LOS ANGELES — In the wake of the press conferences at the Electronic Entertainment Expo, Sony’s stock price rose this week and Microsoft’s fell. That says a lot about who did the best job of explaining their next-generation video game console to the public.
Jon Koller, Sony’s vice president of marketing of home console and handheld platforms, said all indicators suggest that Sony had a better show thanks to its surprise announcements that it would price its box at $399, or $100 cheaper than Microsoft’s, while it would permit gamers to sell used games without restrictions, once again in contrast to Microsoft’s position. But he knows Sony has a tough fight on its hands and wouldn’t presume to do a victory lap yet. We talked about the reactions to the E3 announcements and the big differences in strategy among the rivals.
Here’s our edited interview with Koller.
GamesBeat: What’s your take on the competitive picture that’s emerged here?
Jon Koller: We came here with two things to do. One was to establish ourselves as for gamers and be focused on that. The second thing was to establish PlayStation 4 as the best place to play. I think we did both very well. Those were our objectives, regardless of what the competition did. I think it’s been a good E3 for us. Got a lot of work to go, though.
GamesBeat: I was telling someone that if Microsoft makes the case that their machine and their system is better, it takes them a 30-minute infomercial. Sony right now can just do it in 30 seconds. “We have good games. We allow you to buy used games. Price is $399.”
Koller: One of the things that I think we’ve learned through the years is that the simpler and more focused approach is better, irrespective what Microsoft is doing on their marketing. For us, we look at how clean and simple we can make this. Can we make this as efficient as possible? The trend in the market is much more towards just making it easy for people.
We started working on the PlayStation 4 back in 2007. At the time, there were two things that stood out to us, and still do. That’s immediacy and accessibility. They’re the two key issues in this industry in general. This was before the rise of tablet and mobile. Those two things need to be solved. If you’re not clear about how you’re going to solve both of those things, then the gamer will react accordingly. I think you’re seeing some of that here this week.
GamesBeat: Was there an advantage in going after Microsoft’s event, or do you think you guys pretty much stuck to the gameplan as originally conceived?
Koller: We definitely stuck to the gameplan. It’s a strategy we’ve had for some time. We have had our price in place for a long time. We’ve had our used gameplan in place for a long time. The used gameplan, which a lot of people know about by now – a couple of your interviews even talked about it – is the fact that we want to make it as simple as possible. We don’t want to change what we think is a good system now with the current generation. We said, “It’s not broken. It’s working for us and for our partners. And gamers love it.”
If we have a stance, it’s for gamers. There’s really no other means by which we can change this. We looked at that as a foundation for us. So there wasn’t anything changed in that six-hour period between Microsoft’s press conference and ours, other than me being at the Microsoft press conference and seeing their price point and thinking, “Now we’ve got a tidal wave coming here in a few hours.”
GamesBeat: There are a few things people pointed out as diminishing some of that tidal wave a little bit. You’ll charge for multiplayer gaming on PlayStation Network. Maybe some publishers objected or something, but I guess there’s the asterisk that they could charge fees if they want to for used games. And the PS4 has no camera included, like the Xbox One comes with Kinect. I don’t know if that diminishes the argument or not.
Koller: We clearly don’t think so. On the camera, we wanted to be as open as possible and allow choice. One thing that we’ve tried to do throughout the history of PlayStation is give gamers choices. If you notice, we didn’t announce bundles. It’s a core [unit]. It’s $399. It comes with the console, HDMI cable, and a DualShock 4 controller.
The rest is up to the gamer – what games they want, if they want a camera, if they want another controller. We felt that was a better path. It by no means suggests that we’re diminishing the camera’s importance. The camera, as we showed in our announcement with games like Dream from Media Molecule, will be intrinsic to many experiences. But we want it to be up to the gamer to make that choice and see if they want to include it. It was our goal to get to that $399 price point. We felt that if we got there, we could have a real win. The freedom part, I think, was important.
On your second point, about publishers, we’ve now made it clear, but the system of online passes, charging for online play, is still available to publishers. That’s something they can still do. As a first party, we’ve said we’re not going to do it. But that port is open. What’s not open, and what we’re very clear about, is that we will not charge for offline gaming. That’s not something that we want to do. As the current system exists, it will transition in exactly that way to PlayStation 4.
Your first point, charging for multiplayer, we talked about a bit at the press conference. We’re building a network worthy of next-generation gaming. We view the network as critical, intrinsic to the experience. Again, we’re giving gamers choice. They don’t have to do this. We think that with all the features that are wrapped up into it — multiplayer gaming is part of it, but also instant game collection, sharing, the social experiences – there’s going to be a real consumer proposition. We’ve done a lot of research and testing into all of this. The feedback that’s come back says it’s a positive opportunity. I think that gamers appreciate what the network is going to be.
