Sony Learns From Activision Blizzard's Mistake

Sony (NYSE: SNE  ) has finally come to its senses.

The Wall Street Journal is reporting that the successor to the PlayStation 3 -- likely to hit the market next year -- will have an optical disk drive.

There have been some head-scratching rumors surfacing ahead of next month's E3 conference about what Sony plans to do to resuscitate its slumping PS3 sales. Gaming websites reported earlier this year that Sony was considering features that would make the next gaming console incompatible with earlier software titles and prevent the playing of secondhand games.

Eliminating the drive would achieve both anti-consumer objectives, though it would clearly spell the end of the PlayStation franchise. Just think about what the PS4 -- or Orbis as gaming enthusiast website Kotaku unearthed earlier this year -- would be doing if it nixed the drive.

  • One of the things that sets the PS3 apart from the competition is that it plays Blu-ray discs. Buyers know that they are getting a spec-rich gaming machine that also happens to play rich high-def movies.
  • Killing the drive would mean an end to the used game market that happens to be where GameStop (NYSE: GME  ) scores its meatiest margins. The ability to resell games may be a drag for Sony and software publishers that don't make money on the used games, but consumers would also want to pay far less for games that are forever shackled to their systems. GameStop would probably refuse to stock the console, and understandably so.
  • Backward compatibility is a big deal for gamers that have amassed large collections. They would be reluctant to buy into the new console right away, especially given Sony's history of sharp price cuts after gouging early adopters.
  • Sony's history of its network getting hacked doesn't make it very conducive for gamers to rely on the company's servers to either offer downloads or store Web-based games.

Thankfully we may never see Orbis or PS4 implode. The always chatty "people familiar with the matter" are telling the Journal that Sony is sticking to a drive-based system because Internet connections are still too inconsistent around the world.

Gamers can probably thank Activision Blizzard (Nasdaq: ATVI  ) for that. The world's largest video game maker has been dogged by server outages with Diablo III since its launch two weeks ago. Error 37 and Error 73 messages indicating outright outages or server overcapacity issues continue to haunt the company this week.

If Sony was planning to rely exclusively on digital downloads -- and perhaps host the games to prevent user drives from quickly filling up -- the model could blow up if gamers can't get connected.

Obviously there's plenty of time to get this wrong. This wouldn't be the first time that Sony overestimated its appeal. However, it definitely seems as if it's retreating from what would have been a costly mistake.

Digital delivery is the inevitable future of gaming. The industry is moving that way. The next trillion dollar revolution will be in mobile, but the best investing play isn't necessarily Sony or Activision Blizzard. If you want to cash in on the hot trend, a new report will get you up to speed. Yes, it's as free as this article, but it won't last forever so check it out now.

Longtime Fool contributor Rick Munarriz calls them as he sees them. He does not own shares in any of the stocks in this story. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.

The Motley Fool owns shares of GameStop. The Fool owns shares of and has written calls on Activision Blizzard. Motley Fool newsletter services have recommended buying shares of Activision Blizzard. Motley Fool newsletter services have recommended creating a synthetic long position in Activision Blizzard. Motley Fool newsletter services have recommended writing covered calls on GameStop. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On May 31, 2012, at 4:52 PM, thesmartestfool wrote:

    Your article shows you have no idea what you're talking about. Digital download have nothing to do with the ability to log onto a server to play a game. Whether a game is loaded into a system via CD/disk or whether it is "downloaded" digitally is irrelevant if game-play requirements are necessary take place on a server.

    ATVI's issue was with folks who were trying to ENTER into the game. Those players had already DOWNLOADED the game digitally. The problem was the same, irrespective of whether the player installed the game via CD or through digital download.

    The decision to include an optical CD reader in consoles simply allow players to load a game onto their console via disk, rather than downloading a copy of the game to their console's digitally.

    In both cases, if the gameplay is "single player" and no server is required, then no "bugs" like the ones that players encountered during D3's release would take place. On the other hand, if gameplay is required to take place over a server (e.g. mutli-player modes, etc.) then it doesn't make a difference whether the game is initially installed via disk or digital download.

    Please check your facts before you write an article.

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