Home opens its doors for the PS3

Sony's PlayStation 3 sales dropped 19% in November, but with the public availability of Home, the console has increased in value.

Silicon Alley Insider's Eric Krangel posted an op-ed today calling the PlayStation 3 a "sinking ship."

Krangel cited the console's high price tag, the observation that "no one seems to care about hi-def DVDs," and a lack of must-have titles as three reasons that the PS3's sales dropped 19% year-over-year. According to Krangel, Sony's only option to remain a competitor in this economy is to deeply cut prices. This may not necessarily be the case.

Jeffrey M. Stibel wrote in the Harvard Business Review earlier this year that discounting the price of goods for no other reason than to boost sales is a sure-fire way to create brand deterioration. PlayStations 1 and 2 are the best-selling video game consoles of all time, each shipping well over 100 million units, and the PlayStation brand still is extremely strong. Arguably, the biggest competition for the PS3 thus far has been the PS2, and to risk weakening the name could ruin all the company's future consoles.

Furthermore, unit sales may no longer even be the chief figure determining a console's success.

Yesterday, the doors to the beta of PS3's Home metaverse opened, the first console-based massively multi-player virtual world. With this, the PlayStation 3 has been opened to important revenue streams, namely micro-transactions and advertisements.

The micro-transaction market has proven to be one of growth, with a great deal of interest turning toward it as rumors that EA's latest Star Wars MMO would include the exchange of real life money for virtual goods, and with destinations like Gaia Online claiming more than a million dollars of micro-revenue per month. Last June, Lightspeed Venture Partners estimated that free-to-play MMOs draw between one and two dollars per user per month.

Based upon the number of PS3s that have been sold, Sony's Home could net the company between $17-34 million per month when in full swing.

In the most popular non-gaming MMO, Linden Lab's Second Life, virtual advertisements have become real-world attractions for corporations and organizations alike. From virtual billboards to anthropomorphic representations of the company, the 3D MMO offers advertisers a diversity of form unavailable elsewhere. Last year, the Yankee Group predicted that in-game advertisement such as that found in Second Life would become a $971 million global market by 2011.

If the PS3 is a sinking ship, it's certainly got a lot of lifeboats.