GamesBeat: It wasn’t quite as much about bringing in a lot of the other innovations that have happened in the rest of the industry – online, mobile, social – this time around. I don’t know if you had already said a lot about that in February. This was mostly about games, but it would be interesting to hear more about some of these other things that are now possible, because you have Unity on the platform, or because you have Gaikai, or these other things.
Koller: There’s a lot more to talk about with PlayStation 4. This is one of those times when we’ve felt that we can give specific focused messages based on the venue and based on who’s listening. For the announce, we went with a heavier tech spec. We went with what our value proposition is. We showed some of the partnerships we have. There’s a lot of other things that will be announced at future opportunities. E3, we wanted to focus on gaming and have that be the key.
The last point I want to make on that is just—innovation, relative to PlayStation 4, there are obviously plenty of things to talk about in the future. There’s a lot in the works. But innovation, insofar as the way that publishers work with us, is one thing we tried to convey here at E3. Things have changed. In the past we would see development that was fairly agnostic. It was very much created across all the platforms at the time. It was up to the marketing teams to try to push that index rate one way or the other, based on a little bit of money that you’d put into the market.
It’s changing now. I think that you’ve seen things like what we did with Destiny, where there’s not necessarily exclusivity, but there are different types of gaming experiences – maybe hours of gameplay or different characters and whatnot – for the various games that we’re partnering with. Those things, we think, will end up influencing adoption on a longer-term basis and rolling up to the fact that we think the PlayStation 4 is the best place to play.
GamesBeat: Do you have an idea of what reactions among gamers rated the highest?
Koller: In terms of just social sentiment or something like that? We do measure quite a bit. There was a lot around The Order. There was a lot around Watch Dogs. Lots around Destiny. The larger discussion has been around some of the policies, as you probably know very well. [Laughs] Content should never take a backseat, because that’s why we’re here. We’re here to give great gaming experiences. The fact that people were getting so excited about the types of ways they can play that are new – on all the new systems, but particularly here on PlayStation 4 – was great.
amesBeat: Third parties and their exclusives these days are very tactical. It used to be that you could get Grand Theft Auto or Final Fantasy as an exclusive. Your main rival has closed the gap on those exclusives and gotten some advantage in some areas, like Call of Duty. It almost seems like there are more ways to do exclusives now, but they’re smaller. I’m not sure that they’re serving the purpose of winning over gamers from one side to another.
Koller: This is an interesting area. When we got into the PS3 years, exclusivity of the kind you noted – “Hey, we’ve got Final Fantasy and GTA and the EA Sports games” – was no longer possible on PS3 and 360 because of cost. You’d have to go to the publisher and say, “I will cover your incremental costs that you would have made on that other platform.” Given development costs now, those P&Ls rarely made sense.
We started looking at things like, “OK, can we add a character here or a weapon here?” Those didn’t move the needle as much, to your point. What did start moving the needle is 30-day early exclusivity on DLC, and in some cases hours of gameplay that might be added to that. We had a partnership with Warner for the original Batman: Arkham Asylum. We called it our “Batman Moment,” because we started seeing that there were changes in the way you could add exclusivity on certain types of features. That would change index rates, change the bias in the market away from what would traditionally—if you look at the market, you could say, “OK, the installed base should be X and the index rate should be Y based on how many units are in the market.” You could change that.
The way we started coming into this cycle is we said, “Let’s think about the partners and the publishers who want to stand for gaming.” I’ll tell you, all of them do. That’s their core business. We lined up virtually everybody. You’ve seen everybody on their stage, and they all wanted to be able to use some type of exclusivity, because of what we stand for. Destiny is a great example of that. You start looking at hours of gameplay and the comarketing portions and the other things that start to move numbers. That’s a better way to do exclusivity now. Simply buying out the game is really not possible.
The other thing I’ll say is, I don’t think many publishers want to anger the other side. If they go into a partnership with one side or the other, they’ll give a considerable amount, but saying, “We won’t launch on the other side” can anger the other platform holder for future games, not just that franchise.
GamesBeat: Is there anything you can explain about the Destiny partnership? Do you think there’s an advantage there?
Koller: Unequivocally, there’s an advantage there. I don’t know if we’ve made it all public. But it is a very significant partnership that will be—it’s not an exclusive. They’re obviously launching on Xbox One as well. But that’s a title and a franchise that is of critical importance to us. When you look at how strong that game will be at bringing gamers over to our network, we think that’s going to have an important role to play.
