Sony, How Did You Wind Up In Third Place?

I spent most of my interview at E3 with Sony's head of hardware marketing, John Koller, talking about the PlayStation Vita and what in the world is going on with Sony's lovely handheld. But today I'm going to tell you about how he responded to a question about the PlayStation 3 -- a most basic question that seems appropriate to ask more than five years after the launch of the PlayStation 3....

"You guys are in third place. You're a team that was in first place with the PS1, first place in PS2, why has this generation played out differently, where you guys haven't won?"

"It's a lot of factors," Koller replied. "We've been pleased with overall sales. And also very pleased with just how well then consumers who have purchased PS3s have attached and buy software. We have a very profitable consumer. If you're a retailer or anyone else that sells PS3s, you're more than pleased with the PS3's performance. We've been very pleased.:

Before we get too far into Koller, some context: PS3 has sold more than 30 million units worldwide. The fast-starting but slowing Wii has led the generation with more than 40 million. Microsoft, currently surging in America and selling in Europe is a non-factor in Japan but is still ahead of Sony and still behind Nintendo.

Back to Koller...

"I think when you look at what the PS3 offers, it's extremely powerful and it's one that core gamers really gravitate to. And that's something that's been really gratifying to us in many ways. If you look at games that are coming, like the Last of Us, those are experiences you don't get on other platforms. From an experience standpoint, I think there's really only one place to be right now and that's the PS3.

"Why we're in third... you know, there's a lot of things that happen in the market that cause sales to occur. I think we've been very staunch in our belief that there's a certain value behind the PS3 and there's certain kinds of games for the PS3 that have stood behind that. There's no secret that we opened behind a high price point. [Editor's note: $US500-$600 for two different models in 2006; compared to $US300-$400 for the rival Xbox 360 which launched a year earlier and $US250 for the 2006-launching Wii]. And certainly others got a relatively nice head start on us because of that. That's certainly been part of it.

"But we absolutely have no regrets. This has been a very good cycle for us, and I think if you ask any publisher they'd say the same thing. It's been good, and we think it does portend good things for the future for PlayStation."

We were running out of time, but I needed to push back. "I'm sorry to belabor this," I said, "but you said you had no regrets but also launched at a high price. Maybe if you'd launched at a lower price you would have sold faster, right?"


"Potential regret there, is it not?"

"You could also say if you launched a year or two earlier the experience may not be where we are today," Koller said.

"It's a trade-off is what you're saying."

"It's a basket of opportunities. You can't always do everything at the same time. Given what we've had -- and to do what we've done -- I don't think we have any regrets. That's maybe a better way to clarify that."


Koller doesn't say it flat-out, but it seemed to me that the PS3's exceptionally high launch price, combined with its one-year lag behind the release of the Xbox 360 were two culprits for Sony's position this generation. Presumably, that would signal that PlayStation 4, for which development is well underway, would be released in late 2013 alongside the next Xbox and not for a higher price.

But no so fast. Maybe the PS4 still could be later and more expensive.

Here's Koller's boss, US PlayStation chief Jack Tretton, in an interview with reporter Geoff Keighley, also from last week. When asked about Sony's future hardware, he said, "I think, if you look back again on history we've never been first, we've never been cheapest. It's about being the best. And I think if you can build a better machine and it's going to come out a little bit later, that's better than rushing something to market that's going to run out of gas for the long term. I think, ideally, in a perfect world, you want the best machine that ships first, that's cheapest. But the number one goal is to be the best machine, and that's what we're always focused on."

Image: Kevork Djansezian/Getty Images


    I think a major reason was the price, as well as the fact microsoft's online services managed online games and community a lot better.

    Why couldn't Kotaku ask this of the sony ceo or someone high up when e3 was on instead of making an article about it.... Seems kind of a cowardly way to do it really.

    It's absolutely a trade off, there's three main factors in most cases of developing something: speed, quality and price, but you can only pick 2 of those, that's the trade off. Obviously Microsoft went with speed and price, because they rushed the 360 without doing proper tests and used inferior hardware resulting in the RRoD problem.

    Not that the PS3 and 360 are that different when it comes down to it, just that Sony took their time a little longer to really test out their product and use better components, which obviously. So they went for quality and unfortunately quality means price, and also sacrifices time.

    Maybe they've learnt from their short falls are are going to launch the PS4 alongside the 360, but hopefully they don't sacrifice quality for timing and price.

    *which obviously makes it more expensive.

