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PS4 looks set to break records at launch

But longer term, Sony faces a tough challenge.

Andrew House, President and Group CEO of Sony Computer Entertainment.

In the moments before our interview begins proper, Andrew House tells me 2013 has been his most exciting year since joining Sony. If he's being sincere - and, given what happened at E3 this year, he may well be - 2013 should be honoured. House, the communications expert from Wales who rose through the ranks to become boss of all of Sony Computer Entertainment - was at Sony Corp when PlayStation was a mere skunkworks project 23 years ago.

He's seen it all, then, from the pioneering PSone and WipEout to the glory days of PS2 and Gran Turismo, from the tough early days of the hyper-expensive, difficult-to-develop-for PS3 to the euphoria of PS4's unveiling.

Last night, with over 300 fans waiting patiently outside the Covent Garden shop come stage come gaming arcade Sony had constructed to mark the launch of the PS4, PlayStation was buzzing. People walk briskly with clipboards and mics at the ready, setting things up, making preparations, fixing the stage for rapper Tinie Tempah's 11pm show, testing smoke machines...

We expect PS4 to secure the UK's biggest ever console launch come Monday morning. We expect Sony to outdo its own record: in 2005 PlayStation Portable launched on these shores with a whopping 185,000 sales during its first three days on sale. Earlier in the day, over at Sony Computer Entertainment Europe's Oxford Circus headquarters, PlayStation's affable UK boss Fergal Gara tells me PS4 has every chance of making it a Sony 1, 2 and 3 in the UK. We've heard the company has flooded the UK with 300,000 PS4 machines - many of which are reserved for those who have pre-ordered. Sony has estimated it will shift five million units by the end of its 2014 financial year.

But Sony knows the PS4's launch is just the first step on what will be a long, hard journey. This is not to devalue the importance of launch - I hear SCEE staff discussing Microsoft's Xbox One launch sales press release, suggesting its focus on stats such as "over 60 million zombies have been killed in Dead Rising 3" obfuscates the true story, as I play FIFA 14 on a PS4 demo pod. But PS4 will not live or die by this weekend's results. It won't live or die by this Christmas, either. This journey could last for a decade.

It's a journey fraught with difficulty. The world PS4 is born into is so unlike the world of 2006 - a time before iPhone, Facebook and Twitter - as to be alien. We play games on everything now, and many play without paying a penny. For all the doom and gloom of its early days, PS3 has sold 80 million units in seven years. Does PS4 have a chance of coming even remotely close to its predecessor?

Andrew House, as you'd expect, is bullish. He believes PS4 can exceed the sales of PS3, and he offers two reasons why: new markets and broader networked entertainment devices.

"PS3 launched essentially as a dual-function device. It was a great games console that also played Blu-ray movies. PS4 arrives as a fully multi-functional entertainment device."

The message is clear.

"Through the course of the PS3 life cycle we have in essence opened up new markets globally that weren't open to us before," he says. "Latin America wasn't a serious market for console gaming. It certainly is now. We're seeing signs that, finally, China may open up, with the Free Trade Zone being established in Shanghai and the opportunity now to sell consoles in that market.

"There's a fundamental difference between PS3 at launch and PS4. PS3 launched essentially as a dual-function device. It was a great games console that also played Blu-ray movies. PS4 arrives as a fully multi-functional entertainment device. It comes with a suite of 18 network services. And that's really important. It says it has an opportunity to take its place immediately in the centre of the living room, rather than being a secondary device somewhere else in the house.

"It also has an opportunity to attract a number of other users in the household, who maybe aren't predominantly gamers, but who are interested in Netflix, catch-up TV services and BBC iPlayer, and want to have that experience seamlessly delivered and on a big screen.

"So, those two points: geographical expansion and also delivering fully-functional, broader networked entertainment devices. I think it has great potential for growth."

There's another key difference between now, in 2013, and then, in 2006. Now, Sony is embattled. Its struggling TV and movie businesses are a heavy weight on company profits, dragging them deeper into the red. Vita has flopped. Previous PlayStation boss Kaz Hirai became top Sony dog and triggered widespread layoffs in an attempt to cut costs. In 2006 Sony was a bigger, more influential beast with a booming brand. Now it's leaner, and the pressure on PlayStation to make money from the off is greater than ever before.

