The PlayStation 3 costs too much and recovers slowly

What happened

Two ambitious bets were built into the machine. The Cell processor pursued performance through many small specialized units rather than a few general ones, which rewarded teams willing to restructure their work around it and frustrated everyone else. The Blu-ray drive gave enormous storage and made the console a cheap player for a format still fighting for survival. Both raised the price, and the launch cost far more than either competitor was asking.

The first two years were rough. Multi-platform games often ran worse on the PS3 than on the Xbox 360 because studios optimized for the machine that was easier to work with and already had more owners. Sony trimmed features, including the backward compatibility hardware, to bring the price down. Free online play, offered in contrast to the paid service on the competing console, was one of the few clear advantages it held during those years. Confidence recovered slowly, driven by exclusive productions from the company's own studios that finally showed what the architecture could do.

The disc gamble paid off decisively. Millions of consoles doubling as Blu-ray players helped settle the format contest against a competing standard, repeating the strategy that had worked with DVD six years earlier. Studios that had backed the rival format abandoned it within roughly a year. Over a long life the console closed most of the gap in sales, and its later years produced a run of narrative-driven exclusives that shaped expectations for what a big-budget game could be.

The world at the time

Sony entered the generation from a position of overwhelming strength, having sold more consoles than anyone in history, and priced accordingly. Microsoft's machine had been on sale for a year. Two rival high-definition disc formats were competing for the successor to DVD, with studios and electronics makers split between them.

What it changed

Sony's next console used conventional processor architecture and launched at a lower price, an explicit correction. The competing disc format was withdrawn. Losing a generational lead also ended the assumption that success carries over automatically, and the long recovery demonstrated that a console's fortunes are decided over years rather than at launch.