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Wednesday August 23, 2006 8:59 pm

Why PS2 Succeeded, and Why PS3 Will Fail

Posted by Rob Stevens Categories: Editorial, Features, Video Games


The Sony PlayStation 2 had a lot of things going for it when it launched in October of 2000. It would launch more than a year before Nintendo’s GameCube console, a head start that proved to extend the lifespan of the console far longer than the usual five years. Normally, launching a game console outside of that five-year cycle spelled disaster (just ask Sega), Sony managed to make it work, but it wasn’t by virtue of their games. The launch lineup for the PS2 was laughable, and would not improve for the majority of that first year. No, the PS2 sold for one reason and one reason only: including DVD movie playback cheaper than a dedicated DVD player.

At the time of the PS2 launch, a home DVD player retailed for about $399. Sony was selling the PS2 for $299, taking a significant loss on the hardware and expecting to make it up on software sales (often described as the standard game industry model, despite Nintendo not following that model themselves). For the first year, Sony was taking an absolute bath on the PS2 hardware, since the initial software selection was pitiful, yet the installed user base for the machine would pay dividends in the years to come, allowing Sony to secure many exclusives.

Not only was DVD playback a huge success for Sony and the PlayStation 2, but it was one of the factors that put DVD on the map, pushing hardware prices down and forcing many of the studios not convinced about the viability of the format to bow to consumer pressure. So it came as little surprise that Sony would announce years later that they would again release a game console featuring a new movie playback format at a price significantly less than the existing hardware. This time, however, Sony is the primary player for that movie format, and has a vested interest in its future. If lightning were to strike twice, Sony would come out as an unstoppable force.

However, while all the planets were aligned with Sony the first time around, six years later the outlook is not as positive. There are several factors at work against Sony, some they are powerless to control, and it is these same factors that will likely put Sony in a losing position.

  1. No early mover advantage. Sony was the first out of the gate with PlayStation 2 (Sega launched Dreamcast between generations), but this time they’ll have been beaten to market by Microsoft and Nintendo both.
  2. Extremely expensive. While PlayStation 2 launched at a relatively high $299, it was still at a reasonable price point compared to other console launches. Microsoft was widely criticized for launching the Xbox 360 at $399, but Sony will double their own price point for the PS3 at $599. (I’m intentionally ignoring lower priced configurations for “crippled” hardware.) No console selling for such a high price point has ever been a success in the marketplace.
  3. Blu-Ray has competition. When DVD was released, there was no competing high-end video format. Blu-Ray was beaten to market by HD-DVD (by just about a month), eliminating the first-mover advantage in the video space. Blu-Ray has been criticized for poor video playback compared to HD DVD (though this may just be an early hardware issue), not to mention that HD DVD discs are less expensive to produce. It seems Sony hasn’t learned much from their Betamax days. Regardless, if consumers bet on HD DVD over Blu-Ray, they could go running to Microsoft’s Xbox 360 instead of PS3. It’s possible that some consumers might see BluRay and the PS3 as a whole as a “future investment” (a line of thought Sony is actively encouraging), but it’s an incredibly risky strategy.
  4. PS3 requires significant additional investment. While it’s laudable for Sony to appeal to the videophiles and technologically adept, for either video games or high-definition movie playback, you’ll need a significant investment in display hardware … you’ll need an HDTV. While Microsoft has touted their HD capabilities, movie playback and even gaming looks fine on regular TVs, and still superior to existing competition. For PlayStation 3, many of the features heavily emphasized by Sony (such as 1080p) require the use of HDTV to see additional benefit. BluRay looks no better than DVD on a standard definition TV, making that price tag even more painful to deal with when substitute products are available at significantly lower prices.
  5. No “wow” factor. When PS2 was first shown to the public, the excitement was palpable. PS2 was such an obvious improvement graphically that it was a no-brainer where you would go for “next-generation” games. When PS3 was finally revealed at the last (and I mean last) E3, the general consensus was, “Meh.” Graphically, it’s difficult to tell the difference between PS3 and Xbox 360 graphics, and in some cases, it was stated that the Xbox 360 games looked better, as developers had a year head start to work around the system. Without some other compelling feature (such as the unique controller for Nintendo’s Wii console), gaming does not have a visual improvement on the PS3. Every gamer knows that graphics are not the end-all, be-all of games, but they are a major factor and one that is working against Sony’s favor.
  6. The loss of exclusives. Already, word is coming out that developers are hedging their bets and releasing what were supposed to be exclusive PS3 launch titles on Xbox 360 and/or Wii. Microsoft made significant waves at E3 when Peter Moore announced Grand Theft Auto 4 would be on Xbox 360 with episodic content (through Xbox Live). It seems that every month, more titles are added to the list of PlayStation 3 games that are cancelled, usually in favor of an Xbox 360 version.
  7. No innovation. Another major criticism of Sony’s E3 announcements were the apparent “me too” attitude, showing off a motion-sensitive controller in a cheap attempt to steal some thunder from Nintendo’s Wii (which went on to win Best in Show), and the revelation that they will have a similar system to Xbox Live’s Achievements called “Entitlements” (apparently oblivious to the connotation that moniker elicits).

