Kevin Ohannessian: Tell me about Sony's reorganization.
Jack Tretton: The goal there is to have an organization that serves all of the digital platforms at Sony. We invested heavily in creating the PlayStation Network and it does a great job serving Sony Computer Entertainment's business. But the thought was, under the NPSG group you'd have a group dedicated to bringing things like PSN and digital services to all of Sony digital devices. While we loved having an internal organization completely dedicated to us, it makes sense to spinout some of the people and serve the other divisions. We announced that for our market back in December. I think you will see a lot more, I don't know if virtual organization is the right term, but people that will serve multiple masters. The people in our group that transitioned over went, "Okay you're now in a different organization—you're doing the same job, in the same chair, but now you're going to be serving multiple divisions of the company." It breaks down silos better. There's not so much of us and them, because the lines get blurred. I think it creates more of a natural collaboration.
You guys are having a great Q1 with M.A.G., Heavy Rain, and God of War III.
It used to be if the game doesn't ship for Christmas, "Oh my God! Two-thirds of the sales are out the window; it's a disaster." And the only games that shipped in the first quarter were the disappointments. Now the first quarter is just as robust as the fourth quarter in terms of sales potential. And people no longer worry about whether they're going to make Christmas. In fact they say, "What's coming out from the competition; what's the best window where we can get the most hay for our titles?" I think we are spending a lot more time now on portfolio management—not only looking at genres, but looking at timing, who the competition is, and what the consumer wants. You're not seeing 10 shooters in the month of November, like you might have seen before. Grand Theft Auto is successful, so then 10 rip-offs come out. People are really thinking a lot more creatively.
The game I am hoping you want to spend a little time talking about is Heavy Rain. I spent 25 years in this industry, and it's rare you see a game that sells incredibly well and that impresses you. But then you go, "Wow! That's the type of game I've never seen before!" And I think Heavy Rain falls into that category. I don't even now how to classify it or describe it. I read a review that said it's the next stage of reading a book. You don't have to be a gamer at all. I think if you read a book, unless you read the chapters in reverse order, the story is pretty much going to be the same. But with Heavy Rain, depending on what you do, you are going to get a different outcome every time.
How do you keep the momentum going?
When you are forward-thinking and pressing new ground, you've got a lot of doubters and people that will say, "That didn't make any sense." We clearly had our share of those when the PlayStation 3 shipped. And we said, "Believe me this is future-proof technology, this forward-thinking tech; this is going to have a ten-year lifecycle. And while you may not understand it now, a few years from now you will, and you're going to want one." I'd love to flashback to 2006 and bring people forward to 2010 and say, "Now what do you think about Blu-ray? About the technology?" We can have a conversation on innovation and be talking about Heavy Rain in one breath, Little Big Planet in another, Uncharted, MLB, and you can span so many genres. And the beauty is that is all within the Sony family, before we even talk about all the innovation going on in the industry from the independent publishers.
If you think back to the formation of the division people said, "You should be able to build a good machine, but you don't have the heritage in gaming like Nintendo and Sega does." We said, "We understand the party of first-person software and we've invested heavily in it." And we've done that all along—over half our employees are in development. I think the games you are seeing are the proof that it was a wise investment. We are constantly taking a portfolio and whittling it down to the games that have the best potential. If you look at it in terms of game rankings and metacritic scores, we are absolutely at the top of the list. And that's not an accident. That's based on 15 years of hard work and investment. And I think it's something that is going to pay off for many years to come. That big investment takes a little while to get the output you are looking for, but when you hit your stride, you enjoy a nice long ride. That's what I feel we're in the midst of now.
Because of the PS3 Slim and the lower price you've narrowed the gap with Xbox; what do you do to keep that momentum going?
It's the investment in the hardware technology, the investment in the software, and the fact the system is the real deal. In the old days, it was, "This thing is dead as a door nail in 5 years." Year one is very important, year three you're already starting to get to the other side of the hill and then there's a slippery slope. We've just passed the third year of the PlayStation 3 and we're just hitting our stride. And I don't think anyone is saying, "This is a five-year cycle; what's new on the horizon?" I can't even imagine what can be done technically beyond the PlayStation 3 in the near future. A question I often get is when we are going to see PlayStation 4. When somebody can craft the technology that exceeds what we're able to do on the PS3, but we are still just starting to harness it.
