Sony Group's Mid-Term Corporate Strategy Meeting (PS3 video store = summer 2008)

For now though, I would get the feeling that say what a 50GB bluray disc gives me, is not something I'll soon be prepared to replace with download and HDD storage. It would require a next generation of hardware and bandwidth. I think much sooner I'll be using some kind of video on demand service where you just pay-per-view and the content is streamed in realtime and not stored locally. If that gets convenient and affordable enough, then that'll probably work. But even then I would probably still like to own a few discs. If I'd download stuff to a HDD, that just creates all sorts of management and backup issues.
 
That definitely won't happen, people would share like crazy and the studios are not down for that. This is the norm in the world of DRM anyway (iTunes). If you lose it, you've lost it. Which is why for video purchases, it just doesn't make as much sense. The entire industry would need to soften up on the matter first.

I looked up information on iTunes, XBL and PS3 video DRMs. All of them have similar movie rental DRMs -- tied to hardware; 14/30 day expiration period, 24 hour viewing duration. Apple's rental DRM is slightly more lenient because it allows you to watch the movie on exactly 1 authorized devices at any one time (download and watch on Mac, finish on iPod). In this respect, I am ok since the title is a rental anyway.

For movie/TV purchases, XBL allows you to redownload -- which is great. Everytime you buy a show, MS issues you 2 licenses at the same time: One tied to the hardware so that everyone on the same unit can watch, and the other tied to the XBL id you used to buy the TV show (so only the account owner can watch if he's signed on). Previously, if you change to a new Xbox 360, only the purchaser can watch the show if (s)he's signed on. Recently, a content license tools is provided to transfer the license to another hardware unit once every 12 months. This helps to plug the above hole

On PSN, you are able to share PSN game purchases on up to 5 machines with some restrictions, so no license transfer tool is needed (Excellent !). However, the PSN Video store only allows you to download a purchased movie/TV show once and it's tied to the hardware. They should at least do the following:

(1) Warn people not to delete the show before/after they download it (Did they ?)

(2) Have a migration tool for PS3 guys whose hardware has failed. This is my original motivation for tying the license to PSN id instead of the hardware id. I thought it was possible to reuse the PSN DRM but restrict it to 1 transferable device license, instead of 5, at any one time within a reasonable period.

If XBL can do something similar albeit clumsily, I don't see why Sony can't.
I take it more as a resource constraint or prioritization issue. As a content *and* platform company, Sony stands to gain more from advanced DRM R&D and policy studies.

That's not really up to Sony, and indeed would defy the entire reason that the studios wanted a high-def format to begin with (higher margins to DVD). I'm expecting BD to be sold at a respectable premium for some time to come.

The BDA has a target of US$1b title sales this year. If I remember correctly, they are less than one third there. Even with the holiday season sales bump (double) and Warner's repricing end of the year, I think the BDA guys would want to offer another round of holiday promotion like last year (or this year's Fathers Day sale) to seal the number.

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I read the article; like with most things Sony-corporate related, I had mixed feelings on it. There were some interesting 'slice of time' insights for sure, but I don't think the author is otherwise very familiar with the goings-ons in the recent years. One thing I found interesting was the whole Gerstner mentoring; that was quite surprising for any number of reasons. Ultimately I'm of course a Kutaragi fan, and can't help but note that most of the technology initiatives that Stringer is credited for began with Kutaragi's hand. One thing that Stringer obviously has achieved though, and it's crucially important, is the breaking down of Sony's silo'd mentality... so so counter-productive for things to be that way. That was always a goal of the KK as well, but Stringer used the carrot where Kutaragi would have used the stick.

I check Cellius almost every week with deep anticipation just to see what Kutaragi is up to. In that sense, i am a fan. Without a supportive staff, I have doubts he could carry Sony this far though.

I think Howard and Kaz did a lot to undo some of Kutaragi's damages while trying to retain his original vision. It is no small feat.

Kaz's own vision will be apparent in the current PS3 software platform and PS4. I have not formed any judgement yet. I reckon I'll check in the fifth year.
 
On PSN, you are able to share PSN game purchases on up to 5 machines with some restrictions, so no license transfer tool is needed (Excellent !). However, the PSN Video store only allows you to download a purchased movie/TV show once and it's tied to the hardware. They should at least do the following:

(1) Warn people not to delete the show before/after they download it (Did they ?)

