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Sony Unveils PlayStation 4, Aiming for Return to Glory

Brian X. Chen and David Streitfeld
Wednesday, 20 Feb 2013 | 7:21 PM ET
Sony video game designer Mark Cerny speaks as Sony takes wraps off  PlayStation 4 in New York.
Emmanuel Dunand | AFP | Getty Images
Sony video game designer Mark Cerny speaks as Sony takes wraps off PlayStation 4 in New York.

For the Sony Corporation, a tech industry also-ran, the moment of reckoning is here.

The first three generations of PlayStation sold more than 300 million units, pioneered a new style of serious gaming and produced hefty profits. PlayStation 4, introduced by Sony on Wednesday evening, is a bold bid to recapture those glory days of innovation and success.

(Read More: Will the PlayStation 4 Give Sony the Boost It Needs?)

The first new PlayStation in seven years was touted by Sony as being like a "supercharged PC." It has a souped-up eight-core processor to juggle more complex tasks simultaneously, enhanced graphics, the ability to play games even as they are being downloaded, and a new controller designed in tandem with a "stereo camera" that can sense the depth of the environment in front of it.

All of that should make for more compelling play for the hard-core gamers at the heart of the PlayStation market. The blood in "Killzone: Shadow Fall," shown to a preview audience of 1,200 at the Hammerstein Ballroom in New York, looked chillingly real. The new device was never shown during the two-hour presentation. No release date was given, although before the Christmas holidays is a good bet. No price was mentioned.

With PlayStation 4, serious games are about to become much more social. A player can broadcast his gameplay in real time, and his friend can peek into his game and hop in to help. Also, they will now be able to upload recordings of themselves playing and send them to their hardcore friends, who will possibly want to watch when they are not playing themselves.

(Read More: Sony CEO Says Aims to Expand TV Sales From 2014)

The new features, however, cannot hide the fact that PlayStation 4 is still a console, a way of playing games on compact discs that was cool when cellphones were the size of toasters and browsers were people in libraries.

Much of the excitement in video games has shifted to the Web and mobile devices, which is cheap, easy and fast. Nintendo's new Wii, introduced in November, has been a disappointment. Microsoft's Xbox, the third major console, is racing to turn into a home entertainment center as fast as it can.

"Today marks a moment of truth and a bold step forward for PlayStation," Andrew House, chief executive of Sony Computer Entertainment, told the crowd. He said the new device "represents a significant shift of thinking of PlayStation as merely a box or console to thinking as a leading authority on play."Fine words, but the new PlayStation will have an uphill battle. Sales of consoles from all makers peaked in 2008, when about 55 million units were sold according to the research firm I.D.C. By last year, that was down to 34 million.

For 2014, Lewis Ward, I.D.C.'s research manager for gaming, forecasts a recovery to about 44.5 million.

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"From peak to peak, we'll be down about 10 million," he said. "There was attrition to alternative gaming platforms like tablets, but the trough was exacerbated by the 2008-2009 recession. It did not permit as many people to buy who under normal economic conditions would have bought a console."

That was reflected in Sony's miserable financial results. The company has lost money for the last four years, hampered not only by slower console sales but also by a range of unexciting electronic products, a strong yen and the 2011 tsunami in Japan. Analysts have made dire comments about the one-time powerhouse's viability. But Sony seems to have bottomed out, helped by a yen that has now weakened. Sony executives said earlier this month that they expected a profit in 2013.

Sony's new chief executive, Kazuo Hirai, has a longtime personal connection to the PlayStation franchise and is making it one of the core elements of a more tightly focused company. Mr. Hirai became well-known for some of his more confident statements about the PlayStation, particularly a 2006 swipe at Microsoft: "The next generation doesn't start until we say it does."

Sony has teamed up with Gaikai, the online game company it bought last year, to store PlayStation content in the cloud. PlayStation 4 games can be streamed to the PlayStation Vita, Sony's portable game device, among other features.

"The architecture is like a PC in many ways, but supercharged to bring out its full potential as a gaming platform," said Mark Cerny, Sony's lead system architect.

James L. McQuivey, a Forrester analyst, said that in order for the PlayStation 4 to succeed, Sony needed to think beyond gaming. The console will have to provide other types of digital content and services, like video conferencing, third-party apps and a TV service to create a deeper, long-term relationship with the customer.

(Read More: Sony Dives 6% After Quarterly Earnings Disappoint)

By comparison, Apple, the world's leading consumer electronics maker, does not just sell hardware. It also has an ecosystem of digital content including apps, music, movies and e-books to make people coming back for more Apple gear every year. Apple generally takes an enviable 30 percent cut of all media it sells. Microsoft, Google and Amazon are making similar moves to create ecosystems.

"Then and only then can Sony hope to learn enough about its users to overcome its own bias toward preferring to design products in response to engineering principles rather than customer needs," Mr. McQuivey said.

Sony shares, which have risen by nearly a third this year, were little changed Wednesday before the event.

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