I don't know what the percentage would be, but we've clearly just scratched the surface in the PS3. You're just starting to see games like Little Big Planet, Uncharted 2, and Final Fantasy XIII, that are really taking advantage of the technology. You are going to see more and more value and more and more innovation across the board. Developers will say, "We are coming out with our big franchise on next-gen for the first time, we're bringing it to PlayStation 3. We have a 50-gig Blu-ray disc; there is so much more content and depth we can put it there." They are very open to creating unique characters for us, to really give a value-add to consumers. We talk about Batman: Arkham Asylum with the unique character in the Joker. We need innovation, we need differentiation. I think developers are getting that. They are putting the time and effort in to really make that happen.
This year is shaping up to be the year of motion controls, your product versus Microsoft's Natal; so what's the differentiation there?
Everyone has a different perspective on it—our perspective is we introduced motion gaming with the EyeToy for PlayStation 2. It was an incredible experience to be able to stand in front of the TV with nothing in your hands, and see yourself on the TV and interact with the objects there. But it was somewhat limited in terms of the type of gaming experiences, but you could have more of a core experience. I think the game that best exemplified that for me was AntiGrav—where you're on a hoverboard and you're going through a course. That was a lot more interactive than some of the party games. You have to tip your hat to Nintendo for introducing the motion gaming using their controllers, doing it in a more social fashion. I'm not an expert on Micrsoft's technology, but we all know that it was not homegrown. It's certainly technology that we worked with before; we had the experience with the PS2 and EyeToy.
I think freeing yourself from a controller has advantages, but it also has key disadvantages. And we feel all that experience and all that learning, has put us in the perfect position. We're able to take advantage of the camera, take advantage of the ability to identity yourself in 3-D space, but then have controls in hand to do things like shooting and swinging an object, and much more accurately than ever done before. You can have it as an element of a game, you can do it as a dedicated game, you can do it in a social gaming atmosphere. There is no game where you say, "Our control isn't going to apply there." If you name a game, I can tell you that can be a dedicated fashion, that can be an added experience, or that can be done as a totally different genre or offshoot from a core game. None of our franchises are going to be out of the realm of possibility for motion gaming: it's going to do wonders for MLB, for SOCOM, for Little Big Planet, and it will create franchises that nobody has ever heard of or envisioned.
Every year someone looks at the slate of upcoming games and says, "It's the Year of the PlayStation 3" without fail.
I love that. If we say it, people are like, "Of course you're saying that." If other people say it, that's a good thing. I'd much rather quote other people saying that, than say it ourselves. It's how consultants make a living. You can tell your company all day long that you need to do something, but an outside voice comes in and says, "That could be true." I think that's what we're most proud of, every year is the Year for the PlayStation 3. And to be able to say that multiple years running is incredible. I see a lot of articles now, "As exciting as 2009 was, we're extremely exciting about 2010." You can't ask for higher praise than that.
We've grown this wonderful orchard of content that we're able to harvest year after year. As good as last year was, we get so exciting about what's coming. We do a good job of getting the content in people's hands and getting them excited about it early on. Most importantly, things have delivered. There's nothing worse than being excited to read a book or see a movie, and it finally gets there and it doesn't deliver. That's been the key for us—the excitement has been matched with the actual content. Heavy Rain is another one that people talked about for years, but to see the game is a tremendous experience. It was just released on Tuesday, so I am anxious to see what the sales will be, but the pre-sales were off the charts. Uncharted set the bar very high. But for a new genre and for a game that steps out of the mainstream, Heavy Rain will do some very big numbers. And God of War will blot out the sun.
I think people talk about where we are in this generation. I think there's an appreciation right now, and I can validate that we are in the first 25% to 30% of this generation. I would say we're sitting in the cat-bird seat. And if you like what you see right and if you thought last year was the year of the PlayStation, I hope that in 2015 somebody is going to be saying, "This is the Year of the PlayStation 3." And we're still be talking about it, on the device that everybody's playing today. That's staying power, and something I fully believe in because we have done it for two generations in a row and we've got a lot more horsepower to do it with this generation.