(2) Have a migration tool for PS3 guys whose hardware has failed. This is my original motivation for tying the license to PSN id instead of the hardware id. I thought it was possible to reuse the PSN DRM but restrict it to 1 transferable device license, instead of 5, at any one time within a reasonable period.

If XBL can do something similar albeit clumsily, I don't see why Sony can't.
I take it more as a resource constraint or prioritization issue. As a content *and* platform company, Sony stands to gain more from advanced DRM R&D and policy studies.

See but you're viewing it as if it's Sony's choice to make in the first place. Sony can't come up with 'enlightened' DRM and roll it out on PSN just because it makes sense. Obviously for SCE, this would be great. But the problem is that they don't control the content, and the studios are just simply too paranoid to go along with that. That's the push-and-pull that's existed between the content owners and the hardware vendors for years now in the realm of digital.

Games on PSN are a completely different beast, because first of all as the developer you're the honored party to be releasing on PSN, rather than the other way around as with movies, and Sony themselves is the owner/publisher of the PSN game content in almost all cases. So, they are setting policy with content they essentially control in full. With the video store, they are just acting as intermediaries.

360 clearly does have a benefit in the way they handle the show downloads, but for Sony's model to get the movies while still keeping it uniform, it seems they couldn't (or simply didn't) swing it. I'd like it to be more flexible myself - who wouldn't? - but I fear the ball is realistically not in Sony's court on this one. Frankly if they can keep content updates regular and substantial, that alone will be something of an achievement. (by the way were there any content updates this week?)

I think Howard and Kaz did a lot to undo some of Kutaragi's damages while trying to retain his original vision. It is no small feat.

I don't want to sidetrack things too greatly here, but I am wondering in this context what damages you're referring to. And I know that's very broad and open-ended as well, so truly, just in the sense of what Kaz and/or Stringer would have corrected.
 
While I'm not sure there weren't other people than Kaz or Stringer involved here or what patsu is referring to of course, I would suppose it would be one or more of the following:

1. refocusing the PS3 as a games machine (this is something Kaz worked or spoke on most I think)
2. recognising the importance of online and acting on it (Phil maybe moreso still than Kaz)
3. recognising the importance of SDK's (both Phil and Kaz)
4. all of the above in Home (Kaz at the very least, but no doubt Phil too?)
5. recognising the importance of leveraging Sony's corporate strengths across the various divisions (no idea who started with that but it mentioned a lot a few years ago)
 
See but you're viewing it as if it's Sony's choice to make in the first place. Sony can't come up with 'enlightened' DRM and roll it out on PSN just because it makes sense. Obviously for SCE, this would be great. But the problem is that they don't control the content, and the studios are just simply too paranoid to go along with that. That's the push-and-pull that's existed between the content owners and the hardware vendors for years now in the realm of digital.

As MS has shown, there seems to be some leeway in transferring licenses across hardware unit. Sony should be able to do the "same thing" technically. This will require some tie in with the PSN id for authentication and authorization.

As for redownload, I think this is something Sony can decide without contacting the content owner. The problem, however, is every redownload uses bandwidth which Sony needs to pay for additionally. MS may have more reasons to offer this feature (20Gb HDD and RROD), but with full downloadable games and game installs, Sony's HDD space needs to be managed too. If they don't want to lose money over unrestricted redownload, then they should at least allow users to transfer (and redownload) the license elsewhere if this box dies.

At the moment, I chalked the problem under product management (feature prioritization) because of Blu-ray and the fact that PS3 is rather robust. So we may not use this feature often.

Video rental is good; simple and convenient. Right now, TV/movie purchase sounds more like a marketing "test water" exercise since the sense of ownership is arguably weak. Perhaps they will improve later. Afterall, it took MS a long time to solve the license transfer problem too.

I don't want to sidetrack things too greatly here, but I am wondering in this context what damages you're referring to. And I know that's very broad and open-ended as well, so truly, just in the sense of what Kaz and/or Stringer would have corrected.

(1) Working relationships and communications across divisions. Kutaragi refused to talk to some execs despite Howard's nagging in the early days. You can't lead smart people without buy-in or talking to them.

