O Sony, Where Art Thou?

From king to pauper in one generation

Somewhere in Japan, Shigeru Miyamoto and Satoru Iwata are clinking together crystal glasses of premium liquor, adjusting their monocles and belly-laughing until their top hats fall off.

They have reason to be merry in this economically depressed holiday season: NPD reported last week that Nintendo made off like bandits in November, selling 3.61 million pieces of hardware in North America. The impossibly popular Wii sold 2.04 million units alone, twice the amount it did last November, when the economy was robust.

Meanwhile, that other Japanese gaming giant, Sony, suffered through a miserably disappointing month: Its flagship console, the Playstation 3, sold only 378,000 units, fewer than half the number of its second place console, the Xbox 360. This was supposed to be the flagging console’s breakout year; instead, after last month’s debacle, Sony executives have to be wondering how things turned so bad.

Sony’s poor performance is certainly not due its game library. 2008 saw the release of Metal Gear Solid 4 and Little Big Planet, giving the console must-play titles, commodities it conspicuously lacked in 2007. Next year will see the release of Killzone 2 and Heavy Rain, which both sport astonishingly photo-realistic visuals that simply cannot be found on any other console. The PS3 has boasted unmatched technical sophistication since its release, but it was only recently that those claims bore fruit attractive enough to demand the attention of hardcore gamers.

Instead, much of Sony’s poor performance has been to attributed to price. Former Sony Executive Ken Kutaragi infamously urged people to “work more hours” to afford the PS3′s bloated price tag; instead, consumers have decided to ignore the console altogether.

While Sony never really had a chance to grab the insanely lucrative casual market away from Nintendo, the company bungled away its chance to win the hearts and minds of the American hardcore by refusing to lower the console’s price beyond $399. That’s far above the price threshold of the two groups crucial to a console’s success: cash-strapped college students and Christmas shopping parents.

Had I, as a child, asked my father to buy me a $399 gaming system, he would have responded with raucous, derisive laughter. The price at which that laughter would turn to careful consideration is $199 – not too coincidentally the cost of Microsoft’s Xbox 360.

And therein lies Sony’s greatest obstacle to success: A head-to-head competition between the Xbox 360 and the Playstation 3 is one that Sony’s console cannot win at $399. Sony’s technical advantage withers against Microsoft’s slim price tag, superior game library and streamlined online service. Sony’s latest attempt to spruce up the PS3′s online service, Home, looks and feels more like a commercialized Second Life than it does a serious threat to Xbox Live’s popularity. The inclusion of a Blu-Ray player, one of the console’s main selling points, also seems less attractive when compared to the streaming High Definition movie content offered by Netflix on the 360 – a service that Sony inexplicably has no plans to acquire.

While fanboys will flock to message boards to gleefully dig Sony a shallow grave, the company still has time to get it right this generation. But forgive me if I place my bets elsewhere.