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Timeline: PlayStation 3 versus the World

How inflated egos and gargantuan ambitions were hacked down to size

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November 2006: The Stuttering Start

It had the hallmarks of a console launch but not quite that of a PlayStation launch. Many hundreds had waited outside stores across Tokyo and Japan, but not thousands. It's hard to imagine a games console replicating the sheer hysteria of the PS2's One Million Weekend at the Akihabara in March 2000, but PlayStation 3 was the heir to that system and, from launch day onwards, lived in its shadow.

The system sold out on its opening weekend with 88,000 units shifted. Five months prior, Kutaragi had to relax investor tensions by promising that Sony would be ready to produce a million consoles a month by November, and it would have shifted six million machines by March 2007.

But by the time that deadline passed, only 3.5 million systems had sold. One PlayStation executive, speaking to CVG, said that of all the challenges PlayStation had gone through over the past seven years, that super-high price point hurt the business the most. Between March and June 2007, Sony sold just 700,000 PS3 units worldwide. It marked the lowest period of business at PlayStation since 1995.

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Sony was unable to meet its shipping quota for the US launch, 40% of systems were not available on the day

A strong launch across the US in September 2006 (with 400,000 units on the opening weekend) was more encouraging, but that month the company revealed a far bigger setback. Due to apparent diode inventory problems, the PS3 launch across Europe was delayed until March 2007 across Europe.

"This seems to be the continuation of a series of bad news," said analyst James Hong at the time.

"People were prepared to wait for the PS3, but delaying its European launch so they miss the Christmas season is just so not good."
Between its debut in Japan in November 2006 and January 2007, Sony's sold just 534,336 PS3 units, falling far short of its goal of one million sales. By contrast, sales of Nintendo's Wii - which went on sale three weeks after the PS3 - reached 1.14 million in the same period.


April 2007: Long Live the King

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Kutaragi became Honorary Chairman of SCE in 2007

First there was the internal rumour that Kutaragi, during his brief spell as head of the entire consumer electronics group, had secretly used money from other divisions to help pay for the development of PlayStation 3 - effectively hiding the true cost of PS3 development for a number of years.

By that point, Kutaragi no longer followed company lines. Perhaps feeling stranded after months of in-fighting at Sony, Kutaragi was no longer putting the business' interests first when speaking publicly. He triggered outrage and far-reaching accusations of hubris when describing its closest competitor, the Xbox 360, as the "Xbox 1.5".

Later, came the comments from Sony executives. One of its most senior directors, speaking off the record, commented that Kutaragi "only opens his mouth to change feet".

In March 2007, Kutaragi stunned the Sony board of executives with news that the games division was about to lose $2 billion for the fiscal year (each PS3 cost about $700 to develop, meaning that Sony was selling it at a loss even with its remarkably high RRP).

Then came the unthinkable - an extraordinary measure from a company so embedded in Japanese traditions. Sony Computer Entertainment effectively dismissed Kutaragi on April 26, 2007. The father of PlayStation, after twenty years of driving the business, was seen to be taking it backwards.

By that stage, Sony had invested an estimated $3 billion in the PlayStation 3 project. There are honoured traditions in Japan about companies holding onto their senior executives until the very end, but there was a line.

[Further reading: Farewell, Father - GamesIndustry.biz]


May 2006 onwards: The PR Disasterclass

It only made sense when you took a step back and looked at the bigger picture: PlayStation was a non-stop commercial success for eleven successive years and its executive circle hadn't faced public criticisms before.

These people may have been masters at success, but were amateurs at managing failure. For two years following E3 2006, PlayStation bosses would respond to common complaints with perplexing and berserk statements.

They were all at it. While Kutaragi was insisting to one newspaper that people would work the extra hours to afford a PS3, Kaz Hirai boldly pronounced to another that "the next generation doesn't start until we say it does". Even Phil Harrison, a games executive with a tremendous PR acumen, made some noisy clangers; like the time he was asked why PS3 pads didn't feature rumble control and suggested that force feedback was a "last generation technology".

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PlayStation 3's poor early sales were not taken as a warning either, with Hirai setting the agenda in early 2007: "This is not meant in terms of numbers, or who's got the biggest install base, or who's selling most in any particular week or month, but I'd like to think that we continue official leadership in this industry".

There was then a moment, several months later, when Sony could no longer ignore the growing body of complaints from developers regarding the problems and complexities of developing for PS3.

Hirai's retort: "We don't provide the 'easy to program for' console that [developers] want, because 'easy to program for' means that anybody will be able to take advantage of pretty much what the hardware can do, so then the question is what do you do for the rest of the nine-and-a-half years?"

It really had become a buyer's market for soundbite-seeking journalists for two years following the E3 2006 press conference. PlayStation created this bizarre cacophony of troll-quotes from its most notable executives - people too senior to be given a dressing-down internally.


April 2011: Hacked and Humbled

Kutaragi's shock resignation left Hirai with a duty to become PlayStation's second ever Group CEO, giving him immediate authority to change the direction of the business. But reinventing a company that was losing billions of dollars was no straightforward task. Hirai said years later: "I thought turning around the PlayStation business was going to be the toughest challenge of my career".

And he was going to have to do it without the help of one of his most talented executives. In February 2008, Phil Harrison resigned from Sony. Harrison still, to this day, has not spoken publicly about his resignation.

Hirai needed to push onwards. The key plan was to build a PS3 system that was profit-positive; a console with a redesigned interior, fewer parts overall, a cheaper Cell chip and lighter, inexpensive plastics. By the time it was released in September 2009, there was little suggestion that the PS3 could outsell all.

Then, in April 2011 - and by the time Sony had finally steered PlayStation 3 in the right direction, a group of hackers infiltrated the PlayStation Network and illicitly obtained sensitive information about 77 million customers.

It was said to be the biggest online hack in modern history; a career-defining security and PR catastrophe that made the front pages around the world. The consensus was that Sony's standing among the public would never reach the same position again.

The PlayStation Network was down for sixteen weeks, yet in some ways it had helped the business. At a press conference in Japan, Hirai offered a profound apology and lengthy bow - a symbol of deep regret and humility. It was a foretoken to a new approach for PlayStation; After five years of deeply harmful arrogance, Sony had finally - and in front of the world - admitted its shortcomings.

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Feb 2013: Too big to fail

Two years since that transformative hack on its network, Sony has finally deflated its head - it is a combative company again; wary of mistakes, ready to fight for every inch, constantly thinking about acquiring customers. Its PlayStation Plus service in particular has been unanimously praised as a significantly more reasonable alternative to Xbox Live Gold.

PS3 has reached 70 million sales worldwide and this is, considering its track record, a failure. The company has fallen from clear market leader to a fighter for third place. This was not the future Ken Kutaragi envisioned when, ten years ago, he daydreamed about Cell technology blanketing the earth.

After two extraordinarily successful console cycles, Kutaragi's ambition had become too vast to manage. Now the heads of PlayStation have a completely new task at hand: PlayStation 4 will be announced in a matter of hours from the publication of this article.

The story of PlayStation's fall is over. Whether it has learnt enough hard lessons - after years of gloom and disorder - will determine whether the firm's next chapter is one of redemption.

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