Video Game Pioneer Kutaragi Leaves Sony
MELISSA BLOCK, host:
The man who has been called the father of the Playstation is leaving his post at Sony. The change comes at a difficult time for PlayStation's electronic grandson.
As NPR's Scott Horsley reports, Sony's PlayStation 3 is losing ground to rivals from Nintendo and Microsoft.
SCOTT HORSLEY: Ken Kutaragi pioneered Sony's videogame console business in the early 1990s. And for more than a decade, PlayStation and PlayStation 2 dominated the $20 billion-a-year market. Analyst Evan Wilson of Pacific Crest Securities expected more of the same when PlayStation 3 debuted last fall.
Mr. EVAN WILSON (Analyst, Pacific Crest Securities): If you would have asked a year ago how I thought the cycle would have played out, I would have said that the most likely scenario would be that Sony would end up number one, Microsoft would end up number two, and Nintendo would end up number three. But now, I think it's really a toss up.
HORSLEY: In fact, PlayStation 3 is running a distant third in the U.S. this year. Wilson suspects that disappointing launch and the resulting drag on profits is behind the announcement this week that Kutaragi will step down as head of Sony Computer Entertainment.
PS3 sales were initially hurt by production problems. But even after those were fixed, the systems have sold slowly. To find out why, we asked the experts.
(Soundbite of music)
HORSLEY: Garrett Ludman(ph), Michael Remson(ph) and Melvin Hern(ph) have gathered at this game-crazy store in San Diego as they do many afternoons to play against each other, check out new game titles, and argue the merits of competing game systems.
Unidentified Man #1: I got Wii, Xbox 360, PS2 and a DS.
Mr. MELVIN HERN (Videogame Enthusiast): I got the Wii, the Playstation 2 and a DS.
Unidentified Man #2: I have a PS2 and a DS.
Unidentified Man #1: I'm going to get another Xbox 360 and a GameCube just for my room because they're really that good, and I'm too lazy to go to my living room most of the time.
HORSLEY: None of these avid gamers has purchased a PlayStation 3. So far, in the U.S. this year, Sony sold only about half as many units as the popular Nintendo Wii. Nintendo's profits were up 77 percent in the year just ended. Hern thinks he knows what's behind the relatively sluggish sales of the PS3.
Mr. HERN: It's just the price. The only thing that kills it is the price, $600, $700 out the door. That's a lot of money. If it was the price of the Xbox, I'll get one.
HORSLEY: At around $600, the PS3 costs twice as much as an Xbox 360, and almost two and a half times as much as the popular Wii. Hardcore gamers might be willing to put out that kind of money if there were some great games that could only be played on a PS3, but so far, these gamers say, there aren't.
Unidentified Man #2: Half the titles, they came out on the 360 first. So a lot of people are not going to spend this money when they can just get a Xbox and play the same thing.
Mr. HERN: All the good games that I like for the PlayStation, they're all on the PS2, like "God of War." That was unique. It blew everyone's mind because it was so great. Every person out there liked it.
HORSLEY: Analyst Wilson says it will probably be up to Sony's own game designers to develop a similar killer game for the PS3 since independent game creators are reluctant to play favorites among the consoles. Sony could also cut the price of the system to be more competitive, although that would cut into their profit margins. Wilson notes, despite Nintendo's commanding lead at this point, we're still only about six months into a cycle that will last many years. So this is one high-stakes game that's not yet over.
Scott Horsley, NPR News, San Diego.