Exclusive: Andrew House talks to VG247 about price cuts and going digital in a retail market

Interview by Patrick Garratt.

SCEE president Andrew House took time out of his busy schedule at GamesCom to have a chat with VG247 regarding all things PS3 price-cut, PSPgo, how important it is for developers to comprehend the PS3 hardware, and the future of digital downloads.

Not only did House mention that Sony would  love to drop the price of PS3 to the $199 price point of the PS2 peak should it be fiscally possible, he also touched a bit on yesterday's strange omission of a date for Gran Truismo 5, and how those who preorder the initial offering of PSPgo will get GT PSP for free.

There are loads of goodies in the interview, you should read on past the break.

VG247: How was your first time on the German stage?

Andrew House: It was exciting and we had a lot to talk about in a fairly brief space of time but hopefully we packed a lot of information in there. It is an exciting time to be back in the business, maybe even more so now, obviously.

VG247: I just want to clarify one point, you announced a price cut - talking in pounds - down to around £250 in the UK along with the slim at around £250 - can you explain what people's motivation will be to buy the old SKU especially now that they are the same price. Why would anybody be looking to buy the current SKU?

House: I think that by saying that someone won't buy it presupposes it that somehow that the new SKU is somehow tremendously superior, yes it's great, but from a capability standpoint it's roughly the same device so you are not getting any less of an experience from the original SKU, which is my first point.

The second point is, we have done what we hope is a pretty good job this time around in planning for the transposition to the degree that we've got a very, very well manged inventory channel out there and over and above that, even at the higher price point, when I look at our numbers across the amalgam of different European countries, and markets we're back on track this year. Sales have been, at least speaking for Europe and the other PAL territories, they've been pretty robust. So I think this allows us to create new excitement in the market, I don't think we're looking at a huge amount of inventory that's even existing of the current SKU that's out there.

Previous transitions when we've done this, there's a lot of consumers, for that whatever reasons, are perfectly happy to buy the older SKU and there is always the opportunity to address that promotionally as well if that should become an issue, but at this point I don't envision it being one.

There was a lot of talk before the conference of the slim being a sort of split hard drive SKU - what with a smaller hard drive being below £200 and a larger hard drive being above £200. Was that ever a consideration?

Not that I have been aware of. I think we've learned over time that if you can have sort of a single-based SKU - I mean there are opportunities to create bundled offerings and do other things promotionally - but if you can create a single-based SKU that is the sort of de facto PS3 offering, then that is a very simple proposition for us to communicate that the people will understand and gravitate to.

The £199 price point during the last generation was when PS2 peaked in terms of sales, and many people were sort of hoping you would come down to that level - especially in the UK. To be blunt, do you think you have done enough to accelerate the sort of "PS3 message" as an entity this Christmas season by coming down to £250?

I will phrase my answer to the question slightly differently. If we could get to a more aggressive price point within the boundaries of sensible business, absolutely would we wish to do that? Yes, we would.

We have to deal with an exchange regiment that is-what-it-is right now, and not something that we are obviously in control of. I also think, as well, that that we have - let's not forget - a great line-up of content coming for PS3 this year that I think will be very motivating and I think what we are also trying to do - we spent a lot of time yesterday very deliberately talking about the network - talking about what we are doing to improve, refresh, and add more capabilities to the network.

What I think we're trying to do there, is build out the whole offering to say 'yes we obviously have done as much as we can to reduce price and present a better value proposition to new consumers coming in at the same time'. What I hope is starting to become very apparent with PS3, is that the network has a larger community that you can engage with because there are more services, more things that you can do - access to movies now coming in November - and we are adding value to the existing PS3 owner as well.

Those two trends together, I think, will put us in reasonably good shape for this holiday.

Again, to be blunt, is this even a numbers game for Sony anymore? Are you concerned that you are being outsold by Xbox 360? There is always the to-ing-and-fro-ing about who is winning the numbers game. Do you even care bout what Microsoft is doing with 360 anymore or are you still just trying to dance to your own tune, so to speak?

