Sony banks on PS4 to help revive hardware arm with home entertainment hub

Sony’s new PlayStation 4 has a lot of heavy lifting to do even before it hits retail shelves this fall.

The videogame console, revealed for the first time Wednesday, to 1,200 reporters gathered inside New York City’s Hammerstein Ballroom, is essentially Kazuo Hirai’s answer to turning around Sony Corp., now that the former PlayStation exec holds the reigns as president and CEO.

In the post since last April, Hirai is tasked with reviving Sony’s struggling Bravia TV line, Vaio computer, Handycam camcorders and Xperia mobile phone brands, while still trying to get consumers interested in its PlayStation Vita handheld device. Sony Pictures has been one of its few bright spots.

Sony hasn’t turned a profit in the past four years, but the reveal of the PS4 comes as Hirai said the company’s future hinges upon surprising consumers with innovative new hardware like Ultra-High Definition TVs and smartphones.

“It’s one product at a time to have people understand, ‘Wow! Sony is really starting to get its mojo back,'” Hirai said in January at the Consumer Electronics Show in Las Vegas. He was not on hand for the PS4 reveal.

Still it’s clear Sony hopes the PS4 will also play a major role in boosting the company’s brand appeal, when it hits retailers holiday 2013. Even before that, Sony is looking to benefit from some early buzz, through its two-hour press conference, during which it showcased the console’s capability for sophisticated visuals and connectivity, and where company execs tossed out words like “magical” to describe its features.

In development for five years, the new device represents “the moment of truth and a bold step forward as a company,” said Andrew House, president and CEO of Sony Computer Entertainment.

In addition to wanting to reduce pesky download times for digital updates “to zero,” execs see the PS4 as “the first social gaming network with meaning.” That could be seen through the share button built into an updated controller that will enable gameplay to be recorded and posted on social networks.

Although the focus was on games — including tentpole titles like “Knack,” “Killzone: Shadow Fall,” “Infamous: Second Son,” “Driveclub,” “Watch Dogs,” “Diablo III” and “Destiny” — Sony will also promote the PS4 as a major platform to stream music, films, TV shows and other video content in high-definition through a revamped PlayStation Network — something that prompted a $380 million purchase last year of cloud gaming company Gaikai. Netflix, Hulu Plus, Amazon Instant, Vudu, CinemaNow, Crackle and Epix were shown off as initial apps to appear on the PS4.

A hub for entertainment

At CES, Hirai announced a new exclusive service for Sony’s TV sets that will offer films in Ultra-HD from its studio for download when it launches this summer. That offering will now also likely become available on the PS4 when it bows.

That’s because Sony wants its PS4 to be larger player in the living room and a hub for all forms of entertainment — not just videogames. It’s a mission Sony has had since the PlayStation 3 was launched in 2006.

But Microsoft’s Xbox 360 has managed to entice millions more owners to use that console for more than just games. And at a price: Monthly memberships to Xbox Live, which enable access to entertainment apps, cost $60 per year, although discounts can be found. Company now has more than 46 million Xbox Live members, although it has sold 75 million Xbox 360s worldwide.

Either way, the PS4 should be seen as the next-generation of hardware Hollywood will be able to use to generate additional coin in various homevideo windows. Mark Cerny, a gamemaker and lead systems architect for the PS4, touted the PS3 as being “the top platform for Netflix” during Wednesday’s presser, but did not disclose figures backing up the point.

Still, to say that the PS4 is important to Hirai would be an understatement.

Hirai rose up the ranks at Sony by turning the PlayStation into a powerful videogame brand. Leading up to the media event, Sony flooded YouTube with video retrospectives of how the PlayStation 2 was the bestselling videogame console of all time, with 153.6 million units sold.

Last year, Hirai said he plans to reinvent Sony Corp. by embracing a model he established at PlayStation as the head of Sony Computer Entertainment: linking hardware with software through online networks.

“Hardware drives software and software drives hardware,” he said, referring to the online sale of games, movies, TV shows and music to PlayStation owners.

Content connection push

With that in mind, Sony, which has been offering free access to video and other entertainment content, will now start charging a subscription fee through the PS4, and will connect smartphones to the console, similar to the way the Xbox operates with mobile devices through SmartGlass. As more consumers turn to videogame consoles to access streaming services from Netflix, Amazon, Hulu and Redbox, Sony will need to spend heavily on marketing to get consumers to choose its PS4 as their primary device to connect to content.

With more devices commanding consumers’ attention, that could prove difficult when they’re already comfortable with the hardware they’re using now.

But a major shakeup is about to overhaul the games biz, as Microsoft will soon unveil its replacement for the Xbox 360; Nintendo already has launched its interactive TV-friendly Wii U.

Hirai is ready for Sony to innovate again after creating must-have devices like the Walkman and launching the CD player.

He has repeatedly said that requires investing more in the company’s core businesses: digital imaging, games and mobile.

“And also, obviously, we need to make sure that we continue our success in the entertainment space — in the music space, in the videogame space and in motion pictures,” he told Bloomberg Businessweek four months after taking the top job. “That’s an area where we are profitable, and it needs to continue to grow.” While TV manufacturing is no longer considered a core operation, it “is probably the biggest point of contact between Sony and our customers,” he said.

The PS4 is likely to take a larger role in that.

But coming up with an attractive price will be key.

The PlayStation 3 launch was fumbled out of the gate when it came with a steep $600 sticker. While Sony did not reveal a price point for the PS4, it will likely fall around $400 (sources say one version will cost $429 while another will be $529) this fall. The Wii U is $300. The Sony Vita handheld, launched as a portable PS3, costs $250.

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