GamesBeat: You mentioned that the used games system was working OK. I think publishers and developers may have felt like, “Well, where’s our share of that pie?” With the fees issue, this is something that they want to change, I think.
Koller: That’s been a popular—I don’t want to call it a misconception, but if you look at things like Peter Moore the other day, saying that his personal opinion is that used games are good, or Ubisoft coming out and saying they feel the same—one thing we’ll say about used games is that we do believe used games imbue frontline purchase. That wallet is not used for used games necessarily. That wallet can be used for frontline. The incrementality that comes out of that frontline purchase benefits the industry. It certainly benefits the publisher. It benefits the platform holders. It benefits retail, clearly.
We think it’s an accelerant to frontline sales. We’ve been clear about that. There has been recent research about that, too. Used games work. We view it that way, and most important, consumers view it that way. If gamers are saying this is how they enter into our category, this is how they participate, it’s really a challenge for anyone to say that they can’t do that.
We’ve had a lot of research come back from gamers saying that if used games were ever removed from this industry, they’ll leave this industry and go to mobile and tablet. We have no intention of removing used games from our ecosystem. Now you see the reaction when used games are restricted in some way on competitive platforms. The gamer reacts accordingly.
GamesBeat: Back to games, did you feel like all of the reactions you got were expected, or did you expect any of the other games to show better as well?
Koller: We did expect a great reaction to the games, because I think many people are hungry for what the next-generation content looks like. We’ve launched a YouTube channel that unveils specific content as we go through this summer. The graphics are going to be fantastic, obviously, but the gameplay is also so much deeper and richer. The idea that the core gamer is all that’s left in the gaming industry is old thinking. There are plenty of people, millions of people, that can’t wait for the next generation.
GamesBeat: Do you guys believe that the consoles are significantly different, between Microsoft and Nintendo and Sony, as far as what they can do?
Koller: There are specific differences. We’ve been clear that the PlayStation 4 is the most technologically advanced box. That’s true. We also know, from our history, that the most technologically advanced box doesn’t necessarily always win. The best way to build a sense of confidence and purpose in your gaming community is to have the best content and the most clean, efficient, user-friendly policies at a very achievable price. Those were the three things we looked at. We hit on all three of those.
There are philosophical differences that are starting to appear, though. Xbox, very clearly, is saying that they think there’s maybe more of a digital entertainment direction. Nintendo is trying to get back into the core market. We’ve been very open about standing for gaming. It’s our heritage, from PS1 to PS2 to PS3 and now PS4. The philosophical part, maybe, is more interesting than the tech specs and some of the policies.
GamesBeat: Is there any worry that Microsoft has a lot more cash and can win in a price war?
Koller: [Laughs] Well, anybody can look up their cash position. Maybe a better way to look at it is how the companies view the future. Do you view it as a means by which you’re opening yourself up to a wider range of competition? That’s what Xbox is doing. Or do you view it as a focused approach? That’s what we’re doing. We think the focused approach is better. We’re able to talk directly and clearly about our policies and what we stand for.
GamesBeat: Some of the other things you announced in February, like the interaction with the Vita, has that gone over well? Do people understand how they can use that?
Koller: We’ve had a nice initial reaction to Vita this week in the market, I can tell you that. We have some work to do on that as far as clarifying how that works, but it will make Vita a very exciting proposition that I don’t think a lot of people knew was coming when we first launched the Vita. We’ve planned it all along. The operating systems talk to each other. Vita can play PlayStation 4 games through remote play.
The promise of remote play has been there for a long time, but we haven’t been able to get the game portion of that. We’ve had video and music and photos, but gaming – with a few minor exceptions – hasn’t been part of that. Now the technology has advanced to the point where we can do that. The brilliance of that Vita screens showcases the PlayStation 4 content beautifully. I was looking at Killzone on it. It’s incredible. Those who are Vita owners will be very excited by this. Those who aren’t, I think, will view it as an opportunity, a second screen to use when someone else is playing with the PlayStation 4.
GamesBeat: Do you have anything else to say today?
Koller: I want to say one thing. There’s no victory lap at PlayStation. I want to make that clear. There’s a lot of work to do. I say this to my team a lot, and I do it in a sports analogy – the San Antonio Spurs are up 2-1 [over the Miami Heat as of Game 3 of the NBA Finals — Ed.], but they’re not throwing a parade. We’re in the same boat. We have formidable competitors. We had a great week. It’s back to work on Monday.
Image credits: Leonard Lee, Dean Takahasi, and Sony