Paul Staines says Sony should welcome Brits buying Playstations before their UK release.
European video-gamers who buy the Sony Playstation Portable (PSP) will be surprised to find out that Sony is suing the retailers who sold it to them.
Not yet formally launched in Europe, the eagerly awaited PSP can be bought online from Hong Kong dealer Lik-Sang.com, a leading online retailer for videogame systems. Sony, in an aggressive tactic borrowed from Big Pharma’s lawyers, is suing the parallel trader for breach of trade mark and seeks a court order that would prevent Lik-Sang.com from selling or offering systems, games and accessories to customers in the UK and the European Economic Area (EEA). Sony claims “Lik-Sang’s sales are an unlawful interference with Sony’s economic interests.”
Pascal Clarysse, Marketing Manager for Lik-Sang.com says:
This is the most aggressive move against its own customers that a console manufacturer has ever taken in the 30 year history of videogames. Sony wants to completely cut hardcore gamers away from items released in Japan or anywhere else outside their own country. A very active part of the gaming community has been enjoying Japanese gaming culture for over two decades, and that’s what the Empire is now willing to destroy.
The lawsuit comes as a total surprise to Lik-Sang.com, given that the laws of Hong Kong are clear when it comes to parallel trade. Hong Kong’s legislation is based on the fact that allowing parallel and free trade will restore natural competition and benefit consumers with lower prices. Hong Kong, one of the pioneering countries respecting worldwide exhaustion of trademark rights, allows free trade once an item has entered the market for sale.
Sony wants to control its products even after it has sold them, but that is not how the globalized world works today. Sony should be pleased that the demand from UK customers is so great. Instead of acting against its fans’ interests, they should welcome the early demand.
An economic regime it should be noted which was established by the British Colonial regime. I have always tended to assume that it was the influence of Stamford Raffles’ system in Singapore which was very consciously FREE TRADE. However bearing in mind the very heavy influence of the Trading ‘Hongs’ — Jardines, Swires etc in the creation of Hong Kong they might well claim the credit as well. Both colonies were consistently FREE tradewise from the mid 19th century.
Be it noted that this is in stark contrast to Japan, Taiwan and Korea who used restrictive high tariff policies.
If Sony could just sell their products to anybody and dust off their hands then your criticism would be valid. The world however, does not work that way.
Selling a product today imposes an entire panoply of obligations and responsibilities on the seller. Sony has to provide technical support, warranties, returns, recalls, safety testing (in many jurisdictions) and assume liability for any harm their products might cause. Every item sold becomes a liability on the companies books. Letting your product get sold in a jurisdiction before you have its legal and practical support structure in place is a recipe for disaster.
Further, governments will hold Sony responsible for any sales that Sony did not authorize UNLESS Sony demonstrates a good faith effort to stop the unauthorized sales. Otherwise, the authorities will assume that Sony had a “wink and nod” arrangement with the reseller.
I used to think that a lot of corporate behavior like this resulted from stupidity on the companies part. After having to deal with these issues, I have learned it is usually the result of a company trapped by regulatory, legal and liability concerns.
Sony wants to control its products even after it has sold them
The whole copyright/CD ripping/music piracy thing is the same sort of thing, you don’t buy the music anymore apparently, you merely have a license to use it – with certain restrictions, of course.
So this is hardly news.
Great advertising for this HK retailer.
Sylvain,
If they want to send me a PSP….
Shannon,
Sony should have a liability worldwide if they sell me a product that explodes in my face, but they should not have to support a warranty out of its jurisdiction…
Its not that complicated.
They just want Brits to pay high rather than HK prices.
#Shannon Love
You forgot the sarc tag.
(and in case you said all those stupid things in all seriousness, you might want to know that when buying goods in Hong Kong you do not benefit from world wide warranty schemes — been there, done that — there’s usually a very explict warning on the packaging, i.e. HK Warranty ONLY.)
# paul d s
Thank you for that dose of sanity.
It’s even more fun and games if you want to develop for the things. Though I don’t think I can explain how without two floors of lawyers from Golden Square falling on my head.
I certainly know of cases of people who want to do business with Sony, provide them with content, in effect pay them large amounts of money, yet cannot import a PSP.
Both Paul Staines and Shannon Love are right to some extent I suggest. It is more often trade mark exhaustion problems–and in Sony’s and like cases getting agreement with the competition authorities–that worry multinationals rather than product liability, I suspect. But those are conditions imposed by states. However the principal motive for restraining parallel imports (and large companies often manipulate regulation quite successfully for the purpose) is to get the optimal price in each market.
# guy herbert
How on earth is “getting agreement with the competition authorities” going to interfere with me buying some video console in Hong Kong?
(and if there’s any truth to that at all, even more reason to get rid of all this competition law BS)
Interestingly, you can run Japanese games on US PSPs even though Sony could easily use the same region coding system they use for the movies. And I expect to be able to run European games on my US-bought PSP. So Sony don’t seem to be entirely consistent.
guy herbert writes:
” However the principal motive for restraining parallel imports (and large companies often manipulate regulation quite successfully for the purpose) is to get the optimal price in each market.”
