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PlayStation 2 with bonus 'flaw' sells millions in Japan

In this story:

A hidden function

PS2 effect on DVD

Broadening the base

Weaknesses and rivals


TOKYO, Japan (CNN) -- Many people in Japan have become enamored with the PlayStation 2 since its release here about six months ago, but not just for its gaming capabilities, say consumers and industry observers.

Toru Sasaki said he was happy to buy the PlayStation 2 because of its ability to play movies.

"It's so cool. Graphics are great and I can even enjoy watching movies that we normally are not allowed to watch in Japan," he said.

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Sasaki's wife likes it too. She doesn't play many games, but uses the PS2 often as a DVD player.

Sony has shipped more than 3 million of its consoles in Japan since March 4.

To get a new console when it was released, thousands of youngsters lined up in front of shops overnight or even for a few days. In most shops, the PS2 quickly sold out. To buy it online, gamers had to wait a few weeks.

But the hype contributed to numerous crimes. Some anxious folks resorted to theft, while others became the victims of fraud.

In Saitama, north of Tokyo, a high school boy on his way home was robbed of his PS2 immediately after he bought it. On the Internet, some people put PlayStation 2 units up for auction with no intention of selling, thereby swindling many bidders out of millions of yen.

A hidden function

Only a few days after the release of the PS2, rumors circulated on the Internet that the console had a "hidden" function. Sony Computer Entertainment Inc. confirmed that software included in the utility disc of the PS2 had a "flaw" that allows users to play international DVDs that are supposed to be incompatible with players sold in Japan.

"With a certain peripheral device ... you can easily play overseas DVDs. I myself immediately bought the peripheral and watched a U.S. movie," said technology journalist Takanori Serizawa.

With the threat of legal action looming from the U.S. movie industry, which restricts its DVD sales overseas for fear of loss of revenue, Sony recalled the utility disc in April.

The company asked users to send the utility disc by mail or bring it to the nearest store to replace it with the right one. But according to a Sony spokesperson, just slightly more than 108,000 discs had been collected by September out of 1.25 million from the first release of PS2.

"The recall is only for Sony's sake," said Serizawa, explaining that users don't want to give up the benefit of watching international DVDs.

The Sony spokesperson said the company now ships PS2 with the right version of the utility disc, and has asked the movie industry to understand that the foul up was accidental. No lawsuit has been filed so far, she added.

PS2 effect on DVD

Still, PS2 brings good news to the DVD industry. A conventional DVD player is priced between 20,000 and 30,000 yen. In contrast, a 39,800-yen (U.S. $370) PS2 seems like a good buy since it can use both DVDs and video games. In fact, PS2 has boosted DVD movie sales.

According to the Japan Video Software Association, domestic sales of DVDs topped that of conventional VHS videos for the first time in August. DVD sales were nearly four times higher than a year before, while VHS sales were down 13 percent.

Naoko Ueda, an association official in charge of research and public relations, said that DVD sales increased dramatically since PS2 was launched.

"PS2 has contributed a lot to the increase. Makers have been increasing the number of DVD titles since last year by pinning high hopes on PS2," Ueda said.

When PS2 hit the market, DVDs picked up momentum and become widely popular at home, Ueda said.

"It also helped drive down the price of conventional DVD players," she added.

Broadening the base

Sony is aiming to expand the PS2 user base by launching a hard disk drive unit for the console here this winter.

The unit has a high-speed network interface for connection with broadband networks and a large-capacity hard disk. It will allow users to download directly digital content and store images from digital cameras, digital camcorders and high-quality digital broadcast.

In conjunction with NTT DoCoMo, provider of the I-mode popular Internet-capable cell phone service, Sony is planning to provide users with video games that can be played on both PS2 and I-mode handsets.

Sony has found that PS2 attracts older users as well. According to their survey, 24 percent of total PS2 users are between the ages of 26 and 30, compared to 14 percent for PS1 users. The ratio of users aged 41 or older increased from 5 percent for PS2 to 15 percent for PS2.

Weaknesses and rivals

But in one sense the user base has narrowed. The survey showed that 90 percent of PS2 users are men, compared to 81 percent for PS1. The spokesperson said PS1 has many game titles that are popular to women, but PS2 does not yet have so many titles.

"With PS2 using very advanced technology, only a few software makers can afford to make games meeting the specifications. For users, there are not so many choices of games for PS2, and they tend to rather play games for PS1 or use it mainly as a DVD player. PS2 sells well, but its game software does not," Serizawa said.

Sega's Dreamcast already boasts Internet access, but is struggling to catch up with PS2. Serizawa pointed out that in Japan, Sega has an image of losing out and users wonder if Dreamcast has any future.

"Its (PS2's) prospects seem to be brighter," he said.

More rivals are almost ready to battle it out for the game market. Nintendo's GameCube and Microsoft's Xbox are due next year.

"I won't tell you it's not threatening for us, but we welcome these moves to promote the entertainment industry as a whole," the Sony spokesperson said.

Coming soon: PlayStation 2 pandemonium
October 23, 2000
PlayStation2: This sequel could be a blockbuster
October 21, 2000
Sony to sell PlayStation 2 chips to other companies
June 5, 2000
PlayStation2 due in U.S. this fall
May 12, 2000
Sony has high hopes for PlayStation 2
March 31, 2000

Japan Video Software Association
Nintendo GameCube
Microsoft Xbox

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