Wednesday, June 16, 2010

E3: Sony hedging its bets with online gaming

One thing we can all take away from this year's E3 is that Sony is very keen to convince us all its PlayStation Network is something we want.

Arguably the major announcement of interest for Sony's E3 was its premium content service, called PlayStation Plus. Directly from the press release:

"PlayStation Plus provides gamers with more value, access and convenience by offering subscribers features such as frequent discounts on PlayStation Store content, free and exclusive access to select games, full game trials, early invitations to select betas of popular games, and new functionality such as content downloads and updates which will automatically be 'pushed' to the PS3 system even when consumers are not using their system."

For what it promises, the service seems fairly priced - a year will set you back $US49.95, or $US17.99 for three months. For Sony, it's a good deal too. With free games only remaining playable as long as a user is a paying subscriber, there is a degree of lock-in involved with this service, while at the same time not being so stifling as to discourage people from giving the service a go.

Sony will also keep the goodwill of its existing users by maintaining a free service for people who are unwilling to subscribe to PlayStation Plus.

Sony also spent time at E3 touting its PlayStation Home social space, highlighting the continued support the service has, and putting numbers (such as a 70 minute per visit average) to suggest that people who use Home are quite involved with it. There’s nothing more encouraging for remaining committed to a community than knowing your fellows are as involved in it as you are, after all.

It's easy to understand why Sony is so keen to build on its 50 million online install base. The vendor has been experimenting with the digital download medium quite publically with products such as the PSPgo, and, ignoring the existing competition from the Microsoft Xbox online service and (to a much lesser extent) the Nintendo Wii, the industry is about to gain another genuine competitor in OnLive - a cloud-based subscription service. Vendors know they are going to have to fight much harder for those online gamers over the next few years, but the online strategy seems to be that much more important to Sony.

It's clear that Sony believes the download medium to dominate in the future. From a business sense it makes sense to back downloadable media. It allow publishers and developers to bypass some of the expenses involved in producing a retail game, in turn allowing consumers access to less expensive games.

Downloadable games are also the preferred method of delivery for the indie developer/ publisher scene - an important one for finding and exploiting niche markets.

On the other hand, Sony needs to be careful - by definition an online-focused console would require fast broadband speeds. While this might not be such a problem with large market saturation when it comes to broadband, it will make it more difficult for Sony to gain traction in the kinds of emerging markets that its rivals, Microsoft, are chasing.

It will be interesting to see how PlayStation Plus evolves. I expect it to be quite successful; in many ways, Sony's E3 show was subtle and may have lacked the 'wow' factor of Nintendo's show, but it was a significant show in outlining some of the very significant shift in direction the company is taking.

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