INTERVIEW: The new ‘Station masters

The momentum appears to be behind PlayStation 3.

Strong showings at E3, Gamescom and Tokyo Games Show, coupled with a promising line-up and a new look console, has seen confidence in the business grow over the past six months.

That’s true in the UK, too. A recent uptick in hardware sales has helped PS3 surpass 5m consoles sold in the territory.

But the firm’s new UK VP and MD Fergal Gara – now a year into his job – is already looking ahead to the 6m milestone. He tells MCV this week that he’s completed the restructure of the UK business and he’s determined to help the struggling retail sector.

So we thought this would be the ideal time to sit down with Gara, along with the new marketing director Murray Pannell and new commercial director Alex Coultate, to discover what the UK market can expect to see from this reshaped PlayStation team.

You’ve been in the job a year. What were PlayStation’s weaknesses and how have you sought to strengthen it?

Gara: One of my simple phrases I use is: ‘our product and our brand are better than our performance has been’. So for me we have been a bit of a sleeping giant. It was about awakening that confidence in the people we had, it was about bringing in some new blood, some new talent and some new ways of thinking. It was about prioritising the roles that we had in the organisation. So we focused in on two of the most basic parts of the business – looking after our products and looking after our customers. So the account team and the product team are two of the key areas that we have bolstered, and we have brought in some new names and faces. So it was really about reenergising the team. We have come through the process, we have those new names and new faces. And we need to give ourselves permission really, to compete harder in the market, to be more successful and to ditch anything that has been holding us back.

You have your new team. You’ve literally torn down the walls at Sony UK. Have you got the team you want in place now?

Gara: Yes, I have got the team I want in place. And no there isn’t more to do. Which is very much the purpose of coming here really, to mark that occasion. I am very pleased with the talent we have got on board – a blend of both existing experience, and in the likes of Murray Pannell broad industry experience across several partners and competitors, and in Alex we have another fresh look at the sales area from a related area, but with a new view in terms of what best practice looks like. You can actually feel the energy going through the business. Because these guys know that they have a lot to do to make sure the Christmas plans are sharp and focussed, and they have come to them relatively late. So they are working at a hell of a pace. But you can see that in the response of the teams. Everyone is sharpening up their plans, they know they are being asked 100 questions about them, so they are thinking about them that little bit harder. I can already feel a positive buzz that wasn’t there only a few weeks ago.

Alex you come from a movie background. What do you feel you can bring to the team?

Alex Coultate (commercial director): As Fergal says. We get great content, and we are talking about how we excite the consumer with that. And my teams job is to have the most brilliant partnerships with our retail partners. Having worked with a lot of UK and Irish retail in previous roles, and having sat on the other side of the table from big film studios and worked with big multi-national brands in the past, you kinda get a view of what good looks like. And what it means to be a partner of choice. We want to be the people that our partners pick the phone up to when they have the opportunity. We want to say yes a lot of the time. The acid test is that we are the people they pick the phone up to, so we can understand their business, we can understand their priorities, we work out how we can hit our goals through their goals. But you have got to have a close relationship with your partners at all time, particularly when the market is tough. I have learnt at the Pictures business at Universal, and I was at Silver Screen before that and a buyer at Asda, just the value of having those really open relationships, those clear joint goals between you and your partners. We are focusing on long-term relationships. This is not ‘buy 500 and we’ll see you in a year’. This is relationship management, not hard sales.

What have you found the relationship is like between PlayStation and retail? Does it need improving?

Coultate: I think anybody who says things can’t be improved is in a bit of trouble. If you ask that question in five years, I will still say I want to improve it. Because we should always want to make things better. The job is never done. But retail has changed dramatically. The landscape has changed so we have you make sure that our plans are appropriate for the landscape at the moment. The job of the sales person has changed dramatically over the past 18 months. It’s not just around volume and price anymore, are many more factors in managing that relationship. So we have to make sure that the account team has the skills to do that, and that we win with every single customer.

Giving it has not been the strongest year for games retailers. What do you feel retailers want to hear when they pick up the phone to you?

Coultate: Fergal is coming up to a year, and I am coming up to 15 days. I will know a lot more next time we have this conversation. I can play the new boy card at this stage. But one thing I am doing is listening a lot. I’m going out and talking to all our customers across the UK and Ireland, and we are planning out what they need from PlayStation and how we can help them. I can make a far better answer to that question when I have finished that exercise. But the act itself of going out there and asking the questions about what we are doing well, what they would like us to do different and what is on the list of what you’d like us to start doing, and we wil throw that into the melting pot and see if we can build a plan around it.

Why did you want to step over to games from the movie side of things?

