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.
Q: PlayStation Plus is in some ways like Netflix, where you pay a monthly fee to gain access to a variety of content. Do you view it that way, possibly as a transition for the PlayStation brand, going from retail to digital? And how do the developers feel about that and the way it might affect the way the revenue is split?
John Koller: 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.
Q: One of the big things that tends to be critical at holiday time is price, and there's been plenty of action from your competitors, with a Wii price cut, and temporary retailer price drops on Xbox 360 bundles. Consumers look for value. How are you communicating value?
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John Koller: 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.
Q: Sony Corporation overall has certainly had its troubles, and it just might not be financially feasible for you guys to drop price on PS3 because of that. How has that factored into the picture this holiday?
John Koller: 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.
Q: With Wii U coming out and Microsoft launching SmartGlass, there's more talk about dual-screen play, and I know Sony has talked about how that's easy to achieve with Vita and PS3, but the sales aren't there for Vita. So if the Vita installed base is so low, how can developers really target this dual-screen opportunity for PlayStation?
"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"
John Koller
John Koller: 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.
Q: In terms of pricing, while a price cut would help PS3, Vita could really benefit. I and most of my colleagues really like Vita, but it's a hard sell in this market with 3DS, smartphones and tablets. Nintendo learned its lesson pretty quickly with 3DS, so will Sony be lowering price on Vita soon? Has the company had that conversation internally?
John Koller: 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.
