What The PS3 Sales Implosion Means

By Paul Munn | December 13, 2008

When I mentioned the challenges facing Sony on the PS3’s second birthday last month I held up the economic crunch in the United States as a possible monkey wrench in the gears of the system’s slow but steady uptick of momentum. What I never expected was what fell out of the November NPD console sales numbers: growth of PS3’s year-over-year didn’t just slow down in the face of a frankly frightening economic picture, it started going backwards.

Backwards. Backwards after stellar titles like Resistance 2 and LittleBigPlanet have finally landed. Backwards after a year of growing positive press on the system. Backwards in a critical time, the holiday season which should show growth.

With an utterly insane number of Wii consoles sold in one month — 2 million of them — and an exceptional number of Xbox 360s sold at 836k, it’s not hard to see where those console sales went. The PS3’s limped into its third holiday season with just 378k units sold.

Around the middle of 2008 I personally had made my peace with the fact that the PS3 wasn’t going to catch up with the Xbox 360. The best I felt I would see it do is keep pace with the Xbox 360 month-to-month, maybe edge it out every so often, and never really eat into the difference between them. Even that, now, seems astonishingly optimistic.

The current strategy is just not working. Top-quality exclusive games haven’t turned the tide. Highly reliable hardware hasn’t turned the tide. Blu-ray hasn’t turned the tide. Free online play hasn’t turned the tide. There needs to be a new strategy, and I think you’d agree that this strategy will have a positive inpact and could be the only way the PlayStation products will still be sold in 2010.

The new strategy is: bundling.

Sony must bundle more and more games and movies with the system. Promo code vouchers and rebates are the best ways they can do this, simultaneously keeping production costs low and selling the public on the system’s features. Two full retail games (PSN download or disc) and at least two regular PSN games are a must along with at least five PlayStation Store movie rentals would be a good start. The idea is to make these system features — the PSN Store, free online play, the movie store — be bullet points at retail by making them part of the promoted package and to drive up the perceived value of the system. A price cut to $299 wouldn’t hurt this strategy either.

The only other alternative is to cut the PS3 to $199 and the PSP to $99 and bleed out the hard losses until they can get production costs low enough to break even. I think the losses by giving away software — particularly Sony-produced software — would be much lower, especially for Sony download-only titles and video rentals. That’s why I think bundling will be ramped up to let the system stay more expensive than the other two systems.

NPD numbers seen on Gamespot. See also: The PlayStation 3 Turns Two.