Coultate: I didn’t leave Universal, I joined Sony. The sentiment behind that is that I was pulled to Sony by the opportunity. There was no issue with Universal. It’s a fantastic company and brand. This is a personal view, but I think you work for people first and foremost. I had to buy Fergal before I bought anything else, and I bought Fergal’s vision and I wanted to work for him and his business. The point is you have got to buy into the vision of the business. We have talked about the changes being made, and I have bought into where Fergal wants to take the business and I feel I can play a big part in that. It is a hugely exciting brand. In the movie world you get ‘I am not going to the movie premiere tonight’ because they have been to 25. And I come in here and I feel like a kid in a candy shop. In just my 15 days, the passion of the business hits you square in the eyes, and the quality of the product knocks you off your feet. When I got my Vita and my PS3 on day one, I thought it was December 25th. And that excitement you should never lose sight of, and it is easy to lose sight of that as time goes of. We should never forget how lucky we are to deal with the products that we do.

Murray, same question. Why have you departed Ubisoft for Sony?

Murray Pannell (marketing director): I echo a lot of what Alex just said. For me, when I think back to one of the major reasons why I joined. In the old days, I was a PlayStation fan. PS1, PS2. That is what I grew up on. And the opportunity to come and work for that company you have always loved, was just too great. Plus, of course, combined with the fact that the potential of the brand is huge. We know the challenges that PlayStation faces. But being part of building and growing the business to new heights, was one I just couldn’t afford to miss. That’s the reason why.

Plus, I bought Fergal. (laughs)

How have you judged the marketing that’s being going on at PlayStation so far? Are you having to make some significant changes?

Pannell: We have slightly re-structured the team over the past few months, and I have been involved in part of it. It is about prioritising our product management and product marketing team. Not losing sight of the important elements of trade marketing and PR, which is still critically important. But I also think investing in understanding our products, driving our products – consumer marketing is critical. We have made conscious and significant investment in that area. That’s yet to fully materialise, but in the future that will stand us in really good stead for upcoming games this Christmas and beyond.

On a broader note, what is the goal for you? What’s the target? Is it to be No.1 in the UK again?

Gara: No.1 is definitely possible in the UK. But of course the timeline you set is another question. And you can measure No.1 in a number of ways. In some measures we are No.1. But to be the best perfomer in the market, to be the partner of choice in the market – and our key stakeholders in this market are both retailers and of course publishers – that is certainly on the short-term goal list. And of course as we look forward, being No.1 on all measures is entirely possible, and to have a team that is capable of being that is my goal. To be match fit and ready to be the winners, if all else remains equal.

You’ve just launched the new PlayStation chassis. How distinct are you being in the marketing for that? Is it clear that the 500GB one is for core gamers and the 12GB one is for casual players? Or is that a reductive way of looking at it.

Pannell: it is a little bit simplistic but broadly speaking that is how we imagine that split will pan out. Although, consumers are fickle, the 500GB offers tremendous value for money, so even for the family market, they may see tremendous opportunities to buy that versions. But certainly how they are positioned, and the price points we expect them to net out, will probably be more accessible at the 12GB level. And obviously with consumers being much more savvy with downloading content, be that gaming or movie content or streaming music services, and all those sorts of things, the 500GB offers that amazing almost unlimited hard-drive space. That is kind of how we are positioning it, but whether that is how it turns out, who knows?

What do you expect to be the best performer?

Pannell: I think we expect the 500GB probably to be the lead, but not by very much.

Gara: Our forecasting shows them relatively equal. But it’s not for us to decide, it’s for the consumers to decide. Yes we are positioning them a little bit separately. If you look at how the bundling strategy is working for example. Wonderbook and The Book of spells is with the 12GB model, as we think that is the best natural fit and the most attractive entry price point for the family consumer. And likewise, you will see the likes of Assassin’s Creed III bundled with the 500GB model, because it is more attractive to the core gamer.

Coultate: But the focus is equal from a marketing and sales perspective. We are writing plans so that both can be a success.

Is the new look for it for new PlayStation owners? Or are you hoping to attract upgraders?

Pannell: From a marketing point-of-view it is about getting new people into the PlayStation family. That is my sense. There will inevitably be people who want to upgrade to the new console who are existing PlayStation 3 owners. But I think the opportunity here is to extend the life of PS3, bring a new, fresh design to it – I think it looks really smart. So offering consumers a new opportunity to come to PlayStation 3, at this stage of the lifecycle when there is still great content coming, with a shiny piece of new hardware.

Gara: And of course it will retail at lower price points this Christmas. We are confident of that. And that’s great, particularly for bringing in this longer-tail of new consumers, relatively late into this cycle.

Is that partly why there has been no RRP set? To encourage retailers to be more flexible on price?