    Am I missing something here, where are the numbers coming from?
    40Mil for Wii, 30 mil for ps3 (no number given for 360?) Wiki has this... which seems to line up better with other sources too.

    Worldwide sales figures
    Wii – 95.85 million as of 31 March 2012
    Xbox 360 – 65.8 million as of 12 January 2012
    PlayStation 3 – 63.9 million as of 31 March 2012

      Yeah I was just about to post this.
      Also, PS3 could consider themselves 2nd considering Xbox had a 1 year lead.

        I could also consider it solid gold and made of liquified pinates if i pretend

        If you also add in the PS1 and PS2 sales then that would make it number 1. If you also then add in all the sony walkman sales that would make it 1A++!

      My only thought is he's quoting US numbers but accidentally saying they're worldwide. It had me blinking too.

    MS count replacement units as sales, RROD helped there stats massively
    Wii is damn cheap, easy uptake price, how many are still actively used?
    PS3 damn expesnive, at release and only now getting to be a reasonable price

    with the higher uptake price easy to understand, Sony need to make there products at a more competivite price, unfortunately thats harder to do since there product has a different offering IE its also a blu ray player with free online services (PSN, not PSN+)


      I've read that when Sony started selling the PS3, they were selling it at a loss! The need to get into the market was so great, they had to do it. The price did delay me in getting it, but I've certainly got my moneys worth. Sweet games aside, it's still got blu ray and is almost an ok media centre. Even if current get console graphics are looking dated now, 3D still looks great.

    I think they need to eat a slice of humble pie and realise that people should not need to pay extra for the Sony brand. It would be interesting to see them release a similarly spec'd & priced machine and compete on the games rather than the console.

    That said I've had much fun with both my PS3 and 360 this gen.

      I find this comment extremely naive. PS3 differentiates itself very easily with the added flu ray player. Not to mention the old replaceable hdd that doesn't cost a fortune, controllers that include rechargeable batteries and free online play... oh did i mention the included blu ray player? How much were they worth alone when the ps3 was released? Cost and value are measured differently, my friends

        Thats just sony pushing propriatry formats like they do on everything. Love my Bravia tv and sony smart phone but i still dont own a blueray player - or need one in my opinion. I do have a useless m2 card and memory stick however

        I never use the Blu Ray player, just have no need to, I can stream HD content on my PS3 and 360.

        If you know what you're doing, (or can watch a youtube vid), you can easily put a standard 2.5" SATA drive into the "cassette holder" that the 360 uses to holster it's HDD.

        Included batteries, sure, but the controller is stil very uncomfortable. Plus RRP on a DualShock 3 is AU$100. A 360 controller is $70 with $30 for a play and charge. (that includes more than the 90cm cable Sony give you) So really they cost the same except MS gives you a cheaper option to get a controller if you DON"T want rechargeable. (not to mention the option to buy official wired ones even cheaper)

        The online play on Sony sucks, too. At least MS's works with no dramas for me.

        Oh, and did I mention that i have no need for a Blu Ray Player? (have had a PS3 since 2007)

        * walks down the street singing "TROLOLOL"

          I guess you're the type of person who thinks 1080p on Youtube is the same 1080p from's the same resolution and therefore the same right?

            hahaha! Yep, 1080p is 1080p. The one on the blu-ray may be crisper and clearer because it hasn't been compressed and re-encoded but it's still 1080p.

            But by the very definition of it, 1080p IS 1080p. 1920 x 1080 progressive lines to create a picture makes it 1080p.

            I look forward to you telling me I'm an idiot again. ;)

              I don't understand why you bothered getting a ps3 if you don't like any of the features in the console? Just makes no sense.... Perhaps that is why your an idiot and not because you think YouTube 1080P is as good as a bluray

            I have both 360 and PS3, ...oh, and a wii.

            They all have good points (yes, even the wii!) and some bad points.

            My fave feature of either though is the PS3's ability to render itself unplayable for what seams like an eternity to "update itself". naf!

            My 2nd fave feature is the wii's inexplicable ability to run out of battery charge so darn quickly, and yet take so damn long to charge up.

            The xbox bricked itself a few years back and took a week to be fixed and sent back, but all told, its still probably my fave machine this gen (console design and online store wise at least).

            When I choose my next, next-gen machine I will wait at least 6months after ps4 and the nextbox are on sale and will then consider pricing of hardware and software, exclusive games, and this time i will give weighting to any undesirable features such as self updating, region locking software, etc.
            This will be the first time I wont buy all the major formats -too little time to play them all!!! So fight, fight fight for my dollars bitches!!!!!!!!!!!!

    ps2 launched after dreamcast, but eventually overtook it, and ended up first, so i don't think microsoft's year head start is to blame.

