Analysis: The one-two combo Sony used to knock Microsoft out of E3 2013

Over the past ten years of attending events like E3 and the Game Developers Conference, I have been to at least 40 press conferences held by console makers or game publishers both major and minor. In that time, I’ve learned the subtle art of interpreting the many ways an audience can react to the various announcements a company makes.

There are the announcements that get loud whoops and hollers from random audience members, as if to say “I recognize and enjoy the game that is a sequel to and feel the need to let you know this.” There are announcements that get late, half-hearted applause, almost out of pity more than anything. There are the announcements that only get a response from the development team sitting in one very specific section of the crowd.

There are announcements that lead to awkward laughter, as if to say “This is the best you’ve got?” There are those that lead to genuine laughter, as if to say “Oh my god, I can’t believe what I just saw!” There are announcements that lead to small gasps and a murmur of confusion throughout the crowd (Sony’s infamous “Five hundred and ninety-nine US dollars” moment is one of these).

For all my experience in instant, comparative E3 crowd analysis, though, I was left without a useful reference point of comparison at Sony’s press conference this year. That’s because the sustained reaction the company got when it announced that the PlayStation 4 would not restrict the resale and sharing of games on discs was, without hyperbole, easily the most overwhelming reaction I have ever seen to any announcement from an E3 audience. The only moment that came close, in my mind, was the unveiling of a new “mature” Legend of Zelda game to the Nintendo faithful in 2004.

Rewatching Sony’s “used game” moment on video, the applause clocks in at about 25 seconds from beginning to end, which is really incredibly long for a sustained reaction at this kind of E3 press event (the Vita price announcement, for instance, got ten seconds of applause). More important than the length, though, is the precise nature of the reaction.

It starts even before the words are fully out of the presenter’s mouth, as soon as a small piece of the crowd realizes just what is being said. Then the cheers sweep across the room and start to fade a bit, only to pick up again, as if a large segment of the audience collectively felt the need to reinforce just how much it supported this move. Sony received another sustained applause break of about 27 seconds less than a minute later after laying out more details about the PS4’s simple used game policies. Then there were ten more seconds of applause with the news that the system doesn’t make online checks to confirm game licenses. That’s over a minute of applause given to this one issue alone. That’s “State of the Union address” levels of ridiculous.

Think for a second about what these people were cheering. Sony was basically announcing that retail games on the PlayStation 4 would work just like retail games on every system since the Magnavox Odyssey; that is, the person in physical possession of a retail game has the right to play and/or resell it. At literally any other console launch in the short history of the video game industry (with the possible exception of the Wii U), this kind of announcement would have been greeted with confusion and bemusement. “Of course you can sell your games or trade them with friends when you’re done with them,” the audience would think. “That’s how it’s always worked. How could it work any other way?”

It was the months of widespread rumors that either Sony or Microsoft would actively block used games that set up the massive crowd response tonight. But it was Microsoft that opened the door wide for Sony by finally clarifying last Thursday that publishers of Xbox One games would be able to disable used game sales and that the system would require online checks to enforce these ownership licenses. By bucking the status quo so drastically, Microsoft created a situation where Sony could look like a hero just by maintaining it.

Of course, the reaction of one convention hall doesn’t predict the reaction of the world. Even those following on the Internet (who swiftly responded to Sony’s announcement just as loudly and positively as those in the Memorial Arena did) are just a small subset of the millions of people who will buy a new game system over the next few years.

But you shouldn’t underestimate the importance of this small subset, either. These are the early adopters that wait in line on launch day and create the early console sales momentum that can often be self-fulfilling. These are the “in-the-know” few who friends often look to for advice on which console they should pick up next. These are the people who can make or break a console’s early success. And they are very happy with Sony right now, just because Sony did what every console maker, save one, has always done.

The undercut cuts deep

If the used game announcements was a shiv in Microsoft’s side, Sony’s late announcement that the PS4 would retail for $399—$100 less than the $499 price Microsoft revealed for the Xbox One earlier in the day—was the twist that opened the wound wide. For all the attention Microsoft’s licensing shenanigans have gotten, there’s a large segment of the public that likely doesn’t care all that much about reselling their games or the principles of content ownership. But a $100 price differential at the cash register is much harder to ignore, avoid, or rationalize away as unimportant.

It’s a lesson Sony learned well last time around, when the PlayStation 3 came in at $100 more than the Xbox 360 (though there were two configurations of each, confusing the pricing structure a bit). This pricing disparity was a large part of the reason Sony’s system was so easy to find on store shelves so soon after its launch and why it never really gained the momentum it needed to keep the Xbox 360 at bay after the PlayStation 2 trounced the original Xbox (of course, the Xbox 360’s one-year head start in the market and the Wii’s astounding sales success at the same time factored in too).