Five years ago, the PlayStation 2 dominated the gaming market. Though under the hood it was less powerful than most of the competition, its vast library and practicality as a DVD player put the black box in almost every gamer’s living room. (While some attribute the PS2’s success to being first on the market, this is untrue, as the less-successful Dreamcast predates it by almost a year.)
What really helped the PlayStation brand was a huge budget, a long list of exclusives (Tekken, Twisted Metal, Metal Gear Solid*, Grand Theft Auto*, Final Fantasy*, etc…), and brand name recognition. By the time the PS2 hit the market, “PlayStation” had become synonymous with video gaming, superceding even Nintendo. In 2003, after dominating the console market for several years, Sony revealed the PlayStation Portable, a revolutionary portable entertainment device that Sony dubbed the "Walkman of the 21st Century." Like the PS2, it could play games with full 3D graphics, DVD quality movies, and digital music. The PlayStation 3 was announced in 2005, promising a revolution in home entertainment through the use of Blu-ray.
(*Series were "timed exclusives" that eventually appeared on other systems after several months to a year.)
At some point between then and now, people stopped caring about PlayStation. Microsoft took over as the default choice for hardcore gamers with the Xbox 360, and Nintendo jumped from last place to first this console generation, while PlayStation took their place at the bottom. How did this happen? Why did this happen? And can the PlayStation bounce back before it becomes the next Sega?
Sony became infamous for over-promising and under-delivering. The PSP was supposed to be a groundbreaking piece of technology that would replace the Game Boy, iPod, and portable DVD player with one unit. It would have PS2 quality graphics, analog controls, and a library of games & movies that rivaled its console cousin. Instead it became a bulky, fragile piece of equipment that had a short battery life, graphics that fit somewhere between the Nintendo 64 and the Dreamcast, faulty control inputs, and not one, but two expensive proprietary media devices: UMD and Memory Sticks. UMDs were slow, pricey, and inefficient, and if you already owned a movie on DVD and wanted to watch it on the PSP, your only options were either to buy it again, or watch it as a low resolution 368×208 mp4 file.
Then we have the PlayStation 3, which has been a media debacle from the get-go. First, there was the Killzone 2 "in-game footage" fiasco at E305, then there were the system shortages at launch, lack of games, multiple SKUs, backwards compatibility (or lack thereof), the HD format war, shoddy online functionality, not to mention Sony's arrogance (suggesting that gamers should have to work overtime so they can afford your product is probably not the wisest business move). Sony has managed to dig themselves more holes than Stanley Yelnats. In the past five years they've lost exclusive licenses, billions of dollars, and the trust of gamers and game press everywhere. Is there any way for them to recover?
The first step is ditching not-yet-established proprietary formats. They lucked out with Blu-ray — using the PS3 as a trojan horse for their next-gen format gave them an edge over the cheaper, more consumer-friendly HD DVD — but the Hi-Def war hurt PS3 sales by appending the question of "will it become obsolete?" UMDs were worthless from the beginning, and Memory Sticks were, and still are, the most expensive flash media cards out there.
Second, keep prices down. If the PS3 had been Sony's 1st entry into the gaming market, it would have died like the 3DO. The average consumers, and especially the average consumers' parents, are not going to shell out $600 for a game system. $400 for the 360 was even a stretch. Fortunately, Sony is finally addressing this issue with recent price drops to the PSP and PS3, though the PSP Go is still outrageously overpriced.
Third, improve online functionality. Why is it only Microsoft has gotten this right in a decade of online gaming? If Sony's going to compete in an online market, they need to have a reliable infrastructure.
Finally, ensure backwards compatibility. The PS2 had the largest library and install base of all the last-gen systems — it continues to grow even to this day — and was backwards compatible with almost all PS1 games. Current PS3's are only backwards compatible PS1 games. That means no chance of selling your PS2 when you upgrade if you ever want to play your old games again. Take a hint from Nintendo: The Game Boy Color could play Game Boy classic games; the Game Boy Advance could play GB and GBC games, the DS can play GBA games. Every Wii not only has Gamecube hardware, but controller and memory card ports as well.
Sony and the PlayStation brand still have lot of potential, but they have got to start looking at their business practices from the consumer end if they want to remain relevant for another generation.