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February 22, 2007

New PlayStation 3 hardware specification to drive future market growth

Sony Computer Entertainment Europe has announced that the version of the PlayStation 3 to be launched in Europe, the Middle East, Africa and Australasia will use a new hardware specification. Sony also said that the issue of backwards compatibility with earlier PlayStation and PlayStation 2 titles remains. However, this should have a positive effect on the growth of the games console market.

By CBR Staff Writer

At the official launch of the PlayStation 3 (PS3) on March 23rd, 2007, one million consoles will become available. Sony should have no trouble in selling the first allocation of units as the region’s hardcore gamers and adopters of early technology are eagerly anticipating the arrival of the PS3. Sony’s challenge will come in attracting the ‘second-wave’ of purchasers, and, in the run-up to Christmas 2007, price – and availability – will be two critical factors in deciding Sony’s success.

By utilizing the latest hardware, Sony is able to rationalize the number of components required. This move is significant as it will have a positive impact on the PS3’s long-term cost profile. By launching the PS3 in Europe with the new chassis, Sony has at a stroke removed one of the barriers to future price reductions, and, providing it can make enough units available, there is expected to be sustained growth in PS3 ownership as new users seek to benefit from the PS3’s enhanced features and functionality.

The issues related to the backwards compatibility of existing games will no doubt be viewed in some quarters as disappointing. Where the PlayStation (PS) and PS3 are concerned, the backward compatibility with PS titles will be identical to the level found in the Japanese and North America launch models of the PS3.

When it comes to the relationship between the PlayStation 2 (PS2) and the PS3, the situation is slightly different. The PS2 emulation – which removes the Emotion Engine chip and replaces it with software – is the issue that has the greatest impact on backwards compatibility. However, the technological advances and game-play improvements delivered by the PS3 should temper this.

While it’s easy to be overcome by a wave of nostalgia for older titles, Sony’s new console – and the games that have been specifically developed to take advantage of the increased processing power – will be hard to resist for even the most misty-eyed gamer. Sony has sensibly taken the approach to manage the expectations of purchasers from day one, and this issue should not detract from the advance in gaming that the PS3 represents.

The video game console market shows no sign of slowing down, and the arrival of the PS3 makes an already competitive landscape even fiercer. Next-generation consoles utilize an increasing array of features, including online connectivity, enhanced video playback, and the ability to be continuously updated through firmware upgrades. Video game consoles have the potential to become a unified home entertainment system. They can enable households to replace multiple devices – such as a separate DVD, set-top box, music players, and the home PC – with a single system.

Recent Datamonitor research on the video game console market outlines the integral role of online strategies in the next generation of consoles. The report, Exploiting opportunities in the global electronic games sector, expects console functionality to be a particular catalyst for long-term success, with each of the market players looking to expand their downloadable content portfolios to include movies, television shows and music in order to remain competitive.

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