3D to Reinvigorate PS3 Sales to Early Adopters, Sony Says

"PlayStation will be the first in-home digital delivery system” for 3D entertainment, Dille said. The “does everything” campaign replaced a much edgier effort that SCEA found “was kind of intimidating” to a substantial section of consumers, he said. The humor of the new campaign has undercut an impression that the company was arrogant, without alienating core gamers, he said. The newer tagline represents Sony’s effort to give consumers the convergence they're ready for and to get across the console’s value proposition, Dille said. The campaign, accompanying a price cut to $299, has been “wildly successful,” he said. PS3 sales were up 184 percent in the three months after the cut, and surveyed “purchase intent” rose to 36 percent, almost double the figure before the changes, Dille said. The campaign is “effective, it’s working,” and Sony units elsewhere in the world are eager to have it adapted to their markets, he said.

Sony’s standalone Blu-ray players “are actually selling quite well,” though playing the discs is one of the PS3’s functions, because of a differentiation strategy, Dille said. “There’s a price difference,” the Blu-ray players selling for as little as $150, “so there’s a different kind of customer,” he said.

The stereotypical digital-multitasking young person is evidence that the CE industry is lagging behind consumers, Dille also said. “A lot of consumers seem reconciled to the fact that they'll need multiple devices” to combine entertainment, communications and other information activities, he said.

"We as an industry need to catch up with this developing digital consumer,” Dille said. Sony will be making a bigger consumer marketing push to get across how the PSP handheld can be used to consume PS3 content and to control the console remotely, he said. “The digital living room actually isn’t a room anymore,” and “we're going to work hard to get that message across."

"We actually see ourselves as more of a networked entertainment company now” than the “gaming company” that SCEA started as, though it remains proud of its “great gaming heritage,” Dille said. He held off on gaming announcements, promising a couple of “surprises that we're going to talk about at E3” in June in Los Angeles.

The tough economy is benefiting adoption of digital-entertainment technologies, Dille said. Consumers see the value in new devices and services “versus spending the weekend at Disney,” he said.

Dille made a joke about one of the competitive obstacles to Sony’s making a reality of its vision of being the leader in digital convergence. In the old days, he said, an entertainment center required several players and boxes of content on physical media. “Today you have an iPod -- and hopefully you'll also include a Sony docking station, so we can be in the music business."

Dille took pains to emphasize that physical media will be around a long time and that Sony is highly sensitive to its retailers’ interests. SCEA reduced its margins on the PSP Go to reflect that it wouldn’t create disc sales and it developed PlayStation Network cards for stores to sell, he said. “People like going to the store,” whereas “it’s not a very good experience to push 50 gigabytes of data and wait for it to show up.” But the life expectancy of the physical-media business is a question “we get into a lot, particularly in those meetings with Wal-Mart,” Dille said.

Sony also is “mindful not to exploit the cost of goods advantage we have” in online sales against retailer’s sales of physical versions, Dille said. “We're not really willing to undercut retail, because we don’t want that business to suffer.” He added, “That’s not an easy seesaw to maneuver, but we're doing pretty well."

The new role of Kaz Hirai, Sony Computer Entertainment’s CEO, as the parent company’s executive vice president in charge of networked products and services shows that the PS3 and the PlayStation Network are the centerpiece of the parent company’s digital-convergence strategy, Dille said. The network operates in 58 countries, with 36 online store fronts, in 22 currencies and 12 languages, he said. Other parts of Sony will use the PlayStation Network as the “backbone” behind their own network interfaces “rather than have all these disparate business units recreate” the network, Dille said. The company is eager to “flip the switch” activating a commerce engine allowing access to the network with a click at PlayStation.com, he said.

SCEA has “all those conversations” with online video providers such as Boxee to open the PlayStation to competitors to its partner Netflix, Dille said. He called the PlayStation Network “more open than our competitors” but added he had “no announcements” about new providers. The company has made a “modest investment” in producing original episodic programming with a view toward premium shows he compared to HBO’s becoming a reason to buy a Sony console.

The PlayStation’s What’s New screen, pushing content sales tailored to the user’s preferences, exemplifies what will be a general trend to personalization in digital entertainment, Dille said. This enables targeted advertising in various forms, he said. Meanwhile, though, the network also shows how communications technologies tie in directly to turning entertainment into the centerpiece of communities from intimate groups of friends to worldwide throngs of competitors, Dille said. The game “Call of Duty becomes the communication device itself,” and more broadly, the network takes the place of the work water cooler where colleagues discussed TV shows, he said. The company is “very interested in what’s going on” in social games, and Sodium represents a start on positioning PlayStation Home as a platform for that kind of games, Dille said.