Sony is all set to talk about the future of PlayStation on February 20 and the Wall Street Journal is reporting that the PlayStation 3’s successor, codename Orbis, will not only be revealed on that day, but it will also be on sale in America and Japan by the end of the year with Europe receiving the new console some time in early 2014. Nintendo just kicked off the next generation of consoles with the release of its Wii U back in November 2012 and it is finally Sony’s turn to reveal their hand. Sony could potentially be releasing their next console before Microsoft, a drastic change in strategy from when Microsoft beat Sony to the gate with its Xbox 360. While it’s good news for video gamers to have a new generation of consoles to look forward to, Sony is taking a huge gambit since the PlayStation 3 has not been profitable for long and it is still in the middle of its prime years in terms of gaming. Gamers will be reluctant to buy into a new PlayStation that will likely not have backwards compatibility to play the AAA games and HD remakes of beloved franchises still to be released.

The Next PlayStation and Sony’s Competition Gear Up

The long awaited next PlayStation garners some hefty hardware to compete against Microsoft’s yet-to-be-announced next gen console. According to Kotaku, the next PlayStation will have the following hardware:

• System Memory: 8GB (some rumors suggest this is only 4GB)
• Video Memory: 2.2 GB
• CPU: 4x Dual-Core AMD64 “Bulldozer” (so, 8x cores)
• GPU: AMD R10xx
• Ports: 4x USB 3.0, 2x Ethernet
• Drive: Blu-Ray
• HDD: 160GB
• Audio Output: HDMI & Optical, 2.0, 5.1 & 7.1 channels

Some of the other rumors say the system will have recording capabilities to record games while you play to later be uploaded and the next DualShock controller will be similar to the tried-and-true controller we’ve known since it first released on the original PlayStation, but will also include a small touch screen in the center, a move that will make the controller similar to the Wii U’s new tablet-like controller. The Kotaku rumor points to touch sensitivity on the back of the controller instead, similar to what the Vita uses. Earlier rumors suggest the system will have PlayStation Move support and an improved PlayStation Eye.

Personally, I believe the next PlayStation will also feature 4K support to go along with all those 4K TVs Sony just showed off at CES 2013. Sony would also be crazy to ignore any kind of PlayStation Vita synergy; especially with Nintendo’s Wii U focusing on a handheld device that can play console games. I imagine Gaikai, for streaming video games, and an increased focus on both social apps and indie games will also play a part in Sony’s next console.

Microsoft, Sony’s main competitor based on gaming experience, has yet to reveal what its next Xbox console, codename Durango, will be like, but rumors point to a similar AMD processor. According to EA’s CEO, the next PlayStation and Microsoft’s next Xbox supposedly outshine Nintendo’s Wii U offering by a fairly large margin, going as far as to discredit the Wii U as part of the same console generation in terms of power. How this disparity will play out over the years will be something to keep an eye on. If the scenario plays out like the last console generation with the Wii playing second fiddle to the PlayStation 3 and Xbox 360, then Nintendo may be in trouble (note: this is in terms of graphics and third party support and not profit or number of consoles sold). Nintendo isn’t sitting on its laurels just because it just released its Wii U though. In an attempt to better compete against the mobile scene, which has been creating more and more “casual” gamers, Nintendo will be combining its console and handheld divisions.

PlayStation 3 Profitability

Although the PlayStation 3 came out back in November 2006, the console only started turning a profit some time in early 2010, a mere three years ago. Up until early 2010, a period of over three years, the console was being sold at a loss. When the console first came out, Sony was losing approximately $200 per unit. Part of the reason for this was because of PlayStation 2 backwards compatibility and the high cost of the Blu-Ray diode and Cell processor when the PlayStation 3 first came on the scene. As the diode and processor became more commonplace and Sony decided to nix the Emotion Engine chip needed for native PlayStation 2 compatibility, the PlayStation 3 slowly became profitable on the hardware side. To be clear, the licensing fee for games and the Blu-Ray movies did help reduce the losses incurred selling the console below cost.

With a new console, Sony will most likely be repeating the same tactic of selling the console below cost; especially after the fiasco it went through when it first introduced the PlayStation 3 at a $600 price point. The economy still hasn’t recovered and gamers expect a lower price point. The Wii U entered the market at $299 for the basic model and $349 for its deluxe model. Despite a lower price point, Nintendo only managed to sell 3.06 million units as of December 2012 and needed to revise its sales forecast for the console down a second time.

Sony has been in financial trouble for at least the last 10 years, so selling a new console at a loss will not be beneficial. Unfortunately for Sony, it probably has already invested a large sum of money into the R&D of this new console, a sunk cost, so not releasing it would actually be worse for the company. At least by releasing the console, Sony will eventually turn a profit just as it did with the PlayStation 2 and 3.

PlayStation 3 Still In Its Prime

Probably a larger problem is the fact that the PlayStation 3 still has a lot of life in it and the next PlayStation will likely not have backwards compatibility. In the past, Sony has touted its “10 year life cycle” for its products, so the PlayStation 3, released back in November 2006 with a new remodel just released in late 2012, has a good 3-4 years ahead of it. Game developers mostly agree with God of War: Ascension, Grand Theft Auto 5, Final Fantasy Versus XIII, The Last of Us, Beyond: Two Souls, Metal Gear Solid: Ground Zeroes, and more still to be released over the next couple of years. There is a large chance that the next PlayStation will not have backwards compatibility with the PlayStation 3 library since it will use an AMD processor. The chances that the AMD processor can recreate what the Cell processor does is highly unlikely. With so many AAA titles still on the horizon for PlayStation 3, it will be unlikely that gamers will be ready to spend their hard earned money on a new console. This will be exasperated by a potentially weak line up of new games at launch that will be different enough from what PlayStation 3, Xbox 360, and Wii U games currently provide.

In addition, the PlayStation 3 has become synonymous with HD remakes of beloved games. Many franchises such as Metal Gear Solid, Devil May Cry, ICO, Shadow of the Colossus, Zone of the Enders, and more have all been reborn in HD on the PlayStation 3. Many more including Final Fantasy X and Kingdom Hearts are set to show up as HD remakes for the console. Gamers will want to be able to play these games into the next generation and will feel particularly burned by the lack of backwards compatibility. In response, they will put off purchasing the new console.

On the other hand, most of the games coming out at this stage of the console life cycle are known sequels to well-established franchises except for The Last of Us, created by Uncharted developer Naughty Dog, and Beyond: Two Souls. Ubisoft’s CEO went on record to say that new consoles are needed to “ignite innovation.” A new console is just what some game developers need to both create brand new games and continue to innovate the tried and true franchises.

Sony’s Gambit

Are video gamers ready to pay money for a new PlayStation console? That is the ultimate question here. Over at GameFAQs, a recent poll of their visitors say a majority (39.42%, 17,258 users) were not interested in buying neither the Orbis or Durango within the first year. There is some hope though: the next highest choice was in favor of Sony’s next generation offering, coming in with 24.14% of the votes. In the end, Sony is taking a huge gambit with releasing its next PlayStation because many gamers will not be ready to spend money on a new console that won’t have different enough games and many new games, including beloved remakes, will not be playable on this new console. For Sony, though, it is a gambit it needs to take and one that it hopes will payoff sooner than later.