Sony's (SNE) push into the PlayStation 3 video business: too late?

Sony Corp.'s (NYSE: SNE) PlayStation 3 has rung up over 3 million gaming console sales since its introduction last November, but those numbers pale in comparison to the 8+ million Microsoft's (NASDAQ: MSFT) xBox 360 and 9+ million Nintendo, Ltd.'s (OTC: NTDOY) Wii consoles that have been sold. Microsoft is busy turning the xbox 360 into a central entertainment piece in the living room, with movie downloads and global gaming, and while Nintendo sits back with its smash, video-less Wii (for the casual, mass consumer), Sony has decided to try and pump up the PlayStation 3 with an introduction into the video download market.

Now, Sony must have known that the PlayStation 3 would have a hard time finding the sales numbers that many analysts expected, since the thing cost $600 upon debut and has barely fallen since. The PlayStation 3 is a supercomputer more than a gaming console (with a price to match), and Sony needs some ancillary services to get the interest level to a point where it can start selling more consoles. Sony's (important) gimmick: it does not plan to charge for its own video-based service that should be available soon from the Sony PlayStation Network video download service. Why? Well, Sony will be using the multitude of content from inside the company instead of going to outside vendors like Time Warner, NBC or any other media outlet.

Sony has a full catalog in-house, and it's willing to bet that by offering free access to those services, more customers will be inclined to buy a PlayStation 3 above the competitor's gaming consoles. Still $500 to have access to free Sony video entertainment? Although Sony execs admit these services won't come in 2007, they do say it's in the realm of the "platform life-cycle" of the PlayStation 3. So, Sony will launch these services on the downward slope of the PlayStation 3's life-cycle in the market? Very odd. Microsoft already has a solid offering here and is beating Sony all over the map with sales to its console. Will some late-entry video offering -- even free -- be enough to gain paying PlayStation 3 gaming console customers? Nope.