(2) Strategic marketing issues were not addressed early enough. As a result Playstation 3 came out before some glaring end user (perception) issues were communicated and addressed. The regions also didn't seem to have enough say in how to market PS3.

On the other hand, I think the current situation is also not optimal (yet). IMHO, the Playstation vision is still somewhat muddled. Kutaragi has a unique picture but it may not resonate with the average gamers. Kaz is correct by focusing on the gamers first, but what is next-gen gaming ? Phil is freaking amazing because he could zero in and convey that picture via telepathy, but it seems he may not be able to execute the vision without significant assistance from higher authorities and colleagues.

In my uninformed view, the online presence should be unified with localized sections. Some other areas may be too fragmented (e.g., Multiple game submission and testing processes for different regions). As Gerstner pointed out, there are still much work to be done to truly make Sony work as a unit. They have started the gears turning, I hope they don't fumble around too much (or lose interest).
 
You have to forgive me for laughing out loud when you state that the media giant, Sony, who owns some 50% of the movie industry cannot seem to negotiate better terms than the software giant who owns a whopping 0%, for a video store operated by Sony on a Sony device which debuts about 18 months AFTER the software giants service and with less content. Personally, I am starting to think this is about BD protectionism.

In 2007 their share was 13% - that's a long ways from 50%.

The better terms (or lack thereof) shouldn't surprise. These guys aren't in Sony's corner automatically for its being a player in the field, in fact I think they fear an industry landscape in which one player is able to consolidate/pull away. We see that Universal still isn't onboard... not for Sony's not wanting them I'm sure.
 
@Arwin: I'll sort of touch on some of your points in here just to keep things from fanning out.

(1) Working relationships and communications across divisions. Kutaragi refused to talk to some execs despite Howard's nagging in the early days. You can't lead smart people without buy-in or talking to them.

I'm not quite sure what execs you're talking about in terms of Kutaragi not speaking to them. When Stringer came on obviously a condition of Kutaragi's was that he would deal only with him, and no one else. And then there was Kutaragi's lashing out at the other divisions (diodes) for PS3's costs and delays.

A lot of that I think is Kutaragi having contempt both for people that were once his subordinates and for execution he obviously felt he could have done better.

(2) Strategic marketing issues were not addressed early enough. As a result Playstation 3 came out before some glaring end user (perception) issues were communicated and addressed. The regions also didn't seem to have enough say in how to market PS3.

In truth there was only one big marketing failing - price. Everything else they tried to push as a reason for the console back then was rejected by the press and media, but a lot of those same points are now accepted and actually burnish the console's image two years later.

$600 was simply a hurdle they couldn't get over for a system with similar graphics and a lesser library. I do agree the marketing was bad, but I think there was too much distortion in the demand perception back at Sony HQ. With lines forming at stores weeks in advance, I don't blame them for having assumed things were on a better trajectory than they were.

If only they had realized 90% of those people were scalpers rather than prospective owners....

But as to the marketing itself, I think the different regions have always had relative autonomy in how they market PS3 - that's not a switch Kutaragi to Kaz.

Arwin to your point #1 I'd just say that when we think about what PS3 is, it was always going to be pushed/leveraged as a Blu-ray player; Stringer himself makes that obvious enough. And I don't think they were going to pay out for GTAIV exclusivity either, KK or not. So although maybe their E3 messages would have been more gamer-centric, in practice I think we'd be looking at pretty much the same console either way, so long as the hardware track behind it was maintained. Kaz and crew have the benefit of speaking to the mistakes of the former emphasis from the standpoint of no longer needing to drive the PS3 as the central hub in the effort against HD DVD. If that war were still raging, I think we'd be hearing a lot more Blu-ray/media talk from them a lot more frequently.

And for #5, it's just worth noting that prior to Stringer, when Kutaragi was in charge of electronics and semiconductors in addition to gaming, he's the guy that started pursuing external partnerships with companies, was pro-industry standards vs Sony proprietary formats, and shifted TV production to an emphasis on flat-panel rather than CRT. He may have been a hard guy to work under, but Stringer was a huge beneficiary of walking into a situation where Kutaragi had already begun a shift away from legacy products. Stringer's been credited now and then with Sony's newfound LCD dominance (seemingly in this article as well), but Kutaragi was the man that put the SLCD venture with Samsung into motion, at great opposition from within Sony to boot. I won't deny I'm maybe more of a Kutaragi advocate than is healthy, but I do think that stuff gets lost within the cracks of history. And, it's just a progression which I watched very closely as the years went by from about 2000 on.
 
