SONY CORP. SELLS MORE THAN 100,000 VIDEO-GAME UNITS ON FIRST WEEKEND

By Jeffrey A. Teachtenberg
Staff Reporter of The Wall Street Journal
[Appeared during week of 14 August 1995]

   Sony Corp. said retailers sold more than 100,000 units of its new 
PlayStation over the weekend, spurring hopes inside the company that the
video-game system will emerge as its most successful new product since the
compact-disc player. 
   The PlayStation stakes are huge for Sony, because the Japanese
electronics and entertainment giant is making it the vehicle for a huge
push into hardware and software for computer games. At an average price of
$299, Sony is almost certainly losing money on each unit. Sony is
calculating it will compensate for the losses with profits from
higher-margin game software, say people familiar with the company's
strategy. 
   "We had the right price, the right technology, and the right software,"
said Olaf Olafsson, president of Sony Interactive Inc., the U.S. unit
overseeing the PlayStation launch. "This wasn't parents buying for their
kids; these were people buying for themselves." 
   The Sony system is competing directly with a new Sega Saturn unit from
Japan's Sega Enterprises Ltd., as well as machines from companies such as
3DO Co., based in Redwood City, Calif., and Dutch giant Philips
Electronics NV. In addition, Nintendo Co., based in Kyoto, Japan, is
working on a new video game system expected to debut in the U.S. next
year. Wall Street analysts estimate Sony expects to sell more than 700,000
PlayStations this year. 
   The issue of pricing, however, has been a sore point inside Sony, with
Japanese executives earlier this year arguing in favor of a higher price,
and Mr. Olafsson insisting on the $299 level in hopes of quickly gaining
market share. 
   Only last month, Steve Race, the executive then overseeing the debut of
the PlayStation, resigned his post over disagreements with fellow Sony
executives involving the video game system's pricing and marketing
strategy. At the time, Mr. Race's abrupt departure was viewed as a blow to
Sony. 
   By Christmas, Sony will be selling close to 20 original titles priced
at $49 to $69 at retail. Although Sony had been in the CD-ROM market for
several years, Mr. Olafsson decided this past spring to exit that business
and concentrate almost entirely on the PlayStation. 
   "We couldn't believe it, but we had people at each of our nine stores
lined up to buy the PlayStation," said Tom Campbell, a director of
Dow/Stereo Video Stores, Inc., based in San Diego. "These were serious
gamers and early adapters, but considering the minimal advertising we did,
the response was shocking." Mr. Campbell said more machines have been
ordered. 
   Although the Japanese electronics industry has long dominated the
video-game market, Sony decided only several years ago to test the market
after it concluded that video-game systems are no longer a new form of
entertainment requiring sophisticated engineering. The PlayStation made
its debut in December in Tokyo and Sony executives say it sold one million
units during its first six months. A spokesman for Sega said that the
company has sold more than 120,000 of its Saturn video-game units in the
U.S. since its debut in May. The Sega units are priced at $399. 
   More than 150 third-party developers in the U.S. are currently working
on game titles for the Sony PlayStation, including such major companies as
Electronic Arts Inc. and Acclaim Entertainment Inc. 

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