Sony delay rocks video game industry

SAN JOSE, Calif. — Sony Corp. will delay the launch of its much-anticipated PlayStation 3 console until November, prolonging the agony not only for itself but also for many others in the video game industry.

Ken Kutaragi, the head of Sony’s video games division, said Sony is still trying to finalize the copyright-protection technology and other standards for the Blu-ray DVD disc, the high-definition video format for PlayStation 3 and other next-generation DVD players.

The PlayStation 3 is critical for Sony’s profits and brand image, so the delay from its promised “spring” debut is a major setback for the Japanese electronics and entertainment company as it struggles to mount a recovery after several years of poor earnings.

“I’d like to apologize for the delay,” Kutaragi said Wednesday at a hastily called news conference in Tokyo after reports of it surfaced in publications. “I have been cautious because many people in various areas are banking on the potential of the next-generation DVD.”

Blu-ray preparations were initially to have been completed by last September, but now won’t be finalized until next month, he said.

Speculation of a delay had been growing in the last few months as Sony’s “spring” launch drew nearer without any confirmation of a specific date.

Still, the now-confirmed half-year lag from the predominant console maker will sting.

Already, sales of video games have slowed as customers have been withholding purchases and waiting to switch to new models of game consoles.

In 2005, video game sales fell 5 percent to $7 billion in the United States, according to market research firm NPD Group. And Electronic Arts Inc., the world’s largest video game publisher, saw its net income fall by nearly a third in its pivotal holiday quarter.

Now the industrywide decline will continue, and possibly worsen each month, with sales of current-generation console games falling as much as 35 percent from year-ago periods, predicted analyst Michael Pachter of Wedbush Morgan Securities.

In addition to the PlayStation 3, consumers had been waiting for Microsoft Corp.’s new Xbox 360, which debuted last November with supplies falling short of demand. Also, Nintendo Co., maker of Game Boy machines, is set to release its next-generation Revolution console later this year.

Microsoft spokeswoman Molly O’Donnell said Sony’s delay won’t change Microsoft’s strategy. “We’ve blasted out of the gate with the greatest launch in the history of video games and we’re keeping our eyes squarely fixed on today and on the Xbox 360 road ahead,” she stated in an e-mail.

The PlayStation 3 delay will likely help Microsoft and Nintendo chip away at Sony’s 60 percent global market share, but analysts think Sony will still reign. Sony has shipped nearly 204 million machines worldwide when combining shipments for the original PlayStation and its upgrade PlayStation 2.

“It’ll sell 20 million PS3s in the next couple of years no matter what,” Pachter said.

The PlayStation 3 console can be used as a Blu-ray DVD player, but will also read previously released PlayStation and PlayStation 2 games, Kutaragi said. It will also have a 60-gigabyte storage drive, broadband and wireless Internet connections and support for high-definition televisions.