Sony came out with their third gen console, PS3, to much fanfare. Yey! Consumers were supposed to be excited, it was supposed to take out everything in sight and reign as the best system ever! Didn’t happen.
 
Bigger Not Better
In fact, Sony kept delaying and downgrading the level of technology promised, to the point of eliminating backwards compatibility. The inclusion of a Blu-Ray player made the system much more expensive, and production time for the integrated technology parts, created headaches. Yes, this was going to be the best system to hit the market. Best graphics. Best technology. Best this and that. But it wasn’t going to be the best timing or at the best price.
 
And then it launched…in slow motion. Sony believed this was their Hail Mary. A dying company without a consolidated power product set, Sony has been surviving on the few things it does well (TVs and PS2) and bleeding a slow death through everything else (hello! Sony Connect? What was that? Microsoft Zune should have learned a lesson from that).
 
But it wasn’t a Hail Mary. It was a nose dive into a mud pool, while Xbox 360 continued to grow market share and Nintendo’s new Wii left PS3 at the starting gate.
 
The Difference in Consumers
The Internet is flush with what I told you before Christmas – Sony screwed up big time. They thought Bigger was Better, when in actuality, it wasn’t what consumers were looking for.
 
No, consumers were looking for something different. Let’s look back.
 
Nintendo and Sony have been butting heads for years, but Sony really took the lead with the PS2. GameCube was considered a lame duck because the video game industry was really moving into a more mature state. You started to hear about gaming more, in the papers, on TV. It was becoming a legitimate pastime. GameCube was considered for kids. If you were a serious gamer you played PS2 (and maybe Xbox). PS2 was definitely the technology and gaming leader. The culture of hard-core gaming developed and these gamers played PS2. They wouldn’t even look at a Nintendo product.
 
Nintendo’s Learning Curve
The GameCube made money but it wasn’t where Nintendo wanted to be. They used to be number one and they wanted it back. So they did their homework. They (accurately) projected the change in the market. Nintendo realized that the hard-core gaming community was powerful, but a small community. Not sustainable as a target. Market share could only be won in the general population as gaming moved from the minor stream to the mainstream.
 
A lot of factors played in this – factors that Sony should have known. Cell phones, Internet games, Sudoku, GameBoy all pointed to the growing trend of casual gaming and the expansion of the demographic. No longer just basement boys, gamers were all ages, genders, races, and genders – and expanding.
 
The Lesson
Sony made PS3 for their current market – hardcore gamers. The system is amazing, but not perfect. The system is too expensive for the general consumer. The fact that you need an HD TV (unlike Nintendo’s Wii) creates a large barrier for entry for the console and for Blu-Ray.
Nintendo on the other hand, made a general market console. Medium range graphics, games for everyone, interactive and community gameplay, and a price that is half of the PS3.
Two lessons:
 Reduce complexity: The PS3 does so much, it doesn’t do anything for the general market.
Know Your Customer: Nintendo looked at the trend, Sony stumbled on pride of being the biggest.
 
Marketing Conclusion
As you head into your market with a new product or service, look at what you are doing. Consumers have many choices – don’t develop a product based on your whims. Research and find out what your market is GOING to want, not what you think they should want.
 
And keep it simple. It doesn’t need to be something to end all. Wii plays games. That’s it. Just like the iPod makes music and video in one touch. Keep it simple so the experience is enjoyable. It keeps your price down too.
 
Impact: Blu-Ray
The bigger damage here may be to the hopes of studios everywhere. HD DVD and Blu-Ray were touted as the next DVD. I personally don’t think they will be ever as big as DVD because 1. You have to have an HD TV and 2. The difference between VHS and DVD is much greater than DVD vs. Blu-Ray – i.e. no one cares. The adoption rate is very low. The problem is that the grand plan was to seed the market with Blu-Ray players through the PS3. What they didn’t expect is that the hard-core gamers that afforded the system, don’t watch movies, they play games.
The game Sony tried to play was a bad one: they should have researched the playing field. Instead, they depended on the idea that they knew best. And this time Sony didn’t.