Sony on PS3: "It's not what you buy, it's what you're buying into"

I guess in a word, exciting. For us, we've known that from a content standpoint, that the year was going to fairly back half heavy, and so we marshaled a lot of our marketing resources for this back half, knowing that this October, November, December window is going to be a heavy time for consumers coming into the market and purchasing both PS3s and Vitas as well as the content associated with them. It may be in larger numbers than we've seen in recent years for this particular window.

I think there are a few factors that are causing that effect. Content availability is one of them, but also how people are purchasing and what they're purchasing. So we're really bullish on the holidays. For us, we look at PS3 at 6, almost 7 years into its life cycle, and still launching content like PlayStation All-Stars or the partnership we have with Ubisoft with Assassin's Creed or even Last of Us and Beyond to come. It's still a really strong content lineup that I think people purchasing PS3 this holiday are going to have to look forward to.

"You're buying into a system that has not only a great holiday ahead of it with some of the games we mentioned, but also a great future ahead of it over the next few years"

John Koller

And on Vita equally so with games like Assassin's Creed and Call of Duty and a number of the games that are coming out next year that we haven't talked about. Again, consumers are going to be able to come into the market and know that there's a real wealth of content for them once they get into the platform.

Good question. This is the call of marketing. This is what we all are here to do. I think, taking the PS3, it's not what you buy, it's what you're buying into. You're buying into a system that has not only a great holiday ahead of it with some of the games we mentioned, but also a great future ahead of it over the next few years. We've talked about this a few times, but the opportunity that's in front of us with the God of Wars and Last of Us and Beyond and there are some great third party titles coming over the next few years. This isn't going to be a system that people come into this holiday and then feel like PlayStation abandoned them, and that's important for us.

So when we market to them in all the different avenues, we do so with a larger aggregate content plan in mind. Yeah, you're coming in and buying a PlayStation 3 this holiday with Assassin's Creed, for example, but you know that once you get in and you're playing Assassin's Creed and you're enjoying that game, that God of War is to follow, The Last of Us is to follow, and games like that that are triple-A in any year, particularly in year 7 of a console life cycle. So that's important to us.

And when you look at a fledgling platform like Vita, you have to up that ante even further in terms of really telling consumers what they're buying into. So the number one thing that we keep hearing from people who have not purchased Vita is, "I'm waiting for my favorite game. I'm waiting for my favorite franchise to come." That was a large reason of why we worked on the partnership with Activision and Ubisoft with the Call of Duty and Assassin's Creed titles, respectively.

And that's why we're working with a number of publishers next year to try to get the best content and the best franchises so that once you get into a Call of Duty or an Assassin's Creed on Vita, you've got a number of great titles to follow the next year. So that, for us, again, is another larger content play that we'll be making. It's really a promise. It's a promise you make to the gamer saying, "Look, we love that you've come in through this path. We've got a lot more for you."

Two really good questions. On the first one, the Kevin Butler era and his employment here as a corporate executive, really started under the guise of the "It Only Does Everything Campaign" which we started off really to solve a problem - and that problem in 2009 was that consumers were coming into retailers and they had no idea what the PS3 could do. There was a real misunderstanding. We were seeing people walk out saying, "I didn't know that there was a Blu-ray player. I didn't know that you could play movies on this. I thought it was just kind of this box that plays really powerful games."

So the "It Only Does Everything" campaign, which Kevin Butler helped bring in, addressed those issues and did it in a fantastic way, to a point where we've erased all those awareness issues about the various features. I think the campaign over the last few years has really done that. So relative to his continued employment, we still continue to utilize Kevin Butler messaging through social media and other things and it's been very successful. I don't think we necessarily have to go down the "It Only Does Everything" mantra, however. We've really gotten past that.

To the point that you made, we've really focused all of our attention and all of his attention over the last 10, 15 months to pivoting to a content message because the content is so dynamic and it is so powerful and it really has come now where you look at the lineup of titles that are coming over the next few years on PS3, it's going to be fairly unprecedented in our industry that that late in a cycle you're going to see this type of gaming excitement from consumers but also the type of gaming content that's coming. It's an exciting time to be in the PlayStation 3 world. We've utilized the marketing in a way that I think has allowed us to get past certain points in the lifecycle and now we're at a point where we really want to have exciting content.

And segueing from that to the second part of your question on PlayStation Plus, we agree. PlayStation Plus is fantastic. This is going to be a significant part of our marketing efforts over the next 6, 12, 24 months. This is a big part of what we do. The amount of value that you get from PlayStation Plus is significant. Since E3, we've seen a significant rise in PlayStation Plus adoption and we'll be utilizing this. This is a nice weapon in our arsenal that we'll be utilizing and it's just a great value for a consumer that's coming in. If you look at a consumer that's coming in in year 6 or year 7...you could call them a later adopter and giving them an instant game collection, which is what PlayStation Plus provides, has really proven to be successful. So this is going to be a very important part of what we do here over the next few months. You'll see it at holiday. You'll see it even beyond that with various integrations into our ecosystem.

