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Digital Content for Set-top and Handheld - Sony PS3 and PSPgo

The differences between today's console gaming systems can be reduced to sound bites: the Microsoft Xbox 360 is for hardcore gamers, the Nintendo Wii is for casual fun, and the Sony PlayStation 3 is for games and media. But the battle here is not about gaming -- it's about establishing a permanent beachhead on the home set-top as your home media hub, and then becoming the toll-keeper as digital media flows into the home.

In the past, the path to the home was through optical discs, going back to Sony's support of DVD with the PlayStation 2, and then its use of the PS3 to swell the installed base of Blu-ray players in the recent "format war" with HD DVD.

However, the success of Apple iTunes -- it's now the #1 U.S. music retailer (see previous post) -- has shown the importance of digital delivery for music and now television and movies, albeit mostly to handheld media players. And on the set-top, the cable companies like Comcast still have strong positions as the central device for delivering TV and on-demand content.

With over 20 million units sold by the end of last year, Sony has moved the PlayStation 3 strongly in the digital direction as well, developing the PlayStation Network, now with some 27 million registered accounts, and the associated PlayStation Store, with over 15,000 movies and TV shows (see press release).

Which explains why Sony is selling PS3 systems with 80, 120, and 160 GB of hard disk storage. That's clearly more capacity than you need to save game state, but comes in handy as you get involved in downloading and saving trailers and demos, and buying media content and game titles. The new slimmer PS3 with 120 GB hard drive for $299 has shrunk about two-thirds in size to better squeeze in to your TV cabinet.

Meanwhile, Sony is following the same path with portable players, positioning its PlayStation Portable gaming system as also a media player, and then adding the PSP-3000 with microphone for Skype calls last year. Sony also is moving away from its proprietary UMD mini-discs on the PSP to a digital download model with its upcoming PSPgo, with 16 GB internal flash memory for $249 (see press release).

With both the PS3 and the PSP, on the set-top and hand-held, these devices play local games and media, and then go online for multi-player action, social interactions, and Web browsing. Sony also is developing bridges between these devices, linking the hand-held to the PS3 with Remote Play, TV to hand-held with LocationFree, and now the PC to the PlayStation Store and PSP content with New Media Go.

But the real key is in networked access to purchased content. Apple does well with the PC download model to sync to iPods, but the iPhone and iPod touch have demonstrated the attractiveness of immediate access for downloading apps and content, especially over Wi-Fi. Sony is following the same Wi-Fi access model with the PSPgo, as is Nintendo with the DS systems.

So the player device is the platform to lock in the store, and your account with the store is the lock in that helps keeps you wedded to the same player line. Apple is leading the way in selling both applications and content into its devices, making a much more interesting business with far fewer devices than selling ringtones to mobile phones. And, as on the desktop, Apple's control over both software and media delivery provides a much more comfortable user experience than other smartphones like Windows Media and Blackberry and Palm and Android can provide.

It's now up to competitors like Sony and Nintendo to develop their own digital services that can provide the range of features and content that users will demand.

See my Portable Media Players Gallery for more on the PSP and other media players

See my High-Def Gallery for more on the PS3 and other set-top gaming systems that seek to become your media hub.

    Find the Sony PSP-3000 and PS3 slim on Amazon.com

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