How to Own the Universe and Then Give it Away

Back in the ancient times (you know, 2001), there was an entertainment company that owned the video game universe. Their lock was so tight that even people who were not originally impressed with the technical prowess of their hardware or the aesthetics of their games were still compelled through sheer force of will to buy the system.

This is a story about how a company can own the universe and give it away. I speak, of course, of Sony and the Playstation 2.

I should note at the beginning that Sony is a long way from having literally given up ownership of the video game market. One might argue that the PS2 is as strong as ever. There are 100,000,000 units out there, and they’re not going into the dustbin anytime soon.

That being said, the ruling position of the Playstation 2 has never really been in question since the beginning of its lifetime. It started strong, it crushed everyone, and it continues to crush everyone. Microsoft and Nintendo made a good show of competing, but there wasn’t really any competition there. Consider that within one year after the American launch of the system, the following games appeared:

- Final Fantasy X - Metal Gear Solid 2 - Jak and Daxter - Grand Theft Auto 3 - Devil May Cry - Silent Hill 2 - Gran Turismo 3 (hi Pete!) - Ico

And on and on. These are not all my favorite games. These might not be all your favorite games. But they are all someone’s favorite games. Just about a year after launch, the machine already had a game lineup that crushed all comers when it came to sheer breadth, even if the absolute quality of every title was not world beating.

The PS2 was arguably a conservative hardware design. The only thing edgy about it at the time was the inclusion of a DVD drive, but even there, the format was mature and hardware readily available. Sony could crank them out and sell to all comers, and there were so many customers that there were still shortages anyway. The PS2 also incorporated a fairly radical approach to backward compatibility, which gave you something to do in that first year before the games came out.

The contrast with the PS3 is startling. From the beginning the PS3 appeared to be the place where every questionable emerging technology that Sony wanted to foist on an unsuspecting world had rented an apartment and set up housekeeping. The front-runners in this race of technical stupidity are the Cell and the Blu-Ray drive.

The great thing about the Cell is that Sony has to figure out how to make enough of them and teach people to program them at the same time. This, along with the other realities of higher resolution game development means that games come out more slowly after the launch of the machine. Microsoft had this problem to a certain extent with the 360. There is still a relative shortage of really good original titles on the 360 more than a year after launch, and there is certainly nothing to go up against that list above from the PS2.

The great thing about Blu-Ray is that it drives the price of the machine up and no one gives a shit about it. As a bonus, since the technology is not yet mature, Sony can’t make enough of them yet. You can see how this is a winning bet on all fronts. It makes the machine more expensive and it provides no functionality that anyone really wants. Both of these things make people want to buy your hardware.

Because of these two technology gambles, the status of the PS3 was pretty risky to begin with. Even so, a well-managed launch with a few good games and no major mistakes would have locked Sony’s position in the marketplace. This is not what happened. There were supply problems, a truly anemic lineup of games at launch, people beating each other up so they can flip the box on Ebay, embarrassing bugs with the video processing and upscaling, and on and on. Gamers With Jobs has a long running thread with devastatingly comprehensive coverage of the “haterade”.

In its latest gaffe, Sony has announced that it will be crippling the previously much vaunted hardware backward compatibility in order to “save on manufacturing costs.” Given that the only thing you might want to do with a PS3 right now is play Final Fantasy XII this seems like a strange decision. Backward compatibility has traditionally been one of Sony’s strongest selling points. Why take an already marginal machine and cripple it even more?

Watching all of this fills you with a sense of awe. Sony’s previous launches, through the glasses of hindsight and nostalgia were controlled and precise, with very few mistakes. They lined up the hardware, the games, and the developers into neat rows and then just marched over Nintendo and Sega on their way to world domination. It makes you wonder how they could get it so wrong this time around.

I think this is the second system effect writ large, even though this is the third time around for the Playstation. The first two Playstations were, to some extent, built by a small subgroup of the company working under constrained conditions. The PS3 was essentially built by all of Sony to be the foundation of future revenue and earnings in several different parts of the company. When you look at the hardware, you can almost see the drool from the engineers who got to participate in this groundbreaking from-the-ground-up redesign of the gaming console. They were told that they would conquer the world and with it be the salvation of the company, and they were given free reign and infinite resources with which to do this. The predictable result is an expensive elephant of a machine with features no one wants and technologies that no one cares about. Rather than studying what they did well in the last two rounds of the console “wars”, Sony seems to have assumed that they are geniuses, and proceeded from that position of hubris to screw the pooch.

Of course, they haven’t lost yet. They probably won’t even lose in this generation. We’ll know how bad things are next Christmas. If the exclusives and third party developers are on board and shipping, the PS3 will be just fine. But I think that chances are good that Sony has lost some of that critical support. The launch screwups, the risky hardware, and the relatively low sales will have people writing games for the PS2, the Wii, or god forbid, the Xbox 360. In any case, it should be an interesting year for those of us who are dorky enough to think this stuff is interesting. Hey, it beats watching politics.