Some of PlayStation Plus' benefit is getting consumers more comfortable with digital content who may not be. Obviously, there's the current PlayStation 3 consumer who tends to be fairly comfortable with digital and we have a great DLC sales and full game downloads and those types of things. But the new consumers who are coming in in particular, which is what I'm looking at here, if we can introduce them to PlayStation Plus and this instant game collection idea, you're bringing them into a world that may be a bit foreign to them if they don't own a system this current cycle. So that comfort level is important to us, it's important to publishers, it's important I think to most people in this industry that we get them comfortable with digital content. So that's certainly important.

But I think that point is secondary to the broader point of just easy delivery method - when you're trying to provide great content and have that be part of automatic downloads and just make it easy to facilitate. If you're someone coming in a bit later in the cycle, you want easy, you want accessibility, you want immediacy. PlayStation Plus provides that. For us, what we've been working on, is how do we get the right content? The goal is not to throw out a bunch of older content and just kind of hope. We really want to provide great content and whether it's a game that launched a year ago or maybe some great catalog titles or games that just get people started on that particular platform, it's very important. You know it's coming to Vita this fall as well. It'll be very important to Vita consumers, and I think great as a reminder of some of the great catalog titles that are available on both Vita and PSP. So Plus is great that way.

From a development standpoint, our argument has always been that it's a great way to bring your franchise or your brand to a whole new group of people. So that has really been what's incented most of the development community to participate. So if you see games that are entered into the instant game collections, most of the time they're games that have kind of a franchise umbrella over them. They're well known. Maybe they're catalog now, but they're potentially having new iterations or something else coming out underneath that game umbrella. That's important for those developers. We've had those conversations and they've been very fruitful. Plus, in general, is a good future opportunity for PlayStation - it's something we want to invest in.

We've been really strong in our belief that value drives adoption and that the temporary price gains, while they can drive shorter term gains in terms of sales, that they're not as sustainable because they're in and out of market. A lot of what's happening at retail right now is gift cards and kind of shorter term price opportunities, which have a plateau effect. Basically, when you talk to a gamer and you're kind of shifting share around from one retailer to another, it's a bit of a game.

Now, Nintendo did drop their price overall on the Wii. But, in general, we look at the value of an Uncharted bundle or an Assassin's Creed bundle on the PlayStation 3 side and we like that move better because gamers continue to tell us, "We want to be able to engage immediately with content. We want to be able to, out of the box, have a solution, just be able to play."

Similar to what I was mentioning on Plus, incidentally because that's an instant game collection. "We want the immediacy of being able to play now." So we have chosen to go the value route and it's proven to be very successful. We've done this for a number of years but it doesn't mean that we have not looked at price in the past and wouldn't in the future. It just means that currently I think it's important for us in the current market to look at providing the gamer with immediacy, games out of the box and so we've chosen the value route.

We always have to look at the entire business, but in general this is a strategic opportunity for us and ideally you follow what the gamers tell you in this industry. So they have been telling us the values to play that they've been asking for and when we enter into bundles - and we try not to shower the market with bundles, some groups do - we try not to have multiple bundles because we try to have a focused effort and a focused message. And so as an example of that, Assassin's Creed and Uncharted 3 are really the large national bundles that we'll have this holiday. But you want to have that message of value really stand out, and to us that was the best strategic play.

The last point first, relative to Vita. We think that content drives hardware, that content's king and that the game lineup this fall will drive platform adoption. And we're pretty strong in that belief. If you look at a game like Assassin's Creed: Liberation that's coming, it's a fantastic game. Call of Duty is going to be a very strong game, particularly multi-player is going to be fantastic. It's something you don't see on a dedicated handheld device or a mobile device, that console quality gaming opportunity. So we're big believers in Vita this holiday and beyond.

When you talk to retailers or publishers, they are equally looking forward to this holiday for Vita because they're saying, "This is the time. This is what we've matched our marketing resources for and this is what we've kind of had in our back pocket from a content standpoint for some time." And it's not just those two games. If you look at PlayStation All-Stars and Need for Speed and some of these other great games that are going to be launching, there is good content for both owners and intenders alike. So I think this is going to be a good holiday for Vita.

Relative to your first point, we certainly are looking at opportunities from a development standpoint. I think that technology does exist and you're right that you need to have the scale to incent development to create [dual-screen] content like that. But I think we will have that scale and I think there are some very nice tech integrations that are possible. So we'll be back to you on some of those ideas here at some point in the near future.

I don't want to get into anything specifically, but I do want to say, as we've said multiple times, it's a marathon, not a sprint. And it's certainly going to be a marathon for Vita. It's going to be a very good, solid platform for us, one that performs very well. Right now, as I mentioned, we're focusing on content and value and providing the right types of games for the consumer, and I think we've got a good holiday in front of us. So we'll leave the other conversations aside, but I think that for now, we're confident in our position for the holidays.