Gara: We are just finding RRP increasingly irrelevant in this market. It just doesn’t have a role. As a former buyer, what matters is your cost price. What’s the point in any supplier indicating or dictating or suggesting a retail price? It just doesn’t really stack up. There are similar-ish cost prices between the 500GB model and the 320GB model, so it is a fresh new look and a bigger value in terms of capacity. And there are more attractive cost prices on the 12GB versus the 160GB. Plus with the plans that Murray and Alex are putting together, there is plenty of exciting activity we can drive with our partners.

You mention that it is towards the end of the cycle. It seems to me that there is more that PlayStation can do – based on your E3 and Gamescom showings with new IPs. It doesn’t look like it’s over yet.

Pannell: Nowhere near. The games that were announced at E3 – Beyond, The Last of Us – are all coming in 2013. There is plenty of life in PlayStation. And corporately they have talked about ten year lifecycles, and PS2 had an extended lifecycle and PS1 had one, even. So we are expecting the same

What are your expectations for Wondebook? How does it compare to a triple-A blockbuster like a Gran Turismo and Uncharted.

Gara: You could say it is in a similar league to Uncharted 3 in terms of sales expectations, yes. Obviously it is in a very different market segment in terms of where we expect it to appeal. But it feels incredibly relevant again at this stage and with the shape of the market we have now this year. We can confidently go out there with the best family play for this Christmas. We have the most attractive price we have ever had on PS3, we have the most exciting new IP that has been in that segment for a very long time, and I think it compares very, very well with the competition.

Is Wii U a serious competition to Wonderbook, do you think?

Gara: Well Nintendo have been a fantastic competitor in that space. They’ve owned it and they’ve extended it and done an amazing job. But they are in an interesting transition phase, so we don’t really see Wii U as a head-to-head competitor particularly in this calendar year. How that plays out into next year could be very, very different. We will watch with interest and I am sure there will be plenty of consumer interest around it as it is introduced. But I do expect that this year we are talking about early adopters and hardcore Nintendo fans. Whereas where we are going with Book of Spells, is with families and those who are not the earliest adopters. I think we are in separate spaces.

Coultate: As someone new to the category, it is easy to think that the world is PlayStation or Nintendo, and it’s quite clearly not. If I had children, and I was going out to but their Christmas presents, I am making decisions on whether I buy them a jumper, a bike, a PlayStation or similar hardware. That purchasing decision is a much broader landscape. So of course we are aware of and monitor what our competitors are doing. But the market is much broader than that. If you have good stuff, and Wonderbook is a fantastic piece of kit, then engage with the customer and you’ll have a massive success.

Because of the book nature of the product, is there a broader number of retailers you’re trying to reach with it?

Coultate: We are talking to lots of people about it. I can’t name names because some deals have been done and some deals have not. But yeah, when you think about the 12GB as a new chasses, and the lower price point we are expecting to see, and when you see Wonderbook that plugs into the biggest kids brand in living memory in its first release, of course we are talking to as many retailers as we possibly can and give as many people the opportunity to buy it as possible.

You have some big titles for Vita this Christmas. What else do you need to do to give that console that lift off this Christmas?

Gara: Well there’s three things we are focused on. First of all content. The content is in a miles better place now. So two key titles just out, and several more to come. So that’s a tick in my book. The next thing is awareness, so advertising. We have stepped up our media campaign over the last few weeks and we have seen a good solid step-on in the performance of the console, which is every encouraging. And the last thing is price and deals that we do for consumers. And that’s a part that Alex’s team in particularly is working hard on right now, to make sure there are great offers in the market that combines great content.

Is Vita far off from how you wanted it to perform?

Gara: Well we’d love for us to be further on, and I’m always going to say that. And it’s certainly true that the release schedule for Vita was rather like the release schedule for the industry this year, is that it did dry up during the summer. We had that incredible summer of sport and very little focus on gaming. But the great news is that we have got the content in place. We have got the cash to invest in terms of marketing and retail to really ignite it this Christmas. To start judging a console before it has had its first Christmas is preposterous really. We can have a meaningful chat about that after Christmas. But we are giving it everything we have got between now and then.

Do you feel you have got quite a big role in trying to turn around the market this Q4?

Gara: Well if you look at the numbers for the year to date, the market is declining. But any of the decline that we are seeing is the slowest of the lot. And if you look at the cash value in the console market because of the new introduction of Vita etcetera, we are in growth. It is a privileged position to be in. But it does mean that if we weren’t delivering that, how much worse would things be? We are very confident in our products. PS3 is very much alive with a significant refresh and a strong line-up of products both pre- and post-Christmas. So that’s great. And of course Vita has plenty of room to blossom further from now on in. There is a responsibility on us to help the market and work with our retail partners. Because they need that fuel in the tank.

How has the relationship do you think between PlayStation and the industry altered since you’ve taken charge?

