I've been debating with my friend Matt about what happens when you turn ordinary people into criminals. Or rather what happens when you make the perfectly acceptable actions of normal people illegal. We started off talking about the recent banning of online poker in the USA [article1, article 2] and then descended to our normal arguing about music sharing [I say the music industry has still missed the clue train, he says they are only making 2.9% return and has the right to defend their market, I say their defence of their market is why they are not making good returns, the argument continues]
Which brings me to the Sony PS3. Sony has closed down Lik-Sang for selling PS3 consoles to Europe that were manufactured for the Asian market. Sony has also said that they will aggressively target and sue anyone distributing consoles in Europe when they are released in the USA. They were meant to be released simultaneously, but Sony has pushed back their EU release date. This is because they are unable to get their act together in time and sort our manufacturing.
The reasons Sony gives for suing grey market importers are a bit vacuous. They claim:
- Voltage differences
- Incompatible with European Region 2 Movies
- No warranty
Which is both a load of crap, and Sony's own doing.
- The power supplies are rated for both voltages and comply with EU safety standards
- This is Sony and other entertainment industries own doing, fabricated for a reason no one can quite understand, nor was it something the consumers ever asked for.
- Again this is typical Sony. Living in SA as a kid, meant that grey market (i.e. non official importers) often had Sony goods at half or more the price. Sony does this because their three geographic regions (Asia, EMEA, Americas) don't talk to each other and compete with each other. It's basically three different companies. They could take a leaf out of Apples book and provide world wide guarantees but Sony is not a customer driven company.
You would struggle to convince me that it should be illegal to run a viable importing business to meet a consumer demand. Of course an importer should fully disclose where the consoles come from and any issues or incompatibilities the user might have. The user then knows the choice they are making and the risk that can occur. In fact what often happens is industries spring up to provide warranties and support that Sony wont provide, which is a good commerce. Well for everyone but Sony who is quite happy to screw the rooster as well as themselves.
Of course by treating everyone as a criminal, for example making it illegal to modify a device to play non region movies, Sony puts good guys out of business but the bad guys, and the ones who also modify boxes to play pirate games and sell pirate games continue to prosper. A bit counter productive I think. But that's what happen when you make criminals out of normal people. You also hurt your brand and create an attitude against the brand of "Well if I can't do things the honest way, I'm going to be dishonest, because that's how you are treating me"
Their is a consumer demand out there. Instead of listening to their consumers, Sony is deciding to use restrictive practices to block them. Sony is misusing the legal vehicle. I believe this is wrong. Giving consumers more choice is a good thing, and allowing business to trade fairly in importing is a good thing. It is a strong and viable business model, grey market importing and if Sony can't compete on their own terms, using the courts to fight their battles is wrong. This is not being competitive but a bully.
I hope everyone buys a Wii.
Full disclosure
I am an employee of eBay. The views expressed above are mine alone, are personal and do not reflect the viewpoint of my company nor necessarily anyone else in it, officially or otherwise. I have worked with Sony in the past on a consulting project for the PS2 for a client, but do not do so now, nor do I have any contact with them
1. QE
The whole PS3 story so far just demonstrates again and again how complacent Sony are, and how little they are in touch with (and as you say, care about) the consumer. I think the success of the PS3 will depend largely on the success of Blu-Ray, and I wonder whether that will go the way of Beta-Max.
2. Matt
It is my opinion that Sony are fucked.
From the recent news that their profits are down 94% (while Nintendo’s profits are up 74%) due to the exploding battery recalls, the PSP not being as successful as they thought, etc, going back to the whole DRM rootkit debacle, the PS3 not being released in Europe until March 2007, the fact that there will only be about 10 PS3’s per store on it’s release (compared to 90+ Wii’s), and now this whole Lik-Sang thing, every time Sony have been in the news for the past year or so it’s been bad news.