      Nope, the PS2 'won' because it had the 3rd Party Support and at the time an incredibly priced DVD player also, DVD was also just starting out and the PS2 was the perfect all in one box.

    Bear in mind that PS3 also launched a year after 360. 360 had something like a 5 million unit head start from that first year which has since been eroded significantly. So PS3 has actually outsold 360 during the time that they've both actually been on sale, just not enough to make up for that year's head start.

    It's also worth bearing in mind that the PS3 was probably the decisive factor in BluRay winning out over HD-DVD in that particular format war. Which will have long-term implication for Sony in terms of earning royalties from the sale of all BluRay discs, so in that regard the extra expense will probably be worth their while in the long run.

      Exactly, it was the cheapest BR player for a few years, was tonnes more powerful and was actually VERY cheap for what you actually got. The problem is that a lot of people didn't actually want that and that's where Xbox won on the addition of the HD-DVD player.
      But as you've pointed out, this did few favours for the format wars and Sony won those .
      Personally I hate the PS3 for it's controller and Xbox were the first with achievements :)
      Yeah, and I sold my Wii which went unused for 2 years to a mate.

      I feel the HD war was also a slight factor in the sluggish PS3 sales. As mentioned above, the PS2 had a dream run with having the built in DVD. There was no alternate format fighting for dominance.

      Given the HD war taken place, I feel that some early adopters backed away until a format gained far more momentum (I certainly know some people who regret picking up the 360 HDDVD addon). The other problem that stemmed from this was there wasn't the same need to upgrade from DVD to BluRay as there was VHS to DVD. TVs at the time were still expensive for a full 1080p set and there wasn't enough to support it. This essentially led the PS3 to be seen as a expensive console only, yes it did other things, but other things that not alot of people could make the most of.

      How long term though - like how many more years are people going to be buying discs - seems to me as soon as someone hits upon a Steam-like service that reasonably prices movies for download we'll see the end of physical media

    Cell processor was a dumb idea. All the R&D costs, expensive fabrication & difficult to program for.
    No wonder they dropped it for a traditional CPU architecture for the PS4.

    Business analysts amateur and professional annoy me. I just want the best possible product and will gladly pay the price for it, no optional extras, the whole package power steering leather seats and cruise control, free air drive away no more to pay!

    Hmmm... this is a poor article/interview.
    It seems set out to try to get Koller to back up the premise Totilo has gone in with. When a quote was not forth-coming, Totilo tries to get him to just agree with him.
    When the outcome is still unsatisfactory, Totilo just summises in his favour.
    Not sure what the whole point was.

    I always thought that their 'Third Place' advertising campaign back when they released the system would be a self-fulfilling prophecy.

    I'm one fo those gamers that own them all. Last generation though the PS2 ruled thr roost. This generation I do 85% of my console gaming on 360. A good proportion of that is online. It's so good in fact that 4 separate households in my family have 360's and pay for gold so we can use it to play online together. Mostly it's simple games like UNO or Risk but the ease of use makes it worth the small cost. I think this is why the 360 does well. Meanwhile my Wii gathers dust - like everyone else's and my PS3 is used to play blurays or exclusives.

    Sony's desire to get blu-ray players into households definitely contributed to its price-tag. However, it also helped it win the format war.

    I think the PS4 will be a different story. Blu-Ray diodes are cheap, there are no competing formats, they are going back to a traditional architecture, etc. I also think they are slowly, but surely, improving the Playstation Network to be more competitive against Live.

    The next round of consoles is going to be interesting to watch.

    I would hazzard to guess that their are less than 40 million working 360's out there, every gamer I know has a RROD'd 360 in their closet, I have 2.
    But to conter balance that some people such as my friend grandmother bought a PS3 solely for Blu-Ray as for a year or two it was the best player in quality and price.
    All up I think Sony are happy enough with PS3 sales considering it helped win a format war, the only one for them besides from CD.Failed ones include Beta,Mini-disc,DAT,UMD and memory stick.

    It had hardly any exclusive games when it released and took a long time before it had a decent library. There was no reason to buy it over an Xbox360 because of the price difference. For games that is. The fact it was a Blu-ray player as well probably saved it from obscurity.

