Bringing PlayStation Back to Basics

Sony's Phil Harrison discusses the challenges facing the brand and the gaming world's explosion

Sony Computer Entertainment World Wide Studios boss Phil Harrison has a rather full plate. As the man overseeing SCE's first party offerings, he's responsible for making sure that Sony's own titles are the ones leading the way from a creative and commercial standpoint.

In this interview conducted during last week's Tokyo Game Show, Harrison talks about the challenges facing PlayStation, and echoes SCE group CEO Kaz Hirai's sentiments about bringing the business "back to basics," a difficult task in a sector that's become more about entertainment in general than just gaming alone…

One of the things that Kaz Hirai said during his keynote is that the PlayStation business needs to "get back to basics." Is he implying that Sony Computer Entertainment has lost its way a bit compared to past console generations?

Phil Harrison: Yeah, I think it's a fair observation. Our business is bigger, it's more complex, we have more platforms, you know, there's more stuff—networks, games, movies, music. There are so many opportunities for distraction that it's really easy to make an assumption that the core business that you're in, videogames, is being well-served.

The point I'm trying to make is that Kaz is saying, let's make sure that our core business strategy is working before we start pushing off into too many different new areas. It really harks back to a strategy and a comment that our very first corporate president said when we started the PlayStation business. It was a guy called Terry Tokunaka, and Tokunaka-san was a very smart, very clear-headed thinker when it came to business. He said, "Our strategy is really simple. If we're the creative and technical choice of the developers and the commercial choice of the publishers, everything else will be cool." I don't think he said "cool," but everything else will be, you know, fine. It's important to remember those two things, to be the creative and technical choice of your development partners and they will make the best games on your system and create a business model and a business opportunity for your publishers and your other stakeholders. That is as good as it can possibly be.

Are you saying that the focus on the basic core strength of PlayStation—gaming—has been compromised as Sony tries to make the PS3 more of a multi-functional entertainment platform?

I wasn't talking specifically about PlayStation 3. I was just talking about our business generally, as we've grown into a multi-platform company on four platforms if you include PlayStation Network. We don't have four times the people, so it's something that we have to keep an eye on. What Kaz was talking about in the keynote was making sure that we have great communication and partnership with our licensees and make sure that we provide them with the best tools and technology and listen to what the gamers are asking for and to listen to what publishers and developers are asking for, DualShock 3 being an example of that. I think it's the right approach.

It's interesting how Sony is talking about making relationships with external developers more open. So do you think that Sony has not been open enough with third party developers this generation?

I don't think it's a question of not being open enough. I think we can always be more open to create better partnerships with our developer partners.

Kaz talked about sharing assets and "know-how" and things like that.

Right, and we've developed some interesting things inside the technology base of World Wide Studios that we're starting to share with our third party teams as well. That helps them make the most of the platform, so it's a virtuous cycle.

There were a lot of Western-developed games that were in the montage during Kaz' keynote. As the industry becomes truly global, do you think the Japanese-flavored games from Japanese developers are losing their relevance at all?

I think it's a challenge for any developer wherever they are located, whether they're based in Japan, the US, or Europe to really make their titles globally relevant because the development budgets are so high that you need to have a market for your game in more than your home territory. So [they must market for] Europe plus the US or the US plus Japan or Japan plus Europe. That is absolutely necessary for commercial success. I think that Japan's creativity and innovation is just as strong as it has ever been, and I think that you've seen in the past few years some of the most highly critically-acclaimed titles in our business come out of Japan, both for the PlayStation format and others, and that will continue.

There are—and they are different kinds of games—MMO developers who have said that regional taste is a myth. They agree that you have to tailor games for a certain market but they're basically saying that if it's a good game, the whole world will like it.

I think there were times in the past where we introduced games that were so deeply anchored in Japanese culture, whether it be graphic culture, or music culture, or animation culture, that they were hard to identify with if you were American or European, but that I think is changing for two reasons. One, I think the globalization of digital culture means that consumers can get access to all other cultures' entertainment so easily because of the Internet. And also, the Japanese art style is now an accepted graphic style anywhere on the planet as a kind of iconography.