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I'm not quite sure what execs you're talking about in terms of Kutaragi not speaking to them. When Stringer came on obviously a condition of Kutaragi's was that he would deal only with him, and no one else. And then there was Kutaragi's lashing out at the other divisions (diodes) for PS3's costs and delays.

Stringer had an interview where he called out Kutaragi for not talking to the Electronics guys in particular. I think the diode incident was just the tip of the iceberg.

The PS3 US launch also showed signs of engineering driving marketing. At that time, it seems to me that they shipped PS3 directly from Japan and that's it. The US marketing folks hardly had anytime to influence and package it because they didn't say much at launch.

A lot of that I think is Kutaragi having contempt both for people that were once his subordinates and for execution he obviously felt he could have done better.

May be but still... as a leader, you have to empower the people around you. Kutaragi obviously did not have the time to do it himself, regardless of how he felt. :(

In truth there was only one big marketing failing - price. Everything else they tried to push as a reason for the console back then was rejected by the press and media, but a lot of those same points are now accepted and actually burnish the console's image two years later.

$600 was simply a hurdle they couldn't get over for a system with similar graphics and a lesser library. I do agree the marketing was bad, but I think there was too much distortion in the demand perception back at Sony HQ. With lines forming at stores weeks in advance, I don't blame them for having assumed things were on a better trajectory than they were.

If only they had realized 90% of those people were scalpers rather than prospective owners....

Yes, pricing is a big factor but it is usually a manifestation of many other decision points. A boatload of planning and execution has to happen before the price is finalized. Without a focus to weed out excesses, bloated pricing is unavoidable unless Sony wants to subsidize PS3 all the way (which they could if they want to, just limit the supply to generate positive buzz and also anger).

I remember after Kaz came on board, one of the tech leads who was very enthusiastic about AV features left to join the Electronics side. SACD was taken out from PS3 too. B/C is something I have mixed feelings, but the new management has to do whatever it takes to arrive at a good balance sheet.

They also have to convince external developers that Sony will market, invest and develop PS3 as a game-specific box. The other advanced plays were simply too early to get into. These are not exactly pricing issues, but they are extremely important problems addressed by Kaz.

But as to the marketing itself, I think the different regions have always had relative autonomy in how they market PS3 - that's not a switch Kutaragi to Kaz.

Hmm... not quite, according to Jack Tretton's latest interviews.
 
These guys aren't in Sony's corner automatically for its being a player in the field, in fact I think they fear an industry landscape in which one player is able to consolidate/pull away. We see that Universal still isn't onboard... not for Sony's not wanting them I'm sure.
Universal was also the major hold out on blu-ray. Definitely reeks of antagonism.

Forbes said:
Stringer's goal is to connect its devices--televisions, music players, PlayStation machines--to one another and to a new Sony network for downloading movies, TV shows, games and other digital content. Downloading goes via the PlayStation 3 console, turning it into a home computer server that can handle movie rentals as well as play games. In addition, Sony's Bravia flat-screen TVs will allow viewers to connect to the Internet and stream Hollywood hits without a set-top box or cable subscription; already the TVs can do this with YouTube and other free Internet channels.
Stringer inherited Kutaragi's vision for a unified Sony ecosystem. Kutaragi originally planned to embed CELL in Sony CE devices to create a single hardware environment. This could have been the backbone for a rather neat distributed computing platform. Stringer dropped this goal and pursued a more software oriented solution: XMB and internet capability. That isn't to say Ken didn't care about software; Home is definitely his brainchild.
 
Stringer inherited Kutaragi's vision for a unified Sony ecosystem. Kutaragi originally planned to embed CELL in Sony CE devices to create a single hardware environment. This could have been the backbone for a rather neat distributed computing platform. Stringer dropped this goal and pursued a more software oriented solution: XMB and internet capability. That isn't to say Ken didn't care about software; Home is definitely his brainchild.