According to House, PS4 was designed from the off to do so.

"The selection of architecture was based on the ease of development for the broadest range of developers out there, including small teams who may be emerging from mobile," he says. "And we really listened to developers. That led us to a PC-based and familiar architecture.

"At the same time, we don't have a 'designed from the ground up' bespoke chipset that led to a lot of the initial costs around PS3. Yes, it's highly informed and customised from our own engineering talent, but in essence we were working in partnership with an outside vendor, AMD, this time. That also significantly reduces the scale and the scope of the risk of our investment.

"All of that contributes to being able to launch at what I feel is a really good competitive price point, and secondly, essentially a cost structure on the hardware that is far more similar to PS2 than it is to PS3."

Is Sony losing money on each PS4 sold, I press?

"I can't, for a variety of reasons, speak to the figures," House deflects, "but I can say this: envisage this hardware model being very similar to that of the PS2 at the same point in the life cycle - and radically different of that from PS3."

"I can't, for a variety of reasons, speak to the figures, but I can say this: envisage this hardware model being very similar to that of the PS2 at the same point in the life cycle - and radically different of that from PS3."

Research firm IHS estimates the cost of the PS4 parts, plus what it costs to assemble them, at $381 - $18 shy of the PS4's $399 US retail price.

I get the impression that House's distancing of PS4 from PS3 is part of a wider marketing mantra designed to fuel the feeling that Sony is starting afresh with its next-gen console. At a conference earlier this year PS4 system architect Mark Cerny said he hoped PS4 would rekindle the diversity of games last seen during the PSone era. The message is clear: Sony is desperate not to repeat the mistakes it made with PS3: a high-cost machine that in the early years alienated developers and gamers alike. This time, it's all "#4TheGamers". It's cheaper than its competitor, the Xbox One. And, according to House, it's a machine easier to price cut.

"The hope would be that we would be able to achieve better cost down through the course of the life cycle than perhaps was achievable on PS3," he says, coyly.

Sony looks set to win the opening battle in the next-gen console war with impressive launch figures, but Microsoft remains determined to succeed - and it has a marketing might Sony Computer Entertainment simply can't compete with.

It also has Titanfall, a game that most metrics suggest is the most anticipated game of 2014. After the damp squib of both the PS4 and Xbox One's launch line-up, thoughts turn to next year and the games we'll play. Again, House is bullish.

"[The critical reception to the PS4's launch line-up] has been reasonably balanced," House says, diplomatically.

"If you look back and compare it to other console launches we've executed, there's a greater variety of titles. There's stronger and deeper third-party support than we've seen in the past. The mix we've been able to establish between major well-known franchises and the emergence of good and interesting indie content is really good.

"But a launch line-up is just the start of the console's life cycle," he adds, steering the conversation away from the thorny issue of Knack review scores. "And we all know just how transformative it can be.

"We're able to see a roadmap of other great franchises, whether it be DriveClub, Watch Dogs or Destiny. You can see a road map of promise. It certainly seems to me to be contributing to initial excitement and anticipation around launch."

"We're able to see a roadmap of other great franchises, whether it be DriveClub, Watch Dogs or Destiny. You can see a road map of promise."

All smiles last night as House and rapper Tinie Tempah launch PS4. But the future remains uncertain.

Let's look ahead, then, to next year - and beyond. Many are disappointed that the next generation of consoles do not offer backwards compatibility with current-generation games. This is the sort of thing that matters greatly to people - and both Microsoft and Sony are yet to settle on solutions.

On Sony's part, it at least has an idea, albeit an undisclosed one, for backwards compatibility. Eurogamer has heard from trusted sources that the company has already briefed developers on Gaikai, the streaming tech it forked out a whopping $300 million for last year - and some are being asked to take part in its early 2014 beta. We hear the full service will roll out in Q3 2014 in North America, then, later that year, SCEI gets its turn. Europe? We've heard we won't get the full Gaikai service until 2015.

I ask House about Sony's grand plan for Gaikai and he answers by explaining why he bought it in the first place.

"We're on track to have a commercial service up and running in the US first within 2014," he says. "That remains the plan and we're very much on track to reach that.

