- 24 Mar 2006, 11:21
#6252
ony Delays PlayStation 3 to Fall
Blu-Ray DVD Game Console to Be in Stores Before Christmas
By Sebastian Moffett
The Wall Street Journal
Thursday, March 16, 2006; Page D06
TOKYO -- Sony Corp. said it will delay the launch of its next-generation video game console until November from the spring, even as competition is intensifying with advanced devices from rivals.
The new console, the PlayStation 3, will feature a new DVD format called Blu-ray and will enable users to download music and movies. Sony fell behind in building copyright protections for the Blu-ray technology, forcing the delay, but the company said the console will reach store shelves in time for the Christmas selling season.
Success for the PlayStation 3 is vital for Sony's chances of making a full turnaround after the company posted losses for two quarters in 2005 amid tumbling prices for television sets. Though Sony has rebounded in recent months because of improvements in its core electronics business, any loss of market share in game consoles -- the company's most consistent earner in recent years -- could threaten its long-term health.
The delay means Sony is losing time to rival next-generation consoles.
Microsoft Corp. released its new machine, the Xbox 360, in November. Later this year, Nintendo Co. is expected to launch its device, the Nintendo Revolution, that will feature a radical new type of controller.
Sony dominates the game-console market with the PlayStation 2, more than 100 million of which have been sold. The PlayStation 2 outsold the original Xbox and Nintendo GameCube by about four-to-one each.
Still, Sony may be able to use the delay to its advantage, if it generates enough buzz before the holiday gift season. If the console comes out worldwide in November, the delay likely won't damage Sony's earnings much, analysts said.
"We see no major negative earnings impact if the console reaches the market in time for the Christmas retail season," Yasuo Nakane, an analyst in Tokyo with Deutsche Bank Group, wrote in a report Wednesday.
Sony's share price fell 1.8 percent Wednesday after a Japanese newspaper report predicted the announcement.
Sony has risked vast amounts of time and money developing futuristic technologies for the PlayStation 3. The star of these is the high-capacity Blu-ray optical disc that will store games and display high-definition movies.
The console will run on a chip called Cell, developed with International Business Machines Corp. and Toshiba Corp.
Sony says the PlayStation 3 will bring movie-quality graphics to video games, as well as let developers create detailed and lifelike video game worlds. Ken Kutaragi, president of Sony Computer Entertainment, said yesterday that images on the PlayStation 3 will be significantly more realistic than those on its predecessor: Whereas the PlayStation 2 provided an enhanced sense of space, PlayStation 3 will add images that move fast enough to give a feeling of "live" action.
But this ambitious technology was also the reason for the delay. Copyright-protection technology for Blu-ray was supposed to have been finished by September 2005 but won't be done until April.
"There were improvements [to the technology] that were decided on since then," Kutaragi said.
Sony said that, after the release in early November, it plans to produce 1 million consoles a month and a total of 6 million by March 2007.
The delay could have ripple effects for the array of industries linked to video games. In particular, it is likely to prolong a painful period for game publishers. Companies such as Electronic Arts Inc., Activision Inc. and others have blamed their disappointing financial performances on the transition to new game hardware, a development that occurs roughly every five years in the industry. But investors seemed relieved Wednesday that the PlayStation 3 delay wasn't worse, and shares of several major publishers rose.
Blu-Ray DVD Game Console to Be in Stores Before Christmas
By Sebastian Moffett
The Wall Street Journal
Thursday, March 16, 2006; Page D06
TOKYO -- Sony Corp. said it will delay the launch of its next-generation video game console until November from the spring, even as competition is intensifying with advanced devices from rivals.
The new console, the PlayStation 3, will feature a new DVD format called Blu-ray and will enable users to download music and movies. Sony fell behind in building copyright protections for the Blu-ray technology, forcing the delay, but the company said the console will reach store shelves in time for the Christmas selling season.
Success for the PlayStation 3 is vital for Sony's chances of making a full turnaround after the company posted losses for two quarters in 2005 amid tumbling prices for television sets. Though Sony has rebounded in recent months because of improvements in its core electronics business, any loss of market share in game consoles -- the company's most consistent earner in recent years -- could threaten its long-term health.
The delay means Sony is losing time to rival next-generation consoles.
Microsoft Corp. released its new machine, the Xbox 360, in November. Later this year, Nintendo Co. is expected to launch its device, the Nintendo Revolution, that will feature a radical new type of controller.
Sony dominates the game-console market with the PlayStation 2, more than 100 million of which have been sold. The PlayStation 2 outsold the original Xbox and Nintendo GameCube by about four-to-one each.
Still, Sony may be able to use the delay to its advantage, if it generates enough buzz before the holiday gift season. If the console comes out worldwide in November, the delay likely won't damage Sony's earnings much, analysts said.
"We see no major negative earnings impact if the console reaches the market in time for the Christmas retail season," Yasuo Nakane, an analyst in Tokyo with Deutsche Bank Group, wrote in a report Wednesday.
Sony's share price fell 1.8 percent Wednesday after a Japanese newspaper report predicted the announcement.
Sony has risked vast amounts of time and money developing futuristic technologies for the PlayStation 3. The star of these is the high-capacity Blu-ray optical disc that will store games and display high-definition movies.
The console will run on a chip called Cell, developed with International Business Machines Corp. and Toshiba Corp.
Sony says the PlayStation 3 will bring movie-quality graphics to video games, as well as let developers create detailed and lifelike video game worlds. Ken Kutaragi, president of Sony Computer Entertainment, said yesterday that images on the PlayStation 3 will be significantly more realistic than those on its predecessor: Whereas the PlayStation 2 provided an enhanced sense of space, PlayStation 3 will add images that move fast enough to give a feeling of "live" action.
But this ambitious technology was also the reason for the delay. Copyright-protection technology for Blu-ray was supposed to have been finished by September 2005 but won't be done until April.
"There were improvements [to the technology] that were decided on since then," Kutaragi said.
Sony said that, after the release in early November, it plans to produce 1 million consoles a month and a total of 6 million by March 2007.
The delay could have ripple effects for the array of industries linked to video games. In particular, it is likely to prolong a painful period for game publishers. Companies such as Electronic Arts Inc., Activision Inc. and others have blamed their disappointing financial performances on the transition to new game hardware, a development that occurs roughly every five years in the industry. But investors seemed relieved Wednesday that the PlayStation 3 delay wasn't worse, and shares of several major publishers rose.