I think it's a combination of the two. We would be foolish if we weren't mindful of being in a very competitive business. Having said that, I think we have been very clear about having a fairly long-term view of the business. Not just on PS3, but ever since Sony became involved in the console business, I think one of the things we have been able to do is move the conventional life cycle from what I would characterize as a shorter, more toy-like life cylce, towards a longer one that is more in tune with consumer electronics.

I think at the end of the day, consumers embrace that. We don't expect to upgrade our televisions every five years, and we don't expect to have to upgrade our video delivery devices every few years - most of us at least.

So, providing we are able to deliver a very, very solid content offering, and providing we are able to say 'Now that this device is networked, there is so much more that you can do and so much more that you can engage with' - we will do whatever we can to deliver the cost savings to you as soon as we're able to do that. I think for us, that is our own strategy and that is a solid strategy for the longer term.

Talking about content, the next few quarters are probably the strongest for first party titles you've ever had since the machine launched. Yesterday, during the conference, there were a few omissions that a lot of people were expecting, GT5 is one of them. When are we going to see that? Are we going to see that at TGS?

I am not going to make a prediction on that but I think you will see something on GT5 very soon.

I just interviewed David Cage, as well, and he is phenomenally excited by the machine, and he is a huge advocate of the PS3. How important is it for you, as obviously, a man in charge to get developers that fully understand the actual hardware?

It is absolutely critical and that is why I was absolutely delighted that David joined me on stage yesterday and was part of the presentation.

We are in a creative business and I can talk for twenty minutes about network strategy and I can talk about the business rationale behind PS3. But I think it was phenomenal to have David there, talking very emotionally, in terms of telling a story and how he is translating that into a game. That's tremendously powerful and that's what our consumers want at the end of the day.

PSPgo was basically a huge announcement for you at E3, but the pricing has raised a lot of eyebrows as it seems to be quite expensive.

I think, clearly, there is a delta there between PSPgo and the existing PSP-3000. We've received, to date, some tremendous anecdotal feedback on the form factor and the sheer sexiness of the device which I think bodes well for its launch.

We, at least for Europe, were very keen to put an initial offer in place that would reward the consumer who jumps on board first. Therefore, I think the offer that we announced yesterday, that those initial purchasers will be able to get GT for PSP absolutely free. I think that goes a long way to addressing that.

We're also looking at some other plans further down the line that will come together for launch around people who have existing UMD libraries and what we can do to incentivize those as well. So, I think that and a combination of what is a really very attractive portable device leaves us feeling fairly confident where we are right now.

Obviously, Go itself is a pretty significant step towards a digital world. You are really sort of sticking your leg in the sand there, so do you think it's a move that everyone is going to follow? Do you expect people to move with you as you go digital?

I can't really say what the competition and what other people are going to do, but I think that some of the larger and respected publishers are embracing digital in a big way and are looking towards a world that at the very least will include simultaneous delivery of packaged media. What we should all be thinking about is what the consumer wants, and ifthe consumer wants the option to have discs or wants to get digital content at the same time, then we need to deliver on that

I think we need to balance that though, with one other item we announced yesterday, one we were prompted to really jump in and deliver. This solution, because of the the PSPgo, was the PSN voucher cards. Because as PSPgo, as portable device, potentially brings in a younger audience than there has been on the PSN to date. Clearly, we need to have a solution to those two things that will still ensure that at retail stores there is product that people can see, and know what's hot and know what they want to buy.

This way, both can also be part of that mix and at the same time I can turn to my 14 year-old and say 'You've got your own money, you choose what you want to buy on the network so go buy a voucher.' So, Ii think that was another important message yesterday.

Yes digital and digital delivery is incredibly important to our future, but make no mistake, partnering with retail stores and giving everybody a solution that gives access to it are as equally important.