House Proud

At E3, Sony impressed attendees with its new PSPgo and Motion Sensor hardware, plus a raft of new software. And now new SCEE boss Andrew House tells Michael French that he plans to back that all up with a renewed focus on network games…

How’s the first month at SCEE been?
Absolutely great. It’s a fantastic team and a business with real longevity. It’s a return for me and it’s nice to be back home. It’s been more interesting for me because now I have a dual perspective of the wider Sony Corp and its perspective on things.
Europe is very diverse, and very different to the States. That lends a great fascination to the job. And it’s a good time to come back. After our E3 announcements there is a real sense at Sony of strength given our line-up.

Anything at SCEE you plan to change?
It’d be very arrogant of me to come in an say ‘Right. We’re changing things.’ SCEE is a tremendous business that was run expertly by David Reeves, and Chris Deering before him.

But one real area of fascination for me has been the Network business. Originally I was charged with investigating how we could do that on PS2. Now on PS3 and PSP we have 24m accounts registered – and it has huge untapped potential.

Networking gaming specifically is poised for tremendous growth. I think it needs something of a renewed focus for us, either organisationally or, more importantly, changing the relationship with the consumer.

I come from a consumer marketing background, so know a lot about that – but it’s a learning experience for us. The PSPgo is the first constantly evolving network device that Sony has put into the market. This puts us at the forefront of learning what that means for consumers and that relationship.

PSPgo, as you say, ties into that closely. What’s the message around this device to the industry, specifically retail, about a platform that is digital only?
It puts us in a position of taking a leadership stance. There is a consumer base out there – my children included – which is very comfortable with just downloading their content. The onus is on Sony, on SCEE, and I think all of the industry, to get in front of that change and harness it, rather than get dragged along by it in ways that other entertainment industries have frankly suffered from.

But at the same time it is a measured approach – this is an extension to the PSP line-up, not a replacement. There is a perfectly viable packaged media business still there for consumers who want that offering. But we have to be exploring new ways to deliver that content as well. We will manage both businesses separately and also manage them transparently for developers and publishers.

So it’s an ambitious approach – but a sensible and measured one.

Do you think the new PSP addresses the problems on that format such as publisher support drying up and piracy?
PSPgo aside, one of the big takeaways from E3 was that there was already a renewed focus from publishers and developers – and first parties around the device – about supporting the PSP over the long-term.

The PSPgo adds to that message and says that from a platform perspective we are committed to it in the long term, committed to innovating and finding new ways to serve the consumer. Yes, digital addresses things like piracy but it is more about responding to a lifestyle change amongst consumers, and choosing to do that at the right time, as opposed to being reactive – holding back might lead us down a bad path.

There’s a clear price difference there, too. Are you charging more for the PSPgo to protect retail margins as they won’t be selling software? Or to cover R&D costs?
Those aren’t the factors. When you introduce a new piece of hardware you have the opportunity to say there is a certain premium that is associated with it, and we took that into account.

As with all hardware launches you look at the business model, the cost structure, and the necessarily level of profitability, and you use that to set the wholesale price. Much as we do with any other hardware.

Who is the target audience?
Our opportunity is on multiple vectors.
If the current PSP, as you move through the traditional cycle of console hardware, moves towards younger owners and the mass market, the PSPgo has the opportunity to appeal to a slightly older demographic.

And there is a significant opportunity for those who currently enjoy the PSP and are looking at upgrading to new hardware. There is also a significant tweens opportunity – with two of my own, I know they are consuming their content that way.

Do you think Sony changed the industry’s perception of the company at E3 The previous two years’ events weren’t the platforms’ best. Has the scepticism has gone?
I think so. The tone of our presentation was one of a fair amount of humility and also some quiet confidence. We struck the right balance between new and different experiences and a view of a networked device balanced with great games people want to play.

I think that you are starting to see, not just reluctance gone away, but a genuine belief in that we offered a ten year lifecycle on PSOne, and PS2, and that PS3 is similarly here for the long term. For a third party publisher looking to ride out the different platform lifecycles, we are a really good bet, and poised for much bigger market expansion in the next year or so.

What about price? Many expected some movement on PS3.
The strategy there is to say that, not to harp on about it, the device has a 10 year lifecycle and that there are issues of cost and profitability. We will make that move on price when all those factors are aligned.

Would people buy more when they are cheaper? Of course. But on the other hand there is an inherent marketing challenge. In Europe I think people do see the value of the machine, the Blu-ray and network services and take that all into consideration instead of just focusing on price. But we will look at price and will address it when the time is right.

You announced next year’s ‘Sony Motion Sensor’ at E3 too. Talk us through the plans for that.
It lengthens the experience and the variety on PS3 even further.

The technology is fun; we showed, very tangibly, how it becomes part of games experiences we know and love, but also adds new ones. The goal for us is to bring in new technology at a point in our lifecycle where we think it’s right to do so and really make a difference.

For years people asked us when we would go into portable gaming – and the answer was that we would do it when we have a revolutionary device that will change the business and I think we’ve demonstrated we have that with the Motion Sensor.

That device and the PSPgo – you’re asking consumers to spend even more on PlayStation hardware. Does that not conflict with the fact we are in a recession?
Clearly the industry as a whole has seen some impact from the recession. I think everybody would agree we’ve held up tremendously well in the circumstances. On balance we are still a good value for money entertainment form, especially in terms of dollars per hour spent.

So I don’t think there is a conflict – you have to be clearly sensitive to consumers’ perceptions right now. I am something of an optimist; I think there will be a turnaround within this calendar year.