As rumors continue to build that Sony is planning on announcing a cheaper 400.00 dollar PS3 SKU with a 40 gig hard drive, I don’t see people asking a fairly obvious question: will this change things? Is a price cut what Sony needs to turn around the PS3? Or is that only the beginning of a laundry list of adjustments and fixes that need to be addressed if Sony wants to keep a meaningful position in the modern console landscape? By the way, the irony of writing this amidst a background that is currently devoted to Halo 3 does not escape me. Regardless, here we go.

6 months ago, it would have made a huge difference. The console landscape was actually pretty different even then. The 360’s hardware issues were snowballing into a public relations nightmare, and there hadn’t been a Halo 3 Beta to galvanize the base; Sony had a promising lineup for the year after GDC with games like Heavenly Sword, Warhawk, and Lair leading their AAA charge in the fall, along with buzz generated from Home and LittleBigPlanet.

The high definition format war also seemed much clearer, as the bright spot in the Sony news cycle was the increase in Blu-ray disc sales that accompanied the PS3’s release. Although the games weren’t really there for the system, it was still within the ever-forgiving launch window, where despite its slow momentum, the system showed a lot of promise, and everyone was just waiting for Sony to demonstrate the initiative and muscle that had established it as number one in the console market for more than a decade – meanwhile, many continued to believe that the Wii would be a fad, and that interest in Japan would wane in favor of the more traditional PS3. While the 20 gig system didn’t seem to be selling, it was also virtually impossible to find in the States, which made it mainly a non-player.

In that environment, with a 400.00 dollar main SKU 360, a 400.00 price cut would have made a world of difference; all the launch promise and Sony’s name would have done the rest to make the system sell on par or better than the 360, instead of consistently selling well below Microsoft’s system. However, things have changed.

The 360 dropped in price in August and displayed a sales surge that trumped the PS3’s price cut a month before. While the 360 still hasn’t dropped enough in price, the small cut would appear to have helped momentum considerably, and Halo 3 this month anecdotally appears to have built on that. Meanwhile, the 360’s hardware issues never seriously detracted from its sales numbers, and even amidst a dearth of titles for hardcore gamers, the Wii continues to sell out.

The 360’s hardware issues are apparently largely worked out, and the new three year warranty program has done much to placate the angry hordes of hardcore who could have hurt the system’s image further, and the oft rumored Falcon chipset 360s have finally landed as well. Meanwhile the PS3 loses some of its luster with every iteration; while the new 600.00 model has a larger hard drive, the rumored 400 dollar model has a smaller drive and both share similarly compromised backwards compatibility, a staple of Sony’s admitted hardware strategy of universal compatibility. Some rumors have even gone so far as to speculate that the new 40 GB model will have no backwards compatibility whatsoever, as Sony desperately tries to cut as many costs as they can to minimize the sizable losses they continue to incur on the system.

Finally, there continues to be a lack of games that demonstrate any hardware advantage whatsoever with the PS3, much less any meaningful one; instead, PS3 owners continue to receive ports that perform worse than their 360 counterparts and release significantly later to boot. Huge PS3 titles continue to underperform either critically (see Lair’s abysmal showing), commercially (the PS3 SKU of Madden), or lose their exclusivity entirely (Devil May Cry 4). The Wii and the 360 are entering huge game seasons. as Halo 3 has just released to enormous sales and games like Mass Effect are on the way, while the Wii has Super Mario Galaxy and Super Smash Bros Brawl, and games like Bioshock will continue to have a long retail presence as new owners pick up 360s. Now that games like Unreal Tournament 3 have been delayed, and other titles likely will be (it would be in Free Radical’s best interest to delay Haze, for example), the PS3’s holiday lineup is looking spotty.

Finally, the high definition war has gotten murkier as HD-DVD now has more studios providing content for their platform than Blu-ray (although Blu-ray continues to possess an enormous catalog advantage), and analysts continue to say price is what will determine the format war this Christmas.

Will a 400.00 PS3 help? Well it certainly couldn’t hurt. The question remains whether it will be long term or not, as the drop from 600.00 to 500.00 still couldn’t push the PS3 over the 360 in monthly sales. Either way, it’s going to be a much more interesting Christmas season that I thought it would.

-Aegies