I think some gamers who grew up during a time when all of the really great console games were coming primarily out of Japan are still adjusting to the globalization of videogames.

I think the big change that has happened, and actually you just kind of touched upon the key differences, that the few that powered the videogame business used to be the coin-op business. It used to be the coin-ops trickling down into the home systems and the coin-op business was mostly centered in Japan, so it was Namco, Capcom, Konami, Taito, et cetera. The coin-op business is still important, but it's not as important as it was in the late 80s and early 90s.

The term "arcade perfect" doesn't really hold much water these days.

Yeah, that's right. Just like the [phrase] "a coin-op, but for the home!" You don't see that anymore in advertising do you?

Now the PS3 price cut. It happened recently and [PS3 sales] still didn't, in the US, pass the Xbox 360 in monthly NPD sales. If a $100 price cut hasn't done it yet for PlayStation 3, what is the next step?

Well we had a great up-tick in sales as a result of that price cut, and these price moves are fairly predictable. Taking your starting and ending price point, you know largely what your increase in sales is going to be. What price moves often surprise us in, actually, is how long the message takes to get through to the consumer. You can change the price at a retailer pretty quickly, but [the sales increase happens] when [consumers] start seeing that price repeatedly advertised to them in the supplements that come out in the newspaper or in the print ads in the local paper or when they actually go to the store itself. So it can actually take weeks or months for the price message to really get into the psyche of the general consumer, obviously not the specialist gamer, but the more general mass market.

The second thing is that price alone is not enough to drive demand for the system. It has to be coupled with software and with demand for, in PlayStation 3's case, the other functions, like Blu-ray movies, network, et cetera. All of those are building up. This holiday season, we're going to see a really tremendous lineup of software from us and from third parties and also the increasing importance of Blu-ray disc as a movie format. So I think that it will come into its own over the next few weeks or months.

So the holidays will be particularly important?

Every holiday season is important. Nobody turns up and thinks, "You know what? We're just going to sit this one out. In September we're just going to kick back and come back in the spring." [Laughs.] Nobody ever does that, as much as I'd like to.

There's the acquisition of BigBig and Evolution Studios, which fit the bill for the first-party driving genre, but are there any other voids in your development strategy that you will fill by studio acquisitions?

Well we're always looking at opportunities, but I can't talk to any particular plans, as you understand. Those kinds of things are very sensitive, but we don't have immediate plans to acquire anybody else. However, the acquisition of BigBig and Evolution isn't just about the franchises that they work on, because we already own the copyright and the IP to those franchises anyway, as we do in virtually everything we publish. It was more about the talent. It was more about the fact that they have great people, they have great management structure, they have great technology. They will apply that very well to the continuation of their franchises, and we can now network that know-how, be it creative, technical or production know-how, into the rest of our organization globally and vice versa. The best practice that we use inside World Wide Studios can now be added to the benefit of BigBig and Evolution and together we get stronger.

Moving on, a lot of critics didn't like Lair. Is that game tracking to expectations as far as sales go right now? Can you comment on that?

I haven't seen the latest sales numbers and it's a bit early to tell. Obviously that's one title, but we've got many, many titles coming out. We think that what stimulates people's purchasing decision is never a single title. It always is the catalogue, the range of titles that I can get for my system [which] appeal to me. Is it going to provide me opportunities to play games in all the different genres that are important to me? That's why I think PlayStation has always had that broad approach. PS1 and PS2 were never built around a single iconic game or a single iconic character. They were always trying to present positions in the broadest possible range of games, and that's the same strategy for the PS3.

We touched a little bit on getting the value message across, and it still doesn't seem that consumers are getting that message. Is Sony doing anything more to push the point home, to communicate the Blu-ray features and other PS3 functions to the average consumer who doesn't read GameSpot or IGN every day?