Ha ha, hell yes. There is zero doubt in my mind that Kutaragi's vision is way more cooler and interesting from hardware and software perspectives. If they could pull it off business-wise, I'd buy one major Sony equipment per year. :p

After the initial round of consolidation, I believe Stringer rounded up his lieutenants to encourage them to think up bold plans. I shed a little man tears for Kutaragi there:
http://online.wsj.com/article/SB121148106220714853.html
 
I remember after Kaz came on board, one of the tech leads who was very enthusiastic about AV features left to join the Electronics side.

It wasn't just a tech lead though, but the lead technology officer overall if I recall. Trying to search for news or the thread just now left me coming up empty... wish I remembered any part of his name. But yeah, that was a tragic shift also IMO. Even though the media as a whole felt that the hardware-centric nature of the console was a boondoggle, I disagree... and I'm a little apprehensive about all senior engineers on the team being reduced in clout/influence, to have MA's and marketers take the lead.

I mean come PS4 release rumors, we'll have a clearer idea of what's shaken out in terms of design vision.

Hmm... not quite, according to Jack Tretton's latest interviews.

I'm just taking it based on some of Phil Harrison's former interviews, that seemed to indicate semi-autonomous fiefdoms when it came to localized message distribution.

Probably a lot of shades of grey in there. It'd be interesting to know how well SCE senior management got/gets along with each other, both before the PS3 launch and after it, as hard times can often expose strains that were previously under the surface.

I like both Stringer and Kaz mind you, I hate that it seems as if I might be trying to sell them short - believe me I'm not! :) I just have a fond spot for Kutaragi since like him, the technology itself is what's exciting to me. As such I just like to remind folk as to how central he was to a number of Sony's high-level technology decisions, both within gaming and outside of it.
 
http://kotaku.com/gaming/rumor/sony-computer-entertainment-lost-chief-tech-officer-318074.php

According to an insider, Sony Computer Entertainment platform development head Izumi Kawanishi has been shuffled out of the division. Before we start, a bit about Kawanishi: He was key in the hardware development for the PS2, the PSP and the PS3, and he was the head of SCEI's Network System Development Section and R&D Division. He was Sony Computer Entertainment's Chief Technical Officer.

Kawanishi previously worked closely with PlayStation father Ken Kutaragi and was an important member of the PlayStation team. We wrote "was," because apparently he's been moved out of Sony Computer Entertainment, Inc. and is now working at Sony Corporation.

There was probably some re-prioritization to accelerate in-game XMB development.

I hope Kaz left enough room and backdoors for getting back into the higher concept non-games. Home/Matrix is the most high profile initiative, and is still alive. "Life with Playstation" is another odd one. What I want most is The Magic Mirror :(. But the underlying enabling platform is probably more important than these surface elements.

By enabling platform, I meant more than just technologies. It must also include partnerships, business models, content and network effects.
 
Since we are talking about Kutaragi's legacy...

I could never pinpoint whose baby Blu-ray is, and the exact reasons SCE incorporated it into PS3 (Depending on which level you're arguing and what lifecycle the game console is at, it could work both ways).

In any case, it seems to do very well in Japan now.


* http://asia.cnet.com/crave/2008/05/23/blu-ray-recorders-outsell-dvd-ones-in-japan/ (Blu-ray outsold DVD recorders in Japan)

The statistics from Japan BCN Inc. show that Blu-ray recorders have garnered more than half the country's April DVR sales, a far cry from the 12.4 percent combined Blu-ray and HD-DVD market share in units sold for January.

There was another report on increasing Blu-ray recorder sales in July. We'll see how long the trend sustains.


* http://pc.watch.impress.co.jp/docs/2008/0728/kaigai455.htm

The re-released Macross series just sold 45% of its first volume on Blu-ray (BR: 45,000; DVD: 55,000). Anime fan seems to form the core Blu-ray user base in Japan.


I wonder when/should the player sales hit the mainstream audience, Sony will switch the Blu-ray player in PS3 to a Blu-ray recorder (Japan only). Apparently, the Japanese prefer standalone Blu-ray recorders to players.
 
I heard Blu-Ray recorders with an integrated DVR with a pretty large hard drive was around $800 back in December.

If not for the MPAA, we might have such products here too.
 
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