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Thursday, May 11, 2006 - Page updated at 12:00 AM

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Electronics Entertainment Expo

Sony computer exec says PS3 worth price tag

Seattle Times technology reporter

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The 2006 Electronics Entertainment Expo

What it is: The annual industry-only conference for the video-game business.

When and where: Conference and workshop sessions run Tuesday-Thursday at the Los Angeles Convention Center. The expo runs Wednesday-Friday.

What happens there: About two-thirds of the 400 exhibitors will show off the games they're preparing to release by the holidays. Retailers will get a sneak preview of the hottest games of the year.

What to expect: The next-generation video-game systems from Sony and Nintendo will be the talk of the show. But increasing attention is directed at mobile gaming; half of the exhibitors will launch a title for a handheld platform.

Who's selling earplugs?: Walking the show floor is like being trapped in a Best Buy for days. There will be 5,800 flat-screen computer and television screens, all blaring at once.

Source: E3Expo

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LOS ANGELES — Kazuo Hirai, chief executive of Sony Computer Entertainment America, showed off the graphics and technical horsepower behind the PlayStation 3 this week at the Electronics Entertainment Expo.

He also dropped some unexpected news: The PS3 would come out on Nov. 17 for $499 and $599.

In an interview Tuesday, Hirai shared some of his thoughts on the industry.

Q: Let's jump right into the price. Why is it so high?

A: I don't know that it's high for the kind of value that we're bringing into the hands of the consumers. If you look at technology that we've put into the box this time with the Cell processor, combining that with the fact that it'll play games on Blu-ray discs as well as motion pictures and other software, the ability for it to go onto an online environment right out of the box, the Wi-Fi capabilities, the fact that it interacts with the PSP in many different ways, the fact that it is backwards compatible with PlayStation 2 and PlayStation titles.

You add all that, and on top of that you layer on the compelling entertainment content that we'll be bringing to the console, I think makes for a great value proposition.

Q: Do you think the demographic you're targeting has changed? For someone in their 20s it's going to be tough to scrape together $500 or $600.

A: At the end of the day, it's all about the kind of entertainment content that you bring out. We don't necessarily go after a certain demographic. We want to try to appeal to the mass audience as quickly as possible, and that strategy really hasn't changed with the PlayStation 3 this time around either.

Q: Do you think the price will hurt sales at all?

A: It's an investment, yes. We have at least a track record of saying to consumers when you join the PlayStation family of products you're in it for the long haul. It doesn't matter if it's $299 or $499.

If you buy a console and it goes by the wayside in four years, five years and then you've got to buy completely anew, that to me is doing a bigger disservice to the consumers than saying here is our value proposition at $499 or $599. This is a console that you will be able to enjoy for the long haul, i.e. 10 years.

Q: Even if you're able to get the forecasted 4 million PS3 units out by the end of the year, there still will be a huge shortage. Will this negatively impact the company?

A: Given the strategic importance of the PlayStation 3 to Sony Computer Entertainment and Sony Corp., as well as all the companies on the hardware and software side that are involved in the Blu-ray initiative, and the impact it'll have on consumer electronics in general, we felt that this was important that we launch simultaneously in all the three major markets.

We're going to try to ramp up as quickly as possible. If there's a shortage, I think it'll prove some of the initial questions you had asked as being perhaps not too much of a concern.

Q: Are you at all impacted by 10 million Xbox 360s being out by then, which is Microsoft's goal?

A: That's a foregone conclusion, this 10 million. I had read they were talking about it, and it's always nice to talk about big numbers. The proof is in the pudding.

I've always said that we've never been first, and this is not something that puts us at least at a competitive disadvantage. What's more important is making sure you have the right product at the right time as opposed to trying to rush something out into the market.

We've done this three times already, coming out behind somebody else. This will be our fourth time.

Q: What's the need for a 60 gigabyte hard drive [in the more expensive PS3]? Will we ever need that much space?

A: You can look at it from a variety of perspectives. One is that a Blu-ray disk holds 50 gigabytes. It's 10 gigabytes more than that. When you look at it that way, is it that much capacity for the kind of entertainment content that people would want to store on the hard drive? I don't know that it is.

If you look back in history, every time a new computer comes out with a bigger capacity hard drive, that's the question that people always ask. If you have the capacity, you're just giving consumers the ability and the option to store more good content.