Sony is clearly behind the eight-ball, and it’s very tough to see why analysts are predicting Sony to be the winner in this console race. With a deck stacked so clearly against it, Sony is relying on backwards compatability and desirability to drive sales, seemingly oblivious to complaints about the price. While stranger things have happened, it’s highly unlikely that Sony will be able to fend off Xbox 360 and Wii without significant advantages that simply don’t exist this generation. You know that the outlook is less than stellar when the editor of the Official PlayStation Magazine comes out on her blog to address these very same issues, stating that she won’t be buying a PS3 of her own.

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First, HD-DVD has already proven capable of handling movie content, and the early reviews comparing BluRay v. HD-DVD versions of the same film are all suggesting that the HD-DVD versions are superior.  Perhaps things will change down the road, but if HD-DVD gains ground before BluRay gets these issues settled, it won’t matter.  Storage capacity is really irrelevant right now, and your information about the theoretical capacity of BluRay is wrong.  Upper limit for BluRay is 50GB, HD-DVD is 40GB (IIRC).  The concerns about HD-DVD not being able to hold a full film are baseless.

As for the cost of adding HD-DVD to Xbox 360, most people are still watching movies on DVD.  I think many would chose to buy a console they can watch movies on now, and not want to pay more for technology they might not be able to fully benefit from.  Plus, there’s the idea that since you would purchase the Xbox 360 first, and probably buy the HD-DVD add-on down the road, the cost of the Xbox 360 is “sunk”, meaning that since you’ve already paid for it, the cost doesn’t factor in. 

Yes, I’m a fan of the Xbox 360.  I’d be a fan of the PS3 as well if the price were closer to that of the Xbox 360, but the reality is, I could buy an Xbox 360 and four games for the price of the PS3 alone.  (And if I were a Wii-man, I could get a Wii and SIX games, or even an Xbox360 and a Wii.)  But that doesn’t mean that my analysis is in any way biased or flawed.

I will say this ... if this argument were solely about HD movies, it would be a much closer deal.  Xbox 360 and an HD-DVD add-on would cost roughly the same as a standalone HD-DVD player, while the PS3 is $400 cheaper than an equivalent BluRay player.  That’s quite significant.  The problem is that while DVD could be enjoyed fully by anyone right away, both HD formats require an HDTV, making cost very much an issue.

If the argument is about games, and I’m certain that it will be, the fact is that the Xbox 360 is cheaper, plays regular DVDs just fine, and already has a year head start in software.  The advantages that made PS2 so successful just don’t exist this time around.

