http://spong.com/detail/editorial.jsp?eid=10109380&cid=&tid=&pid=&plid=&page=1&cb=287
Q: What does Microsoft have in place to counter the PlayStation 3 launch?
NT: The PlayStation 3 is obviously a significant factor in terms of what is going to happen in the market. But the interesting thing about this week is that they have really positioned themselves as a Blu-ray player. And I think they’ve missed the ball, in that it’s not really a next-generation games player – it’s a next-generation DVD player. For us, that’s great news, because we think we make the next-generation games console. We’ve got the content to back that up, we’ve got Xbox Live to back that up, we’ve got price-points that are very compelling. If gamers are desperate to get the next-generation DVD player, then they’ll start considering Blu-ray and the PS3. But Sony is the company that brought us Betamax, MiniDisc and UMD – I’m not convinced people today will go and bet the farm on buying a Blu-ray disc. That’s where we now see them playing. If consumers want to move to HD-DVD, we’re going to offer them parts to do that, when they want to do that.
The big difference between us and Sony, I think, is that we’re not forcing consumers into big technology leaps now, which don’t really make sense – both financially, and in terms of whether they’re really going to be standards – whereas Sony are really forcing customers, and relying very much on brand loyalty. Phil Harrison said that – that it’s Sony’s brand loyalty which is going to make it successful in the future. Well, you know, consumers ain’t that dumb – they figure that stuff out. I’m not sure brand loyalty counts for much when you’re forcing people to pay that sort of premium price for a technology that really isn’t proven, and which we still don’t know is going to be relevant in three years’ time, let alone in 12 to 18 months' time.
Q: What do you think of the PS3’s likely launch line-up of games?
NT: Who knows? From what I’ve seen, I certainly don’t think they’re coming out with any of their major franchises. Gran Turismo is probably what everyone wanted to see at launch, and that’s not going to happen. They’ll have some good titles – they won’t come out with nothing. But I’m not sure they’re going to have anything that’s dramatic, in terms of capturing people’s imagination.
Q: That’s not the case for the Wii – Zelda, Metroid Prime, Wii Sports, WarioWare and possibly Super Mario has to be the best launch line-up of any console ever?
NT: I think Nintendo had a great week this E3, and I think they have done some really interesting things for the industry, with where they’re going with their technology. Maybe they have a great opportunity to widen the market more quickly than Sony or ourselves. I think it’s great for certain sets of products. The thing that we’re going to be interested about with the Wii going forward is the breadth of the gaming experience that you can get from it, and will that make it your core console? Or will we get to a point where there is dual ownership of consoles? The difference is that, in the old world, it might have been Xbox and PlayStation, whereas in the new world, it might be Xbox 360 and Wii – and that’s the PS3 cost, as Peter Moore said. Consumers will have a really interesting choice this Christmas, I think.
And beyond, because I can’t think where PlayStation is really going. The lower sku doesn’t make any sense to me whatsoever – you can’t move it into something else, and I’d be surprised if they even launch it. Why put Blu-ray in it if it doesn’t have HDMI out? I think it’s another example of how they’re forcing the cost onto the consumer just to say they’ve got a Blu-ray player for movie companies to create Blu-ray movies. It’s a very dangerous game to play, especially with a gaming audience.
Q: Sony would argue that the PS3, because of its power, would have a longer life-cycle than any previous console. Would you agree with that?
NT: Not really. Sony is not a software company, and I don’t think it is able in terms of operating systems, and I don’t think it has the elegance in its software design that we do, hence they need to put a lot more processing in their box just to get to the point that we’re at. The analogy I use for that is that last year, I looked at their product and thought, “Well, this is a truck engine in a Ferrari,†because they were doing a lot of sexy stuff on the box. What has become apparent is that they are now offering a truck engine in a truck – the size of it is 40 per cent bigger than they said it was going to be, and it’s heavier than the original Xbox.
The thing that we learned with the first generation of Xbox is that when you put all of this extra technology in the box on day one, consumers don’t necessarily value all of that on day one. That’s why we built the Xbox 360 in a way in which we can scale up to any new technology that consumers want. The thing that is fundamentally going to change this business isn’t going to be the hardware, it’s going to be what the software does for them. It takes quite a few iterations of games to get to the true power that these systems have. By the time we get to that point, we’ll have a scaleable business where we’re offering people whatever choices they want in whatever ways they want.
Q: What about the PS3 online service? They’re still saying that they will leave pricing up to publishers and developers, so the unified experience consumers get over Xbox Live couldn’t be applied to PS3.
NT: Absolutely. There are two powerful currencies which will become interesting in the future, particularly with Bill Gates’ announcement. One is your gamertag. If you’re going to be gaming anywhere on any device, you want the same gamertag. Because then your friends will know who you are and where you are. Also, it’s the same with achievements – you want your achievements to keep going, because we’ve all got egos. With Sony’s online model, neither of those things can really happen. Coupled with the fact that at the end of the line are publishers building massive infrastructures to service this - we know through MSN and Xbox Live what that takes, and it’s no insignificant challenge. We just don’t think it’s really a scaleable solution if you don’t have this unified environment.
Q: What does Microsoft have in place to counter the PlayStation 3 launch?