"But what's important is to understand the full scope of what we're trying to achieve and why we felt the Gaikai acquisition was important. Our goal is to be able to have a new form of game distribution streamed from the server side, initially to PS4 consoles then gradually moving that out to Vita.

"But eventually, the endgame is to have this available on a multitude of network-connected devices, essentially delivering a console-quality gaming experience on devices which are not innately capable of doing that.

"We think there's a great opportunity to broaden the market, because you essentially remove the need to make the console purchase in order to have access to that experience. It may sound counter-intuitive, because, aren't you replacing a business that is your bread and butter? But part of being an innovative company is being a pioneer in new forms of distribution of content, and we would like to be there first and take a leadership role."

Again, I press: are we looking at 2015 for Gaikai in Europe?

"I really can't be specific on the European roll-out," House says. "It's a brand new form of delivery. We need to prove out the technology, which we feel is good at its core, but we place - as I think is quite right - a real emphasis on delivering a quality experience for consumers. And that will be dependent to a degree on what the strength of broadband connection is going to be, and what our server deployment and infrastructure looks like.

"We're hard at work on all of those fronts, but I'm not at a point right now where I can be specific about when our European fans are going to be able to enjoy that."

The future is uncertain. Some in the industry I've spoken to predict the PS4 and Xbox One will turn out to be the final console generation. Some think consoles are already dead. Going by launch sales of both the PS4 and Xbox One, I'm not sure that's true. But it's impossible to ignore the increased challenge Xbox and PlayStation face this time around.

Gaming is a fragmented market. More are playing games now than ever before, but on a bewildering number of devices. Next year even more will launch, including Valve's exciting Steam Machines.

Triple-A console games, as they're often described, cost more to make - and right now they cost more to buy. Both Microsoft and Sony are convinced of the digital future of console gaming, but with broadband speeds what they are, and digital game prices unreasonable for many, doing it as we've always done is the best way for now.

And amid the fever of first-party celebration, cautionary tales: fewer people bought Call of Duty this year than last. Battlefield and Assassin's Creed look down year on year, too. There are more than a few publishers who will find the waters of the console transition difficult to navigate. These are exciting - and dangerous - times.

"This generation has seen predominantly consumers connecting in a community that's more or less around online multiplayer and highly competitive. One of the things Mark Cerny and I talked about a lot was, well, what other ways could we have for people to connect?"

Gamers queue outside 17 Bedford Street, Covent Garden, ahead of the PS4 launch.

For now, though, amid the PS4 midnight launch queue lengthening outside in the cold London night, we can afford House his moment. The PS4 launched two weeks ago in North America and raced to record sales. Its new features, particularly the gameplay streaming functionality, appear to be gaining traction - although some, it seems, are gaining traction in ways Sony didn't expect.

"What I hope we're able to achieve with PlayStation 4 is what I like to call connecting people through play, and perhaps connecting them in different ways than has previously been possible on consoles," House says.

"This generation has seen predominantly consumers connecting in a community that's more or less around online multiplayer and highly competitive. One of the things Mark Cerny and I talked about a lot was, well, what other ways could we have for people to connect?

"One was establishing a network which is now not just about anonymous IDs, but is based on your true identity, while obviously still allowing for people to create IDs in the way they have done. Learning from social media, people perhaps behave differently when connected to a network when it's their true identity.

"The other way is having games that utilise connectivity to have people help each other play - the virtual controller idea where you can help a friend. I've spoken to developers who are actively working even within the FPS genre of having status that's afforded to players based on how good they are at training other players in the game, as opposed to just pure competitiveness.

"I don't want to portray this in a too Utopian or rose-tinted spectacles way, but it's my real hope that we can change the way people think about games and how games connect people.

"We made a bet that the kind of sharing people are now so attuned to with so many aspects of their lives was something people would want to embrace in games as well, hence having the Share button right there on the controller, and having the ability to broadcast your own gameplay. We've seen it start to take off on PC, and we felt this was something that was going to go mainstream on consoles as well.

"It's felt like a validation of some of the decisions we made about designing the system."

Will those decisions feel equally as validated seven years from now? Only time will tell.

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