We recently had the opportunity to chat with Sony Computer Entertainment America's Executive VP Jack Tretton (right). In Part 1 of this exclusive interview, Jack fills us in on some key data points and what they mean from Sony's perspective. Dig in...

There's been a lot of negativity surrounding Sony in recent months, but the fact of the matter is they're still number one in the video game space. That was the basic message GameDaily BIZ received in a recent interview with Sony Computer Entertainment America Executive Vice President and Co-COO Jack Tretton.

To start, Tretton outlined a number of interesting pieces of data for us, some of which we hadn't previously been aware of. He began by reiterating Sony's belief in the 10-year life cycle for the PS2 and emphasized how the PS2 has been performing far better than the original PlayStation. "If you track like timeframes, 5 and 3/4 years into the two life cycles, we're 28 percent ahead of where we were on the original PlayStation... We did extremely well with the PS2 on a North American basis, on a U.S. basis and on a worldwide basis, and no matter how you put it, we basically trounced the competition," Tretton said. According to SCEA internal data, the life-to-date PS2 installed base stands at 39 million units in America.

Everyone knows how successful the PS2 has been, but what's a bit surprising is that the aging console has been outselling the Xbox 360 in recent months. Furthermore, according to the NPD Group's TRST data, the Xbox 360 is actually off to a slower start than the original Xbox. Looking at retail sales for the respective consoles' first nine months shows the Xbox at 2.55 million units and the Xbox 360 at 2.21 million units.

"What I've read widely and what I've heard from MS is, 'Yeah, we got beat last generation but that's because we were late to market and came out a year after PS2 did and that's why we got defeated and that's not going to happen again.' Yes, the PS2 was beating the Xbox 5 or 6 years ago, but now the PS2 is beating the Xbox 360... Year-to-date we've sold more hardware than they have and this past month we've sold more hardware," Tretton boasted. "So we beat them in their last generation machine and we're beating them in their current generation machine. And if I were Microsoft, the big concern I'd have is... Xbox 360 is actually doing worse than the original Xbox did."

He continued, "I think there's less consumer interest in [terms of] pure numbers for their new system than there was in their previous system. I think the thing that's concerning to the industry or to anybody involved in generating income from it or I would assume to Microsoft is that they're the only supposed next-generation system out there. They have the market all to themselves... and they're doing worse numbers. To me that says the consumers are either not satisfied with what they're seeing from 360 so far or they're waiting to potentially purchase another system from a competitor or stick with what they're currently playing. So if that is the future of the next generation then this industry is in a whole lot of trouble because it would show a decline as opposed to growth."

The discussion then moved onto the portable space. Interestingly, the PSP has actually had a higher adoption rate than the PS1. Looking at the 18 months after launch of each system, the PSP sold 5.30 million units in America compared to the PS1's 3.48 million, according to SCEA internal sell-through data. Furthermore, while the DS has been an unbelievable success in Japan, in North America since the PSP launched it's outsold the DS, roughly 5 million units to 4.1 million units. Life-to-date, however, the DS still has a larger installed base in North America (5.6 million vs. 4.9 million).

Said Tretton, "We really feel we carved out new territory [with the PS1] and then we built upon that with the PS2. The parallel that we draw to the PSP is that it is exactly the same to portable gaming to what the PlayStation was to console gaming, that we are carving this new road out and we are selling again to 20-something consumers that were not fans of portable entertainment, were not playing Game Boys because the technology and the software offerings just weren't appealing to them... And now because of the technology in PSP and the game offerings it appeals to them and that same consumer we carved out with the PlayStation is now being carved out with the PSP at an even much greater rate than we did with the original PlayStation. There's a lot of PlayStation legacy there that we've been able to capitalize on that we didn't have back in 1995, but I think it's very similar in terms of carving out a new audience and that new audience has generated $2 billion in revenue in the 17 months that the PSP has been out."

He continued, "I think obviously our competition, the handheld devices from Nintendo and specifically in the case of the DS, we really feel like they're appealing to the same audience that Game Boy has always appealed to. And if you look at the adoption rate of the DS over the first 17 months, not only does it trail the PSP but it also trails their other platforms... They're potentially losing some of their core audience and they're not really expanding beyond that and we think we're expanding into a completely new audience as we did with PlayStation. And we'll do just what we did on PlayStation; we'll dip down to the younger consumer eventually and we'll ultimately appeal to that vastly Earth wide audience we carved out with the original PlayStation."

We queried Tretton about Nintendo's approach to broaden the market and "touch" the so-called "grey gamers" in addition to appealing to the younger set, and while it's hard to imagine a PSP in the hands of a 60-year-old for instance, Tretton believes there are more middle aged and young people playing PlayStation systems than one might think. "I think it's a good premise, but I would tell you for a fact that there are much more people in their 50s and 60s playing PlayStation platforms in terms of console, than there are playing Nintendo platforms. So I think it's conceivable just as we did with the PS1 and PS2 that we could bring in that audience."

"You start with the core audience first and then it's much easier to reach down to a younger consumer and it's much easier to reach out to a passive gamer than it is to go the other way around and say, 'Well I saw my kid playing this and I was really attracted to it and I've started playing it now,' or 'I'm not really into gaming. I just bought it because I like puzzle games but now I think I want to play SOCOM.' ... So I think just as you saw us do with the original PlayStation and PS2, we start out with that core audience and then we expand out from there."

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