Japanese gaming guru Hiroyuki kicked off the Sony-slam with a question: “How many of you own a PS2?” Hands shot up all over the room. “What are you playing on it?” asked Hiroyuki, who goes by one name. The audience of 50 gameplayers and designers fell silent, then succumbed to giggles. “Dragon Quest for PS1,” someone finally offered sheepishly, referring to a game for the first, supposedly outdated PlayStation 1. “DVD movies!” a second voice shouted. With that, the geekerati erupted in derisive hoots and hollers.
It is way too early to call the PlayStation 2 a joke. Sony had always aimed to introduce the PS2 as a game machine and a DVD player, targeted mainly at young gameplayers. Then in year two, Sony planned to transform the PS2 with add-ons like a hard drive and a keyboard into an all-in-one Internet device, and a must-have gizmo for adults the world over. In Japan, a nation that has been slow to embrace the personal computer, the PS2 was even hailed as the platform that would carry the country into the Information Age. That may still happen, but there’s no question that Sony is tripping up on step one–the effort to dazzle millions of young Japanese gamers.
The numbers tell part of the story. Japanese have purchased about 3.5 million PlayStation 2s, but there are signs that sales have leveled off. The main complaint is not with the machine itself, but with the 82 programs written for it so far, critics say. The box was rushed to market too soon, so designers didn’t have the time to create games that exploit the computing power of the PS2. The result: many new PS2 games look very much like old computer games, and customers are left wondering what they shelled out $370 on the new console for. Analysts had predicted a runaway success, but now they are forecasting Sony losses of more than $200 million on its game business in the year ending next March–its first such loss in years. “The model of the gaming business is that you lose money selling hardware, then make money by selling games that run on it,” says Kyoko Murakami, a senior analyst at e-Research in Tokyo. “Sony hasn’t been able to do that with PS2.”
Sony’s hopes for a big Christmas hit are melting. Problems at a plant in Nagasaki led to shortages of the graphics synthesizer that produces the gee-whiz PS2 visuals. Sony insists it has solved the problem, but outsiders aren’t so sure. The disruption forced Sony to delay and cut planned shipments to the United States and Europe by half, to 500,000 units. In recent weeks, when the boxes finally went on sale in New York and London, they flew off the shelves. But that is how the PS2 got started in Japan, before customers started to discover that the PS2 software is not equal to the machine. In a Nov. 27 article titled “PS2’s Big Miscalculation,” the influential Japanese news magazine AERA exposed the software flaws and warned that PS2 sales may have peaked in Japan. Sony insists sales are meeting expectations. But analysts warn that failure to solve the software shortage could derail Sony’s global plan to sell 100 million PS2s by 2005–and allow competitors like Nintendo, Sega and Microsoft back in the game.
So what happened to PlayStation 2? Launched in 1994, the original PlayStation was designed to dethrone the reigning king of gaming machines, Nintendo’s SuperFamicon. To compete, Sony courted independent designers, many of whom bristled at Nintendo’s efforts to micromanage their work. Sony granted designers technical support and “a very easy creative environment,” says game-industry journalist Kenji Ono. These artists created hot action and fantasy games that catapulted PlayStation 1 to the top spot in an exploding global game market. Then came the sequel. When Sony began laying plans for PS2, it cut out small design houses, and tightened control of software development. “In short,” says Ono, “Sony has become Nintendo.”
Complicated technology made matters worse. To build games for any new machine, creators need tools, such as code-writing aides and designing programs, known as middleware. Sony’s middleware for PS2 arrived late and much of it was hard to use. In desperation, designers developed tools of their own. That raised costs from $1 million to as much as $9 million per game. “It’s like telling a movie director to start by making a lens for his camera,” says Kazunari Yonemitsu, a 36-year-old game producer. Many games failed to tap the power of the PS2’s vaunted “Emotion Engine” processor, and some even came out with rough edges and jerky graphics.
Not surprisingly, many of the pioneering PS2 titles are flopping. In fact PS1 is still the hotter machine among gamers. Japanese consumers have purchased nearly six games for every PS1 sold so far, but just over two games for every PS2. According to Famicon Marketing Systems, which tracks game sales, Japan’s most popular PS2 title, Ridge Racer V, ranks only eighth in sales. The first, second and fourth best sellers are all PS1 games. “There has not been one killer PS2 title,” confessed a game designer at the coffeehouse forum.
Software companies that design for the PS2 are suffering. The top designer, Namco, has sold nearly 800,000 copies of Ridge Racer V since the game hit stores in March. Normally that would be considered a respectable hit, but not after the blockbuster hype for PS2. Namco has seen its share price tumble 60 percent since March and recently announced that it expects to report its first-ever yearly loss ($19 million) since going public in 1988.
Sony has at least tacitly acknowledged the problem. Hoping to gain a firmer handle on its games, the electronics giant recently turned four of five affiliated companies that design for the PlayStation 2 into in-house design teams. The aim: “bring out PS2’s power and push the envelope in terms of entertainment content,” says Benjamin Gurnsey, spokesman for Sony Computer Entertainment. By March one Sony design house, Polyphony Digital Inc., is expected to unveil a new car-racing game called Gran Turismo 3. Alan Bell, a games analyst at Credit Suisse First Boston in London, calls Gran Turismo 3 a crucial “test case.” PS2 “is all about fast video and visuals” that are “uniquely suited to high-octane race-car games,” says Bell. “If Sony can’t do it right themselves, who else is going to?”
Sony can only hope that the future for PS2 is not written by disappointed gamers. “I waited in line on launch day and ordered seven machines to make sure I’d get one,” says Masaya Yuki, 25, a self-described game fanatic. “Yet I am very unhappy with the games now on the market.” Is he waiting for better PS2 games? No. He’s playing imported titles on his Japanese Gameboy, made by Nintendo. It’s this year’s “coolest thing,” he says. That’s bad news for a box that claimed to be the coolest game machine ever, and so much more. Now all Sony can do is shoot for Christmas 2001.