Q: Will you make full-length movies available for download?

A: That's obviously a possibility. From a technological standpoint that's something that we can do literally today. The gating item there is the speed at which consumers can download through their broadband network. That's more of an infrastructure question than perhaps a question about the PlayStation 3 itself. Sixty gigabytes will allow consumers to do that as well.

Q: It seems like some games work with the motion-sensitive controller, some games do not. Was this a last-minute addition?

A: This was something that actually was a culmination of what we've done with the launch of the PlayStation. Implementing that functionality into the game is no different than implementing the DualShock vibration functionality into the game.

So if a third party publisher or one of our first-party studio guys says this is a game that feels right with the motion sensor control, then it's like, here just pop it in.

If you look at the evolution of the controller of the PlayStation, it's another evolution in our step to make the controller more intuitive, open up more possibilities and try to make it really a part of our body. This is not something that we decided to do yesterday.

Q: PlayStation has really benefited from having an exclusive launch window with the "Grand Theft Auto" series for years. How do you feel about Microsoft being at the table on day one with "Grand Theft Auto 4"?

A: It's not one game or two games that are exclusive or not exclusive that make or break a console. You really need to take a look at it from a library perspective. What kind of compelling games are available for all kinds of different demographics?

If you look at it from that context, one title going exclusive or one title going non-exclusive doesn't really make that much of a difference. The PlayStation console and the business strategy has always been about breadth of software and there was exclusive and non-exclusive content.

Q: But I have a feeling that Sony probably sold a lot of PlayStations as a result of that exclusive window, don't you think?

A: Given the strength of the title, it's a platform-driving title for everyone, I think. I don't want to diminish the importance of that franchise. But you're swinging the pendulum too far the other way to say that is going to make or break the success of any console, whether it's PlayStation 3 or anything else.

Q: So should I not read anything into that as far as any momentum the Xbox 360 might be having?

A: What you need to probably read into, not looking at console specific, but perhaps looking into more the changing dynamics of the publishing community and the need to look at a variety of ways to further amortize their development costs.

It's more of a question for the publishers, because they need to look at how they're going to manage their portfolio or platform strategy going forward.

Q: How do you sell Blu-ray over HD-DVD to consumers? It's a totally confusing issue right now.

A: The onus is certainly on the consumer electronics industry, as well as our industry, to make sure that we send a clear message to the consumers of the benefits of Blu-ray.

The biggest benefit there is capacity over anything else. If you take gaming, you don't want to be changing discs during gameplay. We've all had the experience of buying a Blockbuster movie and getting three disks. All of that can be done seamlessly with one disk.

Blu-Ray is truly a next-generation storage format, as opposed to HD-DVD, which is basically an incremental improvement over what's out there.

Q: Are you just going to have movies playable on the Blu-ray player or games also?

A: Games are going to be on Blu-ray disk as well. That's a very important differentiating point. One of our competitors talked about an HD-DVD add-on for movies only, which is kind of puzzling because if I was a content creator for games, I still only have a DVD-ROM.

Going forward, if I have a game that is 25, 30, 40 gigabytes, it's going to be a multiple disk set. That's going to be a challenge.

Q: Will there be a browser in the PS3?

A: The browser is something we can add on very easily. If we believe that the consumer demand is there for a browser there's no reason why we should not be adding one.

Q: Has the browser in the PSP worked out well?

A: The browser in the PSP has worked out very well for what it is supposed to do. I don't think it was meant to be a replacement for Web browsing or the Web browsing experience in the home where you have a large screen. For just getting bite-sized portions of reading news or what have you it serves its purpose very well.

Q: Microsoft has set a goal of having half of its Xbox 360 buyers connected to the Xbox Live online gaming service. Do you have a similar goal with the PS3?

A: The online network is almost like air at this point in time. Some of these basic community functions, they're going to be free of charge and there is no commitment to sign up and give out your credit card information.

The percentage of the users of PlayStation 3 that will go online will be a pretty high percentage and perhaps limited only by the access that people have to broadband. I'm not going to put a number to it, but I think it's going to be a very high percentage.

Kim Peterson: (206) 464-2360; kpeterson@seattletimes.com

Copyright © 2006 The Seattle Times Company

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