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PlayStation 3 playmaker

Sony's Jack Tretton takes long-term view for console wars, says consumers won't balk at PS3's price.

On Monday afternoon, Sony Computer Entertainment of America kicks off E3 week in Los Angeles.

At its press conference, the first major event of the video game industry's annual blowout convention, the company is expected to unveil the controller for its forthcoming PlayStation 3.

But many are hoping that SCEA will use the press conference for much more, including pricing and game availability information, though the company has been mum about its plans.

One architect of whatever the company announces at E3, and of its PlayStation 3 marketing plan, will be Jack Tretton, SCEA's executive vice president and co-chief operating officer.

Last week, CNET News.com spoke with Tretton about the company's goals for the next year, as well as how the video game industry and next-generation console environment has changed since E3 2005.

One thing that is lost on a lot of people is that we have never been first to market.

Last year at this time, clearly, things were different. At that point, Microsoft had only just announced its own next-gen console, the Xbox 360, and the device was still months away. Now the new Xbox is out and has already sold a reported 3.3 million of the consoles.

Thus, Sony has a long way to go to catch up with Microsoft if it wants to claim the title of winner of the next-console wars. And it will also have to contend with Nintendo and the company's puzzingly named Wii next-gen console. All told, Sony will have to do a lot to impress an increasingly skeptical public, as well as video game watchers, who have seen the company delay the launch of the PS3 and grapple with production costs that could mean the device will either be far more expensive than the Xbox 360 or force Sony to subsidize it in order to keep the price down.

But Tretton believes that Sony is well-positioned for the fight and cites the company's dominance during the PlayStation 2 era, which, because Sony sees consoles as a 10-year play, still has years to go.

Q: Next-generation consoles have been big news for the last year. Comparing E3 2005 to E3 2006, what do you think were the biggest changes in the dynamics of the video game industry?
Jack Tretton: Well, I think we really have to go back 10 years to our introduction of PlayStation. We had one business model and one planned execution from day one: That was overdelivery to the consumer, have a state-of-the-art technology that blew people away and to distance ourself from any other competitor out there.

We've really been able to deliver that with PlayStation and PlayStation 2. We've had a 10-year product life cycle with the original PlayStation. We had PlayStation and PlayStation 2 living side by side, and now we'll have PlayStation 2 and 3 living side by side. We vastly expanded the marketplace from 12- to 17-year-old boys in a $3 billion industry to where it is today--to really a vast audience of mainstream entertainment with male and female, old and young alike.

The changes from the last E3 to this E3--we really felt that at E3 2005, we were in the catbird seat, enjoying 10 years of dominance. We felt with the announcement which we made on PlayStation 3 that we would deliver the true next-generation platform that would deliver that same quantum leap in technology that we've been able to deliver over the last 10 years. I think as we move forward to this year's E3, our dominance is the strongest ever on the two platforms.

As far as the rest of the industry between last year and this year, what do you see?
Tretton: One thing the rest of the industry has suffered from is that they are still in that run of a five-year product life cycle and never being able to break through to a diverse audience. I think you can't rush a product to market, and you can't come out with a partial solution.

If you're struggling and you're failing, you get a little bit desperate. I think if you're in a position of leadership, and you have a plan that you can execute...consistently, and you have confidence, then you have the luxury of waiting until you can do everything right. That's the difference between what you'll see in a debut of PlayStation 3 and what you may have seen from some of our competitors.

What's SCEA's strategy for this year's E3 and for the year ahead?
Tretton: Well, I think we really want to talk about the fact that we are now a three-platform company. The revenue dollars being generated by PlayStation 2 are significant enough; we've sold 100 million systems worldwide.

We're heading into the seventh year of what we believe is easily a 10-year product life cycle. While the launch of the PlayStation Portable last year was the most successful platform launch in the history of this industry, there's still a lot of work and a lot of education to be done there.

On PlayStation 3, we're delivering a quantum leap in technology, a very complex and exciting message for consumers. The message to the publishers is, if you deliver and you execute on the PlayStation platforms, you will be successful in this business. Anything you do beyond that will be gravy. We have the goods that we can deliver for anybody to invest in our platforms--whether it's the consumer or the publisher.

Looking specifically just at the PlayStation 3 and the so-called next-generation console war, you look at your consoles as a 10-year play. So what does PlayStation 3 have to do in order to win the next-generation console war?
Tretton: We have to do just what we've done in the past. You have to have the best system at the end of the day. You have to have the consumer's confidence, and you have to have a pureness of vision, in terms of the way you execute your strategy. One thing that is lost on a lot of people is that we have never been first to market.