I think PS3 will sell a fair amount of units, but it’s not going to win this round…honestly I’d be suprised if it outsold the Wii; Sony turned alot of people off with the price tag; while yes MS is going to be releasing the HD-DVD add-on later at an undisclosed price that was probably the better move.  Personally I’m content with DVD content; I have over 600 movies in my collection and I have no need to make them obsolete already.  MS saved the consumers from the high cost of being an early adopter; a chance Sony doesn’t offer us consumers [since the expensive blu-ray drive is in every shipped unit].  If sony brought out a dvd based system and later added a Blu-Ray add-on later in the fashion MS is approaching this I’d be more willing to pick up the PS3. The $600 price tag is just a bit extreme; until you buy a system a game and an extra controller and mem card you’ll be in about $1000.  That’s quite a chunk of change to drop on a system right out of the gates for a technology that hasn’t proved itself and obviously has not been declared the ‘winner’ in the new HD movie battle.  In a couple of years should HD-DVD come out on top you now have a system that has a technology that will never be supported; just look @ the PSP; while the games are great, UMD movies were quickly yanked from shelves for poor sales. 

Oh, and on that note I don’t trust Blu-Ray for the simple fact it has built in license management capabilities. ..the restrictions this could impose not only in the videogame market but in the movie market could be extremely high.

Knight, I’m not being a fanboy, but I need to point this out from your last post:

—“Top developers like Konami, Eidos, Epic Games… have already stated that Playstation is a beast! Kojima (VP of Konami) stated that the Playstation 3 is like a movie theater, the XBOX 360 is like a DVD player and the Wii is like a TV. Eidos (director) said that PS3 is clearly the best spec machine as far as next-gen goes. Top developer from Epic Games said even though the PS3 is hard to program, it’s clearly more powerful then the XBOX 360. ”—

It’s obvious that PS3 will have better/updated hardware specs.  If you buy a computer today [or any electronic for that matter] today, and wait 365 days, go back to the store and tell me what has happened to the price?  What has happened to the specs? 

The answer is going to be this:  The process is faster, it has a bigger cache, the HD is bigger, there is more RAM; the video is better; the software is better AND THE PRICE IS COMPARABLE.

Lets face it, gaming systems today are just fancily packages computers.  As time goes on and technology gets better, and we can produce parts faster the cost drops; in the case of this ‘console war’ PS3 releases nearly a year later and the 360; yet the cost is 50% more expensive [when comparing the premiums editions]—now logic would tell me that the cost of technology dropping over the last year should bring the base cost of the hardware down on the PS3; while adding blu-ray & HDMI etc will tack a bit onto the sticker making them comparable in price; this is the problem with Sony’s price structure.

And on that note:  Before you call me out for being a fanboy as you did to Rob; I’ve been waiting on Wii, Nintendo is my all-time favorite.

—Charlie Chan—

It sounds like you are the one who bought into the advertising campaigns.  When I describe my setup I feel no need to point out I have a “61 Pioneer Elite Plasma Monitor”—It appears that you like many others have been sucked into the ads.

Look, the bottom line is this: PS3 is going to cost $500 & $600 for their units.  Like I said earlier, they are going to sell a ton of them; I just don’t think all parents are going to run out and get one for lil johnny when they could get comparable graphics from 2 lower price point machines.


I appreciate that you refer to me as a 360 fanboy; even more I appreciate the part were you call me an idiot. 

“Bluray is also much better than you HD-DVD, no matter what”

Interesting statement; do you care to back that up with any type of facts? Or is that just your inner fanboy showing?  OMG, T3H Ps3 is teH roXOR !!!!!111One!!!!—Seriously, if you are going to make comments please back them up with some sort of factual evidence that indicates bluray is superior to that of HD DVD.

“You won’t get comparable graphics from the Wii”

Are you comparing actual graphics of the Wii to the rehashed CGI Sony has been releasing?  I also noted that you did not use this arguement to compare PS3 to the 360.  Is that because you know the graphics will be comparable?  I mean, I’ve already stated that [although I though PS3 had far superior hardware].  If that’s the case it would seem to me they should be able to have graphics ~1.5x better [based on your non-scientific guess].

“Where I live…”

I’m not really suprised…you are from Canada

Ok, ok the last part was a joke…don’t want to piss off all my neighbors to the North.


“The PS3 is rated at over 2 teraflops, the Xbox360 manages only 1.2 teraflops. “

See that’s the problem, these are just numbers—looking at them on paper is great, sure PS3 looks to have an 80% advantage on the 360 but can the PS3 handle 100% of it’s potential?  Early benchmarking has confirmed what many have thought…Simply put, no they cannot.  Look I’m not blasting the PS3, the 360 has it’s fair share of problems; but as stated a couple posts above the technical details for rendering are broken out so I won’t go into it again but the PS3 has mismatched hardware that cannot support 100% of their functionality, Cost to benefit factor to me is nill. 


