PlayStation Prez On Leaks

You have to feel bad for Sony. By any normal standards, the company’s press conference at E3 should have had jaws on the floor.

A new portable gaming system. A motion sensing game controller. A greatly increased focus on digital distribution. Normally, just one of these announcements would have rocked the show. But thanks to the industry grapevine, the details of all of these announcements were known long before E3 began.

Shizuo Kambayashi / AP

Leaks are a common occurrence in the video game industry, perhaps more so than any other entertainment medium, but the growing frequency of them makes it harder and harder for companies to contain information — and control consumer expectations.

“People don’t respect confidentiality in this industry,” says Jack Tretton, president and CEO of Sony Computer Entertainment of America. “It’s tough enough to keep a secret within your own company, much less when you speak to third parties.”

For E3, it was an annoyance, but as research and development work gets underway for the next generation of consoles, it could be particularly damaging. Makers of video game machines try to keep the features of new machines top secret during the development phase so they can differentiate themselves from the competition at launch.

And while we’re several years away from the PlayStation 4, Tretton’s still worried about the rumor mill beating the company to its own news once again.

“This is an industry that has trouble focusing on today,” he says “We want to constantly talk about tomorrow.… You have to prepare for people to know things in advance. The frustrating thing is they only know a part of the story and that opens up a lot of conjecture and misinformation that ultimately waters down the reality when you roll it out.”

Sony was hardly alone in having news leaked. Word of Microsoft’s “Project Natal” began to trickle out weeks before the show. And everyone walking into Nintendo’s press conference knew they’d be hearing about either a new Mario or Zelda game.

It was a video of Sony executives discussing the PSP-Go handheld system that made the company stand out, though. Despite the anticlimactic announcement at the press conference, the company is still confident the system will be a success – even with the increased competition from Apple.

“At the end of the day, the iPhone is a phone,” says Tretton. “At the end of the day, we’re a game system.… If the iPhone gets you interested in gaming, that’s good for me, because it gives me a chance to sell you a PSP.”

And while Sony’s motion sensor control didn’t turn as many heads as Microsoft’s did with the general public, the buzz on it was still very strong among developers.

The company will roll the device out next year. While Sony only focused on tech demos at its press conference, Tretton says gamers may be surprised when they see how many games will support the technology.

“Personally, it’s very difficult for me to perceive ‘God of War 3’ being played with the Wii controller,” he says. “It’s a different experience that doesn’t lend itself to certain types of games. [But] I think our [motion] controller can be used with every game that’s on the system now — and every game we’re working on.”

Do does that mean we could see updates released for existing games to make them compatible with the new controller?

”I think that’s absolutely conceivable,” says Tretton.

With leaks come false rumors — and the biggest was an expected $100 price cut for the PlayStation 3. Many publishers, including Activision and Disney Interactive Studios   were hoping to see one, but were left disappointed. Analysts still believe Sony will lower prices before the holiday (likely in August), but Tretton says the company will not be pressured, even by its partners.

“I can’t remember a day that people who have no stake in the profitability of our company have not called for a price cut,” he says. “I think everybody but us would love to see it given away for free.”

The focus, says Tretton, is managing the PS3’s life cycle — and making it so the machine has a 10-year (or longer) lifespan. And while he certainly gave no official guidance for a price cut, he did tease:

“We’ll do everything we can do to make our pricing relevant. But remember cheapest isn’t always the most successful. It’s what you get for your dollar.”

© 2009 CNBC.com