Sony halves launch shipment of PS3

UPDATE: 2 million expected initially; European release delayed

By Jennifer Netherby -- Video Business, 9/8/2006

SEPT. 8 | Sony Computer Entertainment’s cutback in its initial shipment of PlayStation 3 players won’t change the rollout of the Blu-ray Disc movie format but it could give game rival Microsoft’s Xbox 360 a key advantage in videogames.

Sony will halve its worldwide player shipment to 2 million units this year and push back the console’s European release to March due to shortages of blue-laser diodes for the Blu-ray drive.

Sony now expects to ship 400,000 units in the U.S. at launch with up to 1.2 million units reaching the U.S. market by the end of 2006. Sony will still launch the PS3 in Japan on Nov. 11 and in North America on Nov. 17.

Although the company will fall short of its initial rollout plan of 4 million players by the end of 2006, Sony said it still plans to ship 6 million players worldwide by March despite the delay.

“In our view, [for] the launch of the PS3, even with the reduced allocation to Europe for the launch date, we will actually have more PS3 and Blu-ray units out there than the original DVD had at launch,” said a spokesman for Sony Computer Entertainment.

Rollout plans for the Blu-ray movie format will continue as planned, Sony Pictures Home Entertainment president of digital distribution and acquisitions Benjamin Feingold said.

The number of PS3 units out this year “will be a significant multiple versus anything HD DVD or standard Blu-ray will have,” Feingold noted.

Other Blu-ray manufacturers say they haven’t been affected by a blue diode shortage.

Panasonic is still on target to launch its Blu-ray players this month, a spokesman said. Pioneer, which now expects to launch its first Blu-ray players in October, also hasn’t been affected by a diode shortage, senior VP Andy Parsons said.

Parsons said player manufacturers are unlikely to be affected by a blue diode shortage because they are manufacturing far fewer units compared to the millions of PS3s Sony is producing.

Neither Panasonic nor Pioneer have said how many players they will ship at launch.

Although the initial shipment of PS3 units in the U.S. isn’t all that different from what the company had previously expected to ship, the latest delay raised skepticism about how much Sony will be able to deliver to videogamers this year.

David Cole, president of DFC Intelligence, told VB that retailers were already primed for PS3 production delays, given that Sony missed its original spring launch plan and faced constant rumors of fabrication issues throughout the summer.

“We think this will have very little impact on the U.S. market,” Cole said. “We had built in assumptions of early shortages, and so far, announcements have been in line with our expectations. It was pretty clear that the PS3, like most popular new systems, was going to be in very short supply this holiday season.”

Should the shortages of Blu-ray diodes persist into 2007, Sony could face a problem of a different sort: Will third-party developers be forced to choose the Xbox 360 as their lead development platform? That system’s November 2005 launch means upward of 10 million units will be in homes worldwide by the end of 2006, and 15 million by June 2007. With more Xbox 360 consumers to satisfy, developers might choose to work primarily on that platform and convert assets over to their PS3 versions.

Which system is the lead is important because games on the secondary system end up looking a lot like the title on the lead platform. The PS3’s Cell architecture is more powerful than the Xbox 360’s, but it requires developers to program to that Cell architecture in a very unique fashion that is not easy to covert to, or from, other platforms. If many early third-party PS3 games end up looking much like the Xbox 360 versions, retailers will have a harder time convincing consumers to pay $200 more for a PS3.

“For multi-platform developers, the Xbox 360 is already the lead platform,” Goodman says. “The question is for projects set to start in the next six months. Developers need to be on the phone to Sony right now for hard answers about how soon PS3 production will catch up.”

Cole pointed out that Sony has been able to ship as many as 20 million units of past systems a year, while Microsoft has yet to show that it can produce more than 10 million Xbox 360s a year. If Sony can match its past PlayStation yields, and consumers are willing to buy, Cole said the PS3 could catch up very fast.