Gara: The feedback I had was that the relationship was quite passive and relatively standoffish. We had become complacent. So we have tried to reach out there, listen and engage. And when we say listening, we don’t just mean the people in the Head Office, we have also listened what the store managers have had to say. Some of those conversations have been sobering. But the important thing is you have these sessions, and when it is really sobering it is better, because you don’t forget these big strong messages. So that has been a huge part of this first year. Listening to various partners, publishers, retailers, store staff and consumers. And try and then work out how we can do better. We are definitely moving forward. Now with a refreshed team, I believe we will have a better team ethos in how we work together. And when you put all that together, things will move on and are moving on already.

What is the most sobering thing you’ve heard?

Gara: When retailers came back with what they think of their product, and it is full of preconceptions and misconceptions, that was scary to me. Because if you are trusting retailers to go and advise consumers and to represent your product on the frontline, and there knowledge is clearly deficient, then that means we have done a bad job.

Coultate: We have a real opportunity to give frontline staff in the stores all the information they need to keep the consumer informed. And I don’t think we have done that well as we could in the past.

360 stole a bit of a march on PS3. Do you think that caused a problem within retail where store staff was used to recommending Xbox and making that more prominent? And that left you playing catch up?

Gara: Certainly my view from the other side of the fence, was that there was certainly more energy, passion and commitment from some of the other suppliers when they came to see me. That determination and that will to win from Sony was a bit off the pace. So putting that energy in there, that desire to compete, the desire to win, the desire to do the best possible job you can for your retailer, as an account team, that is something where we can raise our game.

In terms of publishing partner position. Was that the same thing? Did PlayStation come across as being a bit standoffish?

Pannell: It was a slightly similar vibe from publishers and retailers. I’ve asked my team to focus much more on our relationship with local third party partners. Quite often there’s not much we can do if there’s a big global deal, and we will take advantage of that. But even just having those relationships. Being more open and more communicative, I think unless you have that conversation, then they are not going to think about you at all. If there’s one person talking and no-one else, then who are you going to listen to? We just need to be more open and honest and communicative with all our partners, and we have a great opportunity to do that. We can certainly do more of it.

You have that deal with Activision and Skylanders, Ubisoft and Assassin’s Creed and EA and FIFA 13. Does these sort of partnerships make a big difference to your numbers? Or is the focus on exclusive content?

Pannell: From a consumer point-of-view, the more they see PlayStation the better. For the brand and the platform. Especially when it is tied to the biggest of games that are in the marketplace. So I do think it makes a big difference for us. And it certainly helps our relationships with third parties in certain areas.

Gara: It also gives us scope at retail to be more creative in how we bring the software and the hardware together, and how we leverage that launch moment for the benefit of PlayStation and selling consoles, which is the foundation of our business.

A couple of years ago these games were all promoted heavily on Xbox. What’s changed? Or is it just there are some games more suited to PlayStation than rival platforms?

Gara: I think there is some differences in what products suit. Publishers, if they want Europe, they need PlayStation. And I mean the entirety of Europe including the UK. So there is a big appetite to work with us, and I think in the UK we need to make more of that desire and to make it a competitive strength for us in the UK to a greater extent than we have in the past. Yes, some franchises may work a little better than others. But I think there is a conversation to have with PlayStation on almost any franchise that’s out there because we are a broad church. And I do think it is about that detail of the local execution that will give us a bit of an edge, give us a bit of a point-of-difference and excite more consumers.

What would you say is the most significant change you’ve made to PlayStation so far?

Gara: Fresh blood is probably the key underlying factor. And it’s not just these two guys, because we have fresh faces in several levels of the business. And they may come from other departments within our organisation, they may have come from external organisation. Some people internally have got great opportunities and have moved internally within the wider organisation. But the net result is that we have a good deal of change for various reasons, and we have lots of fresh blood within the business. And that is bringing new ideas and new energy into play straight away. But we have kept enough of the core experience, with enough knowledge and enough consistency. You can go too far with this sort of thing, and throw the baby out with the bathwater. But I am confident we have gone as far as we could without being reckless.

Coultate: It is about more as well. From a UK sales and marketing perspective, we have fresh faces, we have experience, and we have more faces as well. There won’t be many businesses investing like we are in such times to build relationships. We have put our best foot forward, and not just with fresh faces, but with more resource.

It does appear some of your rivals have consolidated, are knuckling down a bit and therefore have become a bit quieter. That must present an opportunity?

Fergal: We can’t speak for others. But what we can say is it really is an exciting team that has come together now. It really feels like we the right people. There will be a little bit of learning on the job, a little bit of nervous energy as we run fast from a standing start. But that is exciting. There is a real will to win. After a few months that have been tricky in ways, we are in much, much better shape now.