Sony Learns From Activision Blizzard's Mistake
May 31st 2012 10:53AM
Updated May 31st 2012 10:54AM
Sony (NYS: SNE) has finally come to its senses.
The Wall Street Journal is reporting that the successor to the PlayStation 3 -- likely to hit the market next year -- will have an optical disk drive.
There have been some head-scratching rumors surfacing ahead of next month's E3 conference about what Sony plans to do to resuscitate its slumping PS3 sales. Gaming websites reported earlier this year that Sony was considering features that would make the next gaming console incompatible with earlier software titles and prevent the playing of secondhand games.
Eliminating the drive would achieve both anti-consumer objectives, though it would clearly spell the end of the PlayStation franchise. Just think about what the PS4 -- or Orbis as gaming enthusiast website Kotaku unearthed earlier this year -- would be doing if it nixed the drive.
- One of the things that sets the PS3 apart from the competition is that it plays Blu-ray discs. Buyers know that they are getting a spec-rich gaming machine that also happens to play rich high-def movies.
- Killing the drive would mean an end to the used game market that happens to be where GameStop (NYS: GME) scores its meatiest margins. The ability to resell games may be a drag for Sony and software publishers that don't make money on the used games, but consumers would also want to pay far less for games that are forever shackled to their systems. GameStop would probably refuse to stock the console, and understandably so.
- Backward compatibility is a big deal for gamers that have amassed large collections. They would be reluctant to buy into the new console right away, especially given Sony's history of sharp price cuts after gouging early adopters.
- Sony's history of its network getting hacked doesn't make it very conducive for gamers to rely on the company's servers to either offer downloads or store Web-based games.
Thankfully we may never see Orbis or PS4 implode. The always chatty "people familiar with the matter" are telling the Journal that Sony is sticking to a drive-based system because Internet connections are still too inconsistent around the world.
Gamers can probably thank Activision Blizzard (NAS: ATVI) for that. The world's largest video game maker has been dogged by server outages with Diablo III since its launch two weeks ago. Error 37 and Error 73 messages indicating outright outages or server overcapacity issues continue to haunt the company this week.
If Sony was planning to rely exclusively on digital downloads -- and perhaps host the games to prevent user drives from quickly filling up -- the model could blow up if gamers can't get connected.
Obviously there's plenty of time to get this wrong. This wouldn't be the first time that Sony overestimated its appeal. However, it definitely seems as if it's retreating from what would have been a costly mistake.
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At the time this article was published Longtime Fool contributor Rick Munarriz calls them as he sees them. He does not own shares in any of the stocks in this story. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.The Motley Fool owns shares of GameStop. The Fool owns shares of and has written calls on Activision Blizzard. Motley Fool newsletter services have recommended buying shares of Activision Blizzard. Motley Fool newsletter services have recommended creating a synthetic long position in Activision Blizzard. Motley Fool newsletter services have recommended writing covered calls on GameStop. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.
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