Can Sony PS3 Get in the Game?

Holiday Season Critical for Year-Old Console Amid Aggressive Push, Price Cut

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It's crunch time for PlayStation 3. But Sony's got a plan: to promote its platform beyond video gaming.
PS3: 'It's bursting at the seams' in new ad.
PS3: 'It's bursting at the seams' in new ad.

With its most aggressive marketing push to date, Sony Computer Entertainment America is aggressively positioning the PS3 console as the center of consumers' home entertainment. Along with an equally impressive price cut -- to $399 from $599 -- PS3 finally may be ready to challenge rivals going into the holiday season, when, according to NPD Group, nearly 50% of video-game products are sold.

"It's not a system that's just about one thing," said Peter Dille, SCEA senior VP-marketing and PlayStation Network. "The campaign speaks for itself in that it's really trying to demonstrate everything PS3 can do -- it's bursting at the seams with all this entertainment capability."

PS3's marketing will center on gaming but will also highlight features such as its built-in high-definition Blu-ray player, downloadable content options and compatibility with PSP.

While one holiday season can't make or break any console, most agree this is a critical time for Sony. "It's the second season, and you're now past the early adopters and tapping a more general consumer," said Michael Gartenberg, analyst with Jupiter Research. "Sony is facing not only a reinvigorated Nintendo ... but also Microsoft."

Sony has been outdistanced by both of Sony's next-generation competitors. PS3 had sold 1.9 million units in the U.S. through September. But Wii sold more than double that: 4.5 million units in the same time period, according to NPD Group. And Xbox 360, which bowed one year earlier, outsold PS3 by a factor of three, with 6.8 million units in the U.S. in two years.

'Icing on the cake'
Gone are crying babies in the PS3 ads. Instead, PS3's latest TV spot, driven by music from heavy-metal band Saliva, begins with black vinyl hands punching out of the PS3 black box, some with clenched fists, some wielding weapons and at least two brandishing sports equipment. PlayStation Home, Network, and Blu-ray also appear morphing in and out of the box. Mr. Dille said several more TV spots are under development and will feature different types of content, entertainment features and third-party partnerships. TBWA/Chiat/Day, Los Angeles, which created the ads, is defending its agency-of-record status in a review.

Sony is also working with retailers to craft end-to-end Sony product packages, such as a Sony Electronics Bravia flat-panel TV bundled with a PS3. Mr. Dille said those types of deals will continue through the season. But what about gamers who still just want to, um, play games?

Analysts say that while add-on features and special deals help market a console, game content still drives the majority of sales.

"Our research shows that the most compelling reason a consumer purchases a new gaming system is to be able to play the games that they're eager to get their hands on," said NPD analyst Anita Frazier in an e-mail interview. "All the other features are certainly icing on the cake, but game content is still king when it comes to inspiring sales."

Catching up
A strong holiday could go a long way for the PS3. Sony has already seen a "very large uptick in sales across the board" after just one weekend of the lowered $399 price, Mr. Dille said. "We're feeling really confident, and there's a great sense of enthusiasm here." He added that many in-house think the $399 price point will make a big difference.

Some analysts aren't so sure. "They created a product that was priced out of the market, and the end result is the Wii came up and stole their share," said Rob Enderle of the Enderle Group. "Wii was outselling them 6-to-1 midyear, and while that's now closer, at 2-to-1, if you were once the leader and now you're the 1 in that equation, that's not a good thing."
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