We were not first to market with the PlayStation against our ultimate competition. We weren't first in the market with PlayStation 2. And yes, we won't be first with PlayStation 3. But if you look back at the most recent battle on PlayStation 2, we sold 3 million PlayStation 2s in that period before Microsoft launched, and we had gone on to sell 103 million worldwide to their midteen number.

Ultimately, if your platform is successful, that initial year represents less than 5 percent of your sales. So ultimately, it has little or no bearing on the success of the platform long-term, and I think we've borne that out over the last 10 years.

How committed is Sony to releasing the PlayStation 3 before the '06 holidays?
Tretton: Well I think when we were talking about it last year at E3--and we were talking about timing--it was a very general statement. It was not market-specific, it was not date-specific, and that was the planning stages upwards of two years out. I think the tremendous success that we've enjoyed on our other two platforms has given us the very enviable position about being able to pick and choose our date.

If there was some reason that you weren't able to get the PlayStation 3 out before holiday '06, what do you think the effect would be in terms of perception of the platform and the bottom line?
Tretton: Well, at this point, we'll be left with the No. 1-selling platform with PlayStation 2 because, as we speak today, it's still outselling the Xbox 360, so I think, you know, given our 10-year heritage, we're talking very hypothetical, and things aren't going to happen, but we would maintain the leadership position we already enjoy with our PlayStation 3, and we wouldn't be able to add on that gravy, and that will ultimately propel us to an even more dominant position that we enjoy right now, which is 55 percent market share.

You've got a library of 5,000 games that are already available to play on PlayStation 3 the first day.

When the Xbox 360 launched, they had, I believe, 18 titles. Do you have a sense of what the number of launch titles will be when PlayStation 3 hits the shelves?
Tretton: One of the tremendous benefits that we have going for us, without being able to speak specifically to the number of the titles available for PlayStation 3, is that, before the first title being used--thanks to our 100 percent backward compatibility, dating all the way back to the first PlayStation game ever sold--you've got a library of 5,000 games that are already available to play on PlayStation 3 the first day. And I would point to our previous platform introductions--most recently on the PlayStation Portable, where there are 25 games available on day one. We've always had the most extensive library, and I don't think PlayStation 3 will be any exception.

And what about availability? There was a lot of kind of negative press about the Xbox 360 launch, in terms of what availability they had. What do you anticipate, in terms of being able to meet demand that's right there for launch for the PlayStation 3?
Tretton: It's very important to us that we don't dress everybody up and leave them with no place to go. I think when we make a commitment to deliver a launch, we're not only committed to a significant number at launch, we're committed to product flow after that. Again, the most recent example--just a year ago--was the launch of PlayStation Portable.

The anticipation was 500,000 units would be available for the North American market, in fact, we delivered a million units day 1, and we had a good product flow behind it, and I think if you go back to the original PlayStation or PlayStation 2, the story would be the same. So, we are a company that has effectively executed product launches three times. We've dominated the market on our three platforms, and PlayStation 3 won't be an exception.

The big game news everybody expects out of Microsoft next week is the announcement of "Halo 3." Regardless of whether that's going to happen, do you have a sense of what game will be the one that everybody gets for PlayStation 3?
Tretton: You just hit on our greatest strength, and there is no one game. We're not a one-trick pony; we're not dependent on one game to ultimately define our platform, and I think that's why we've been so successful and why we stand in the demographics and continue to do it today, and why there's 100 million people for whom PlayStation 2 is out there--in that there's something there for everybody.

And if you were to ask 10 different people, they'll tell you there's a different must-have game, and that's the reason why they bought the platform, and I think if you're dependant on one game, you're dependant on people who have been in that game. If you have a number of games, then you're going to attract a much more diverse audience, and like I said, past history has really borne that out.

And I think it's a leap of faith, but not a real stretch, to say that given what we've done over the last 10 years, we know what we're doing; we're in a position to deliver for the next 10.

What has been the best-selling game for PlayStation 2?
Tretton: It depends on what period of time you're talking about. I think the most successful game is either "Gran Turismo" or "Grand Theft Auto," and I'm not sure which iteration it would be.

How can you price the PlayStation 3 so it's going to be attractive to the mass market?
Tretton: I think that's the great question. There's a well-documented history that hardware publishers have to invest in the technology to ultimately deliver a device that's going to get consumers excited. There is a willingness and a desire from consumers to get the best out of the best. They'll pay for the value, and I think that we've proven time and time again--and we will prove with PlayStation 3--that the value to consumers, and what we ultimately deliver, is far in excess of what they'll be willing to pay. Price has not been the barrier for us in the past, and we don't anticipate it being a barrier for us on PlayStation 3.

Does that mean that if the price has to be $600, people are going to pay it?
Tretton: It means that people are going to perceive enough value that they're not going to consider the price to be a barrier to entry; that they're going to be willing to do it just as they have on the last three platforms.