The Sony View

The story each month from Sony is “wait for the software to arrive”. Despite the heavily promoted 2007 releases of Heavenly Sword, Ratchet & Clank Future, LAIR and Uncharted: Drake's Fortune, the software play has yet to work. Even during March, Sony's own Hot Shots Golf: Out of Bounds failed to catch on with consumers and sold only 36,200 copies.

Which leaves Sony again pointing to the future and Grand Theft Auto 4, Metal Gear Solid 4, and eventually Resistance 2 in the Fall. Certainly, these titles will probably sell well, but it remains to be seen if they will provide the sales needed to put it ahead of the Xbox 360 and possibly stop losing so much ground to the Nintendo Wii.

Essentially, Sony faces a classic chicken-and-egg problem. The PlayStation 3 is the most expensive system on the market, the most difficult hardware for which to develop, and has the smallest installed base of users. They need a larger installed base to justify the development costs required to make compelling games. On the other hand, they need those compelling games to draw in the consumers and grow the base, thereby attracting game development. Sony's solution to this problem has been Blu-Ray, but even that may not provide enough momentum to make its platform sustainable.

The bright spot for the moment is the PSP, and to a lesser extent the PS2. The former just had its best month in literally years, with robust hardware sales and two top 10 software titles. Where Sony's handheld goes from here in uncertain – are there any big-name PSP games that will attract consumers like God of War and Final Fantasy?

Sony can probably still do well with PS2 system and software sales through the end of 2008, and that will provide some comfort as they continue to push the PS3 forward. Goosing the PS2 market by dropping the system price to $99 should help.