Sure, there's a huge amount of communication outreach to our existing and potential user base. The channels of communication are as fragmented as they've ever been, if not more so. The methods of engaging people are getting more sophisticated. It's not just about running a two-week campaign on TV and then sitting back and waiting for the orders to roll in. It's a much more sophisticated beast, coupled with a marketplace which is far more competitive than it's ever been, not just in the videogame category, but entertainment eyeballs generally. There's web, movie, DVD, Blu-ray, TV, game, music, live [events], sports, travel. These are all our competitors now.

And Sony's feeling that pressure from non-gaming entertainment even more than in the past?

I don't think it's a pressure so much as a fact of the business that we're in, that the competition for eyeballs and the competition for people's pocketbooks is as intense as it's ever been. I don't think it's any different than what we've seen in the past.

Some third-parties publishers have said that they're moving some development from the PS3 to the Nintendo Wii because of the success that [Nintendo's] having right now. Is that of any concern to you?

No, and I think the smart third-party publishers know how to plan a portfolio based around the strengths and weaknesses of different systems. There's always been a stampede effect whenever there's something hot, whether it's a hot technology or a hot trend. We've all seen in the past when there's a successful game, there's four or five knockoffs that are influenced by it. They're never successful. Nowhere near the same as the original.

So if you're asking me from a World Wide Studios point of view, I don't make games for any other platform, so from my point of view that's an opportunity, because it means that I can have greater market share and greater share of voice with the titles that we do make. From an overall platform point of view, I think the combination of World Wide Studios titles and the smart, strategic investment of key third parties is more than enough to stimulate demand for our systems.

A lot of people have been surprised by the Wii. Have you been personally surprised by the uptake of the Nintendo Wii?

Yeah, I don't remember reading anybody's analysis that called this route two years ago or even a year ago to 18 months ago, but that doesn't mean it's a bad thing. We work in an entertainment business, basically, and entertainment has elements of fashion, and it has elements of the latest cool thing. If that stimulates interest in the videogame business and causes more people to play games, causes more people to go into retail stores and buy games, causes retailers to dedicate more shelf space to the category, and causes game developers and publishers to have a better macroeconomic foundation for their business, that's a win-win for everybody, best of all for the end consumer. It's a virtuous cycle.

And it's really good for Nintendo.


It seems that both Sony and Microsoft often look at the Nintendo Wii and say, "oh yeah, Wii's great, its success is really good for the industry." Those kinds of compliments don't happen too often between Microsoft and Sony. Can you equally recognize the success that Microsoft has had?

It would be churlish to try and suggest that you would wish ill on any company, because as I said, if the business has got a lot of momentum and it's aggressively acquiring new users, new forms of creativity are being accepted in the marketplace and the kind of games that we can make as creators gets wider, that's a great thing from a game designer point of view, from a game creating organization. That's incredibly empowering because it means that people's minds are more open to new challenges. In the 16-bit and the 8-bit era on 8-bit Nintendo and 16-bit Genesis and Nintendo, it was all about 2D platformers, some sports and that was it. And that's a pretty boring place to be.

What do you consider the biggest factor in the PS3 overtaking Xbox 360, if that's destined to happen?

First of all, we don't look at it in terms of short term notches, where we're trying to overtake that particular product or in that particular market. We just look at it in terms of a longer-term strategy. It actually reverts back to the earlier discussion about what we should be doing in our business to be the creative choice of the developers and the commercial choice of the publishers. If, as a game development studio, we can create the most compelling experiences that showcase our platforms in the most interesting way, that generate the most fun games for people to play, people will buy our systems. Now that has to be linked to great marketing, great promotion, the right price points, the kind of rising tide of Blu-ray disc adoption and an increasing adoption of networks. But those things will be fine. They'll all take care of themselves, but we just need to stay focused on building the right game content, bringing those to our systems, and then I'm pretty happy that everything else will fall into place.

So you feel that the PlayStation business is focused right now.

Yeah, I think so. You can see the games that we're releasing this year and you can jump forward 18 months and imagine what their sequels are going to be like. You can see the games that we've got coming out in 2008. Again we've got some incredible powerhouse titles. So yeah, we're just going to stick to our guns.

Before it's here, it's on the Bloomberg Terminal.