“The PS3 specs was announced way before the XBOX 360 launch day and it hasn’t change since then”

I’m not sure what reports you are watching but I see spec changes all the time.  Additionally, announcing specs and actually mass producing an item are 2 different things.  Eventually the companies have to lock into their hardware so they can begin producing the components.  Same happened to MS; they announced the internals long before release day.  It’ll be approximately 2 years difference between the time MS announced what their system will run, and when Sony actually comes to market with their offer, technology changes an awful lot over the course of 2 years.  Have you ever heard of the “Moore’s Law”?


Over 40 years old and still true in the microprocessor world.

Ok, now that the comments have simmered down…

I think this is the first item I’ve ever come across on GL that has ecxeeded 50 comments.

Like I said earlier on, 360 will sell a ton, PS3 will sell a ton.  I’m not debating that; I just think that the bottom line is that Sony’s offering is going to be cost prohibitive for many consumers.  Last Gen I had all 3 of the big players…all together the hardware cost me $700; now this time around it’s going to cost you ~$1200 to go gaming with the big three; that’s just for hardware too; don’t forget to tack on $60+ for each title.  If you make $40k a year that’s going to be roughly 5% of your yearly income…until you tack on games, XBL live subscription etc. are you willing to take that plunge?

the ps3 is not that good for games as it is harder to develop for. i bought an xbox 360 and have not regretted it once. i had the so called ring of death but turned the console off then on again and it has been fine. i did have a ps2 as all my mates had it but the laser went on mine like all others but it is 5 years old. but my brothers slimline model that is 2 years old has broken entirley and cannot be repaired even with a new laser. Most xboxs have a new motherboard that decreases the risk of failure. I expect that a year or 2 from now the ps3 lasers will die as well. thankfullt the xbox doesnt use a laser to read disks. also xbox is more attractive to teenagers like myself as it is cheaper and most people have it.

You are all noobs.

DX learn english before posting, you make no sense with your points fool!

PS3 costs the mosts because it hasn’t been out as long and because it is more powerful than the 360 and Wii.

Give it to the end of this generation the PS3’s games will have better graphics than the 360 and Wii because the processors, video card are more higher specced and because it is blue-ray and it runs far more types of discs than the other two. Your all arguing that HD is better than blue-ray, yes for now it is because blue-ray is new!!! EVERY NEW TECHNOLOGY FAILS AT FIRST! The Wii failed on launch, then the 360 failed on launch—sooo many crashed and now the PS3 is crashing, my PS3 has crashed and Sony had to replace it, its the same for everything!! YOU IDIOTS.

And your all saying that the 360 is better because it has more games, because it has been out longer! And not all games are brilliant, you’ve got exclusive games like Halo 3 (though in my opinion from the last 2 is crap, Halo and Halo 2 were both extremely boring - Halo is only good for online but World of Warcaft owns it, though Halo 3 might good I dunno, I cba playing it) and Gears of War. We have Ratchet & Clank, Metal Gear Sold 4 and soon to be FINAL FANTASY XIII, its all about what types of games you prefer!  For a nice variety of games you buy a PS3, for games to play with friends at a party buy a Wii, for online play and FPS games you buy an Xbox 360.

Also people say that the PS3’s motion sensor is a sleasy copy of the Wii’s, I have a PS3 and my brother-in-law has a Wii so I’ve used both loads, they both feel completly different, the PS3’s motion sensor is nothing like the Wii’s. The Wii is used entirely by motion sensor (well mostly) and is designed for all types of games where as PS3 uses it here and there and it is mostly designed for drivingi.e. to reload in GTA4 you lift the controller up.
Or in Folklore you use the motion sensor to capture mobs, or use the Sixaxis angles to capture bosses in different ways which makes the experience complelty different to games for the Wii.

All in all I think all three consoles are awesome, neither is better than the other.

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