The PS3 will also cost over €500, mainly because of it’s (unproven) Blu-Ray technology and the ‘cell’ architecture. But it will still only have ‘normal’ games, like the games we’ve been playing for the past ten years, but with prettier pictures (consuming, according to reports, over 380 watts of power for this prettiness!).
The Wii will cost about €230, and will introduce to the world an entirely new way of playing games.
I’m getting a Wii.
3. Chris
As, according to Sony, I am now a criminal (having given in to temptation and bought a PSP on grey-import before it was available in the UK), I can only say that Sony have a fucking long way to go before they’ll convince me I need a PS3.
And the safety/voltage issue is, as you say, utter bullshit: my evil illegal grey-import PSP’s power supply has a CE (European safety) mark on it, meaning it’s completely approved for use in the EU.
Your point about Apple is a good one: when I bought my iPod in Japan, I specifically asked about warrantees and was hugely, pleasantly surprised to discover I wouldn’t have to ship it back to Japan to get repairs or whatever.
Got my XBox 360, and got my Wii on pre-order. Sony? Fuck ‘em.
4. Destructor
I don’t know who these people are that have time to play games, let alone own multiple systems.
5. Gert
I don’t know the specifics, so my comment is more a general observation.
Big business, in general, doesn’t like Government intervention and regulation.
Some government regulation and intervention is clearly in the interest of big business eg interception of ‘snide’ goods masquerading as brand-name, and Big Business is right to expect Government to intervene to protect their legitimate business.
Is it the role of government to intervene to protect sales of genuine product that happens to be imported against the wishes of the legitimate business, and, where presumably, a slice of profit will have gone to the original manufacturers, who have already handed over title by selling the products to Wholesalers in Malaysia or wherever.
My instinct says ‘no’. But I am not sure I can entirely square that with my logic that says it’s right for Govt to intervene to prevent snides.
6. Adrian
Gert, I agree with you. However this isn’t fakes or knock offs or snide goods. It’s the exact same device from the exact same company. It’s just released earlier in a different country.
7. tucola
I wouldn’t characterise this so much as an issue of Government intervention. Or bullying, for that matter. Sony is just using the legal system (English court) to enforce its existing UK legal rights in relation to its IP, against someone who is acting in breach of those rights.
It is Sony’s prerogative to decide how it wants to market and distribute its products worldwide. If the strategy is to release a particular product in one jurisdiction at a particular price, that is Sony’s call. The deal with the Asian distributor presumably prohibits the distributor seeking to circumvent the strategy, no doubt in the interests of greater profits than those bargained for in the deal with Sony, by selling the new goods provided by Sony for Asian distribution to consumers in the UK without Sony’s permission. UK IP law means that to do this without Sony’s permission, thereby circumventing Sony’s strategy, puts the distributor in violatation of Sony’s trademarks, etc. The bottom line is, if you don’t want to stick to the Sony deal, don’t become a Sony distributor.
It is certainly true that the fact that such market compartmentalization strategies are increasingly becoming untenable in a globalized world, due to freer flow of goods and particularly of information, brings new challenges for global brands (and challenges for the law as it continues to develop). The companies that adapt quickest and best to these changes should do well. But a free-for-all where companies just relinquish control of their product at the factory door and do not seek to enforce their valuable IP rights thereafter does not sound likely to be a great strategy for brand driven, high-technology companies.
8. Adrian
So that’s some good points but
So I agree with your points, but since Sony didn’t even use this as a defence and had to win by bullying (using the court system to put more cases against the defendant than the defendant could deal with), means they probably know it’s a rubbish legal case. And Sony could solve the problem by simply not supplying to the dealer why are they not doing this.
I think that the strategy is being circumvented because it’s flawed. Instead of fixing the flaw or encouraging their dealer network to help, they have simply used the legal system to bully people.
Ultimately this is not something that endures you to your dealers or customers. Which is not a very good strategy.
9. Jeffery
Meow. I’m buying a Wii.