marconelly!:
Well, since you asked...
Despite admirable efforts to evangelize their PlayStation platform to third parties in '93 and '94 before its launch, Sony wasn't receiving anywhere near the level of support from the developer/publisher community as the market incumbants, SEGA and Nintendo, were already getting. At the time, Sony also lacked the first-party software ammunition of their competitors, so they certainly weren't planning to play the content card when it came to pushing PSX. The one advantage Sony
did have, however, was that they were a lot larger than either of the other two leading manufacturers and much less conservative than Nintendo when it came to throwing around their cash.
Right off the bat, Sony used their larger pile of money for a strategic move against SEGA and their impending introduction of Saturn. At that point in the industry's development, it wasn't unheard of for a console manufacturer to take a small loss ($10-$25) on hardware initially in order to reach a desired price point. It wasn't standard practice, though, for it meant the manufacturer would be absorbing tens of millions of dollars of losses on hardware. Sony, backed by their mountains of cash, decided to outdo everyone before them and take an initial loss of at least double what anyone else had been willing to risk. They were gambling with an upfront loss/investment in the
hundreds of millions of dollars, something they knew they'd be able to cope with more easily than their competition would. Coupling that with the wise decision to build a console that was cheaper to manufacture than SEGA's, Sony was able to drastically undercut the Saturn's pricepoint at a near head-to-head November 1994 Japanese launch.
This didn't stop SEGA from leading in sales, though. In Japan, the Saturn convincingly outsold the PSX initially despite Sony throwing a lot more cash at advertising. Sony had some back-up plans, though, and wouldn't you guess it... it involved more money.
Sony began to break the stranglehold Nintendo and SEGA had on the third-party community by continuing to undercut them on royalty fee pricing for third-party software in addition to offering more publishing incentives, cash and otherwise, for timed exclusivity on certain software releases. They were also planning the biggest coup yet - securing the Final Fantasy and Dragon Quest franchises for PSX. While Square did want to move away from Nintendo and their decision to support cartridges with the N64 platform, the Saturn offered them a CD-based platform too. Not only that, but Square was one of the more technically capable devs around and could've tackled the difficulties of Saturn development as well as anyone. It certainly would've been worth it, seeing as the SEGA Saturn was the 32-bit market leader in Japan, by far the primary and largest market for those RPGs.
SEGA had been struggling of late financially due to a slow transition from 16-bit to 32-bit, and Sony could smell the blood. Knowing full well about their competitor's recent money struggles, Sony fired a deliberate kill shot by launching and hyping a significant price drop for the PSX much earlier than anyone expected. They was playing more dangerously with money than anyone in the industry had dared before. They fully intended to drag SEGA into a pricing war early to capitalize on the company's money problems, and SEGA knew they had to respond if they intended to participate in the escalating console war.
What this key move of Sony's did was to competely throw the already-troubled Saturn business plan out the window. SEGA had been pricing their console higher than Sony because of manufacturing costs and the inability to be as risky as their deep-pocketed competitor, and they were depending on a normal pricing scale to lead them to sufficient profitability during the pay-off years of the traditional console cycle. Sony's much-earlier-than-expected move forced SEGA to push back the Saturn's pay-off date a lot further. They knew that by forcing SEGA to delay intake from their primary source of income, the company would soon be in trouble.
The coup came through, and Square and Enix pledged the next update in their RPG franchises to Sony. The financial arrangement Sony reached was not simply to bring those titles titles to PSX, but expressly to
keep them off of the Saturn. To the impartial observer, it was a strange move indeed to see the holders of the biggest RPG franchises actually announce that their new games were coming to PSX only and not at all to the biggest next-gen console in Japan at the time, the Saturn. Sony made sure there was no room for ambiguity - there would be no talk from Square of Final Fantasy 7 eventually being ported to Saturn some time down the line. In fact, Sony's exclusivity on certain chapters of the Final Fantasy series continues on into the PS2 era.
Well... SEGA reacted to match the price war and took extremely steep losses on their hardware. After launching early in the US to move initial units at a necessarily high price point of $399, they eventually dropped the price in the US, too, and took close to an estimated $100+ loss on each hardware unit for a while. Sony's RPG coup had come through, and the PSX started outselling the Saturn almost instantly after that in Japan. Sony blitzed the US airwaves with the most expensive ad campaign yet for their 1995 international launch, and the Saturn simply wasn't seeing the level of sales SEGA was counting on from the pricedrop.
Sony's money forced SEGA to play a game they couldn't afford if they wanted to stay in their market, and Sony's deal spending helped seal SEGA's fate by delivering them lower-than-expected, and needed, sales. Sony's methods for spending made the market of console manufacturing too rich for SEGA's blood, mishandled business strategies and console launches on SEGA's part or not. Sony's only card to play in the beginning was money, and they buried their better-selling competition eventually by outspending them.
Sony's practices changed the nature of the videogame market into one which required BIG BIG money, and they have only theirselves to blame for attracting a BIG BIG money competitor like Microsoft. It's funny to hear certain people complain that Microsoft is trying to get by in the industry solely with money, especially since Sony's PlayStation division has
outspent Microsoft's Xbox division all along. It's also funny to hear them complain that Microsoft, with purcahses of Bungie and Rare, are trying to buy their way to victory when Sony was the company that invested in Squaresoft. Forget Vivendi, Rare, or Bungie... Squaresoft is one of the most important publishers worldwide in the console industry. It's like buying into Konami or EA! And it doesn't matter who went to who asking for the deal; Sony was still the company that bought into such a major player - not anyone else (though, probably not for a lack of trying.)
