Interviews// Sony Europe Boss David Reeves

David Reeves is the president and CEO of Sony Computer Entertainment Europe so, along with president (Worldwide Studios) Phil Harrison, he’s the biggest cheese at PlayStation outside of Japan and the U.S. I caught up with him in order to quiz him about the lack of PS3 price-drop in the UK, when we’ll start seeing killer PS3 games, the delay in PS3 porting of games that use Unreal Engine 3 and all sorts of other tricky questions.

SPOnG: You dropped the price of the PS3 in the U.S. but not here. What was the thinking behind that?

David Reeves: I should not be the spokesman for Sony Computer Entertainment America (SCEA), really, because they have their own strategy – you’ll have to draw your own conclusions.

I will tell you what we’re doing here and why we’re doing it. Put yourself in our situation – I’m not trying to convince you, but let me take you through our thought processes. If you’re a consumer and we introduced the PS3 in March for £425 or €599 – let’s say you bought one at the end of April and have been using it, playing Resistance: Fall of Man and MotorStorm.

Then suddenly, SCEE said: “Well, what we’re going to do is reduce the price to €499 (£336).” We’ve only been on the market for three and a bit months.

Our thought process was: “Wait a minute – we’re actually not doing too badly – we’re not selling as well as Wii or DS, but seasonality-wise, compared to, say, PS2 at the same time we launched it in 2001, we’re actually doing quite well on a regional level. It’s exactly the target that we sought.

The only boost we have normally at this period is First Communion, which is in the Catholic countries, and we have had that in Spain, Portugal and Italy, but it’s not really a gamers’ month unless you get a big, big title. So, we thought if we reduced the price, we’d annoy a lot of people. We did think about it, but we also felt that it wasn’t doing that badly. In the U.S., they’ve been going for more than six months, so they took the decision that going down in price was a better thing to do than a value pack.

SPOnG: The fact remains that right now, if you want to buy a 60GB PS3 over here – admittedly with an extra controller and game – it will cost you £425, but in the States, it will cost £250. That raises the spectre of grey-market imports, which Sony has been tough on in the past. Is that something that worries you?

David Reeves: No, I’m not worried about that at all. Because we are at £425. The value in there is £120 to £125. We know that most people, anyway are going to buy 2-to-2.5 games.

So, when you do the maths, it’s going to be $499, which is £250, plus two games and a Sixaxis controller. So, that’s going to come up to £380 to £390. But there’s VAT in Europe, so you have to take 15 per cent off, and there’s GST (Goods and Services Tax) in the US, and the average sales tax is 8.5 per cent.

So, when we did the maths (and this is the case in Australia as well which has GST at 10%. Ed), they are exactly the same. We could have omitted the Sixaxis controller and just put two games in, but it wasn’t enough – we wanted to have a level playing field. But not drop the price – because we actually don’t believe that dropping the price in the summer works.

What happens is – and we’re not arrogant about it; we just have the stats – if you drop the price in the summer, the sales rate goes up for a couple of weeks, because there’s not much demand out there, and then the sales rate comes down again until you get to the end of September/the beginning of October, and it all starts to heat up. We’ve had more success doing that either earlier in the year, in March, or later in the year, but doing it in the summer just hasn’t worked for us. We’ve tended to do these starter or value-added packs, and people have come out and said: “You know, that’s not bad”. That keeps us going in the summer. But we realised we had to – to use an old Chris Deering expression – take some air out of the tyres to get to the next level.