NT: The PlayStation 3 is obviously a significant factor in terms of what is going to happen in the market. But the interesting thing about this week is that they have really positioned themselves as a Blu-ray player. And I think they’ve missed the ball, in that it’s not really a next-generation games player – it’s a next-generation DVD player. For us, that’s great news, because we think we make the next-generation games console. We’ve got the content to back that up, we’ve got Xbox Live to back that up, we’ve got price-points that are very compelling. If gamers are desperate to get the next-generation DVD player, then they’ll start considering Blu-ray and the PS3. But Sony is the company that brought us Betamax, MiniDisc and UMD – I’m not convinced people today will go and bet the farm on buying a Blu-ray disc. That’s where we now see them playing. If consumers want to move to HD-DVD, we’re going to offer them parts to do that, when they want to do that.
The big difference between us and Sony, I think, is that we’re not forcing consumers into big technology leaps now, which don’t really make sense – both financially, and in terms of whether they’re really going to be standards – whereas Sony are really forcing customers, and relying very much on brand loyalty. Phil Harrison said that – that it’s Sony’s brand loyalty which is going to make it successful in the future. Well, you know, consumers ain’t that dumb – they figure that stuff out. I’m not sure brand loyalty counts for much when you’re forcing people to pay that sort of premium price for a technology that really isn’t proven, and which we still don’t know is going to be relevant in three years’ time, let alone in 12 to 18 months' time.
Q: What do you think of the PS3’s likely launch line-up of games?
NT: Who knows? From what I’ve seen, I certainly don’t think they’re coming out with any of their major franchises. Gran Turismo is probably what everyone wanted to see at launch, and that’s not going to happen. They’ll have some good titles – they won’t come out with nothing. But I’m not sure they’re going to have anything that’s dramatic, in terms of capturing people’s imagination.
Q: That’s not the case for the Wii – Zelda, Metroid Prime, Wii Sports, WarioWare and possibly Super Mario has to be the best launch line-up of any console ever?
NT: I think Nintendo had a great week this E3, and I think they have done some really interesting things for the industry, with where they’re going with their technology. Maybe they have a great opportunity to widen the market more quickly than Sony or ourselves. I think it’s great for certain sets of products. The thing that we’re going to be interested about with the Wii going forward is the breadth of the gaming experience that you can get from it, and will that make it your core console? Or will we get to a point where there is dual ownership of consoles? The difference is that, in the old world, it might have been Xbox and PlayStation, whereas in the new world, it might be Xbox 360 and Wii – and that’s the PS3 cost, as Peter Moore said. Consumers will have a really interesting choice this Christmas, I think.
And beyond, because I can’t think where PlayStation is really going. The lower sku doesn’t make any sense to me whatsoever – you can’t move it into something else, and I’d be surprised if they even launch it. Why put Blu-ray in it if it doesn’t have HDMI out? I think it’s another example of how they’re forcing the cost onto the consumer just to say they’ve got a Blu-ray player for movie companies to create Blu-ray movies. It’s a very dangerous game to play, especially with a gaming audience.
Q: Sony would argue that the PS3, because of its power, would have a longer life-cycle than any previous console. Would you agree with that?
NT: Not really. Sony is not a software company, and I don’t think it is able in terms of operating systems, and I don’t think it has the elegance in its software design that we do, hence they need to put a lot more processing in their box just to get to the point that we’re at. The analogy I use for that is that last year, I looked at their product and thought, “Well, this is a truck engine in a Ferrari,†because they were doing a lot of sexy stuff on the box. What has become apparent is that they are now offering a truck engine in a truck – the size of it is 40 per cent bigger than they said it was going to be, and it’s heavier than the original Xbox.
The thing that we learned with the first generation of Xbox is that when you put all of this extra technology in the box on day one, consumers don’t necessarily value all of that on day one. That’s why we built the Xbox 360 in a way in which we can scale up to any new technology that consumers want. The thing that is fundamentally going to change this business isn’t going to be the hardware, it’s going to be what the software does for them. It takes quite a few iterations of games to get to the true power that these systems have. By the time we get to that point, we’ll have a scaleable business where we’re offering people whatever choices they want in whatever ways they want.
Q: What about the PS3 online service? They’re still saying that they will leave pricing up to publishers and developers, so the unified experience consumers get over Xbox Live couldn’t be applied to PS3.
NT: Absolutely. There are two powerful currencies which will become interesting in the future, particularly with Bill Gates’ announcement. One is your gamertag. If you’re going to be gaming anywhere on any device, you want the same gamertag. Because then your friends will know who you are and where you are. Also, it’s the same with achievements – you want your achievements to keep going, because we’ve all got egos. With Sony’s online model, neither of those things can really happen. Coupled with the fact that at the end of the line are publishers building massive infrastructures to service this - we know through MSN and Xbox Live what that takes, and it’s no insignificant challenge. We just don’t think it’s really a scaleable solution if you don’t have this unified environment.
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(Sony were also behind the CD and ultimately rowed behind the DVD also - with others in both cases, as is always the case with these things. The guys behind VHS are also behind Blu-ray exclusively now too, which is worth remembering when someone brings up a vhs/betamax comparison).