Precisely. From the utter bollocks surrounding DVD ‘region’ encoding to this nonsense surrounding games, the driving force is extracting as much money from the consumer as possible.
Japanese corporations are the worst at this (and Sony leads the pack) but they are closely followed by some of the giant US outfits.
I see inter alia that Sony’s latest figures are rubbish. There is a connection, whatever the corporate drones pretend. The market will always win and however big and powerful Sony thinks it is, if it doesn’t work with the market, the market will destroy it.
Though actually, Sony doesn’t make money directly from the Playstations, rather they sell it at a loss, but indirectly through licensing for games. If I’m not mistaken, they have different licensing rates for different regions.
Which is why Sony and others in the same market need the agreement of competition authorities to carry on as they do.
They couldn’t charge the manufacturer’s license fee on each unit manufactured that they do unless they were entitled to control what product is published for their platform. You cannot make or sell a Playstation game without Sony’s approval. Which would normally be regarded as an illegal monopoly/restraint of trade over other publishers and developers, save for their capacity to pursuade the European Commission, et. al. that this arrangement is not being abused and is in the public interest.
Thus, pace hm, abolishing competition laws would not affect this particular problem. (Though it does give an example of how, despite the conviction of many of its fans, regulation is often less of a problem for very large companies than it is for smaller ones.)
The web of fierce contracts that maintains this position is founded on various forms of intellectual property. But parallel imports are in general controlled through trademarks.
Guy,
Thanks for the insight, but I still read it as Sony want to charge the “optimal” (trans. highest) price the market will bear.
Free trade breaks down artificial borders and should ultimately promote global price convergence. Sony and others hate that because cross border competition means they can’t gouge consumers for higher margins.
Ahh, diddums.
Roger that Guy.
I thought game developers paid a licence fee for putting the Playstation logo on the packaging etc., not for making the game per se.
However, I do not buy into this making a loss on the console.
hm, it is true however. Hardware manufactuctuers do not make money each console they send they do however make money on the licensing and insundries connected with the game. Generally these companies wait to have enough “launch titles” before releasing a console. A console without enough good ones can have trouble with the stiff competition.
Paul,
I’d have thought a man of your financial sophistication would have spotted that “optimal” from a large corporation’s point of view does not mean “highest”, nor even “most profitable”, but “contributing most to profitability over the longer term, taking into account the need to undermine competitors and maintain market intiative”.
hm,
Pay for the logo? You might say, on the contrary, that because displaying the PlayStation logo is part of the deal, and thus every game reinforces Sony’s image in the consumer’s mind at the expense of other brands involved, the license fee is lower than it might be were it possible to sell no-logo PlayStation product. You might say that. I couldn’t possibly comment.
Launching a console is almost inconceivably expensive. Running a Hollywood studio is a low-risk business by comparison.
Two things bother me about this thread:
(1) Statist like simplistic thinking: “I don’t understand in any detail any of the parameters that Sony has to consider when releasing a product therefor I conclude it must be a trivial task. Any behavior I don’t immediately understand will be chalked up to greed and immorality on Sony’s part. My ignorance is proof of ill-will by Sony.”
(2) Sony has the inherent right to sell its products under any conditions that it believes will best benefit its OWN interest. Sony is under no moral obligation to provide me with a gaming platform at a price that serves MY best interest.
(3) Sony has the right to establish conditions of sale for any products it creates. If you don’t like Sony’s conditions, don’t buy. If Sony wants to charge different prices in different areas or refuse to sell to people named “Bob’ on a Tuesday, they have that right. If Sony establishes contracts with distributors or resellers that place conditions on further re-sales then Sony has a right to expect the state to enforce those contracts.
Don’t be naive in thinking that companies don’t have significant concerns imposed by the state in releasing products world wide. Rolling releases are the norm for all mass-market products and the driving force behind rolling releases ( beyond supply, support etc) is the need to comply with each region’s legal requirements. If it were not for such State requirements, worldwide markets would be much more common.
Before you leap like a Socialist to the conclusion that Sony is trying to rip off its customers you might spend some time trying to understand the problem from Sony’s perspective.
Shannon Love writes:
“Before you leap like a Socialist to the conclusion that Sony is trying to rip off its customers you might spend some time trying to understand the problem from Sony’s perspective. ”
Everything you say would be true, were it not for the abuse of market position which large companies routinely use to stifle competition and innovation.
Yes, I remember reading that, when commencing production, Microsoft lost about $100 per unit on the original X-Box. Since they used over-the-counter parts like Intel chips, hard drives, RAM etc, it wasn’t hard to figure this out, even when factoring in the bulk buying power MS would have utilised.
Shannon, you are quite right. Too many times we get someone whining about how xxx is so much cheaper in Mumbai than in London/New York/Tokyo or how they bought these amazing graphics cards etc in some market in Shanghai for xxx dollars and how they wish we had those prices in London. A swift reality check is called for in such cases methinks.
Regarding the PS3, this article from Merril Lynch is quite interesting,