Disruptive pricing requires backing behind it

Here’s something I didn’t expect to see Shuhei Yoshida to use anytime soon; disruption. He jokes that that when the PlayStation 2 was released, it had no games to it, though Street Fighter EX 3 was published week before the console was launched.

The PS2 essendtially broke the barrier between previous home media formats like the VHS, Beta and Laserdisc and the DVD by introducing an affordable, competent player to the mass markets. An overnight industry revolution, some had put it back in the day. Sony had a product that wasn’t just cheap, but decently competitive too. It wasn’t the cutting edge player many people nowadays seem to think it was, but it was good enough. In fact, it was pretty terrible, and using the PS2 as a DVD player would kill the laser unit incredibly fast. This was part due to how it worked, and part due to Sony using cheap lasers units for their consoles.

Sony never learned from this. While it can’t be denied that the PS2 gained its initial success from the DVD market, the games themselves later made the console what it was. They were hoping to replicate this with the PlayStation 3 with the newfangled Blu-ray, but that didn’t go as expected. The stupid high price was made fun out of and the BD format took years to mature. It did manage to kill off HD-DVD though, so one win for Sony there. First time they beat someone in a format war, though this was also the time when people said that in few years digital-only content will be taking physical format for a ride. It’s been a slow burn with digital taking over the physical media, more than a decade at this point.

Yoshida seems to be missing something that’s been going over and over in the video game industry with his remarks about the PS2’s launch. An affordable, good enough machine that does its job well, but bleeding edge, will eclipse its competitors. There’s no large science behind it, people just dislike investing into an expensive machine. DVD players around the change of the millennium were stupendously expensive at their highest quality. They were, however, still cheaper than the Laserdisc by that point.

When Nintendo says that they’re not interested in doing or knowing how their competitors do stuff, Sony seems to be ones that don’t really learn from the history of an industry they’re not part of. Yoshida saying that they wouldn’t know how industry manages shift from one console to another spells us that they didn’t look up anyone who had been working with Sega, Nintendo, Atari, Hudson or NEC for some information. It sounds more like they went in cockeyed and hoped for the best. After all, the PlayStation had been the victor of the previous generation, beating both of its two main competitors. On one hand, Sony was in pressure to deliver a proper successor to their maiden console, and on the other hand they knew they had build a consumer base in the video game market that would surely follow in suit. Sony’s history with home media and electronics after was strong at that point, but after that it seems like video games took its toll on the company and they couldn’t compete with the current marker forces.

The Blu-Ray was the only time Sony won a format war, and even then it was more because there were only one other competing format. HD-DVD didn’t market itself very boldly, and most of Toshiba’s pricing was lacklustre to say the least. While it got decent studio backing, that backing came in too late compared to BD. Sony managed to get Warner Bros. support BD in an exclusive manner, and WalMart seeing writing on the wall, stopped offering HD-DVD due to lack of sales. Furthermore, the whole support Microsoft gave to the format to fight Sony’s BD was incredibly poor and never went anywhere. It’s more likely that PS3 didn’t contribute to BD’s win streak one bit. Sony’s history with their formats like the DSD, AVCHD and MiniDisc weren’t all that successful, though I must say MiniDisc still saw some success that should not be understated. Nowhere near the standards of the compact cassette or CD, but still.

Reiterating that you can’t simply disrupt a market with a cheap price. Cheap price in itself doesn’t tell anything about the product outside that you can buy it for less money. Disruption requires meat behind, something more substantial that drives the consumer towards a product. A relatively competent product with lower price than its competitors would be more on point with this. Something that larger amount of consumers can get their hands on and experience the higher fidelity of things is that sort of sweet spot, but it’s not easily attainable. It’s much easier to produce either trash products you can sell for large profit margin even when the price is lower than most, just as it is easy to put all the bleeding edge components into polished designed shell and sell it to high-tier enthusiasts, like hifi snobs, to enjoy.

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