    "I think when you look at what the PS3 offers, it’s extremely powerful and it’s one that core gamers really gravitate to."

    It's such a shame then that the vast majority of games I have played on it LOOK worse than on XBox 360.. have more glitches than on XBox 360 and so on. 1080p?.. what's that?

    "But we absolutely have no regrets. "

    By that they mean.. they have no regrets that they are prepared to admit to.

    "I don’t think we have any regrets"

    Oh only "think" now.. I see.. and if we press you a little more into the corner and poke you with sticks?

    Just admit it.. you dropped the ball.

      Bravo sir, this is the most fanboyish comment I've read all day.
      More glitches on PS3? Are you implying that's the fault of Sony, or the lazy devs that half ass their game just to get it out the door?

      2/10, would laugh at again

        Bravo sir, you are my post of the day.

        10/10, an award in the general field of excellence for you.

      @light487 - 1080p? I think you are mistaking being upscaled to a resolution for being rendered in a resolution. The same game might output to 1080p mode on the 360 and 720p on the ps3 but they are probably both being rendered at 720p. There are very few true 1080p titles on either system.

    What I find strange is that the majority of releases on PS3 now are only playable on 720p where as the X360 always is playable in all formats up to 1080p. I don't really understand since its on a BluRay Disc aswell which you would think would be in 1080p. Some examples: Max Payne 3, Mass Effect 3, Ghost Recon Future Soldier.

    Some people have said its because they are putting all their information onto one disc rather then multiple discs which Xbox has done, but to be honest I would rather have a higher resolution and be on multiple discs rather then 720p on one BluRay.

    I'm not hating on PS3 because I do love the console, I'm a proud owner of it and all the current gen consoles as well I just find it confusing...

      @sighduck - UPSCALED to 1080p. Your 360 games that are displaying in a 1080p mode on your TV are probably mostly being rendered at 720p whereas fewer PS3 games use upscaling and just display at the rendered resolution.

      It has got anything to do with the disks. At most he capacity of the disks allows a larger collection of textures and graphics to be used across the whole game, but it is the graphics processing hardware, memory and so on that affects the rendering performance.

      The 1080p on the Xbox is due it force upscalling all your media, this results in no more added benefit whatsoever since your TV etc will upscale your media anyway. In fact you would actually want the game console to not upscale it since by doing it yourself you have a choice of how this is done.

      The storage medium doesn't have anything to do with what resolution the game runs in. It's not just playing video off the disc like a movie - the BluRay just stores the code, assets etc which the console then has to run. The fact is that the VAST majority of games on both PS3 and 360 render at 720p. My understanding is that the 360 has a hardware scaler which automatically upscales everything to 1080p (or whatever the TV is able to handle), while the PS3 requires developers to do this in software. But the fact is that the difference between 720p and 720p-upscaled-to-1080p is negligible. Native 1080p would be a different story, but not many have actually done that.

      The only time BluRay might give PS3 a real advantage over 360 in terms of resolution would be in the case of prerendered cutscenes in which case the additional space might allow them to have higher resolution video than the DVD storage on 360 would allow.

        Thanks for clarifying that for me guys! - andye/plmko/Braaains

    Microsoft won because they launched. You can't sell stuff if you do not launch. Sure, they released a product that was not ready, had serious problems, and cost them billions to sort out - but they won the war. It is he same thing they have been doing with software since forever - getting it out the door.

    Its funny how PR dudes still act like PS3 & 360 are the latest and most powerfull technology, hahaha. Also, nothing more need be said about 360 Vs PS3 that hasnt already been said in the last 7 years - they are both good consoles that are really showing their age, especially when compared to Cryengine3/Unreal Engine 4 running on GTX690's.

    Sold the least units (by not a massive margin) but given the software sales, given the margin they made once the manufacturing cost came down, given the influence on winning the Blu-Ray format wars and getting Blu-Ray players into households... it's probably true that Sony did pretty well, possibly close to Nintendo due to software and Blu-Ray sales and certainly better than Microsoft which dropped a fortune on the RROD debacle.

    I always thought Sony insufficiently advertised the fact that the PSN is free and an Xbox Live subscription is not... eats up some of that price gap. Hell, over time it eats up all of it.

    They thought lightning would strike twice and people would be as eager to get a Blu-Ray player as they were for a DVD player. The inbuilt DVD player was a huge draw for the PS2, the added costs of the Blu-Ray player a bit of a drag on the PS3.... I wonder if the PS4 will just be a console and be done with it or if they will try to have lightning strike again...

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