"Sony is in a tough position. In many areas of their business, they are losing share, such as TVs and computers, and their challenges are well known in gaming. The need to invest in a significant upgrade cycle for Orbis/PS4 comes at a awkward time for Sony, but to remain competitive longer term in games," Sebastian states, "We think there needs to be another price reduction on the PS3, and then be first to market with a next generation console."
Sebastian is not alone in this belief. Fellow analyst Michael Pachter of Wedbush-Morgan advised the same strategy earlier this week.
It isn't only the realm of videogames that the PS3 must remain relevant, Sebastian added. He also warned, "The battle for the living room is only going to get more competitive with an Apple television and a bunch of Google/Android powered TVs coming to market - Sony needs to act quickly."
Microsoft has been aggressive in this area. For example, it recently added HBO Go, Xfinity, and MLB.tv to its video apps, in addition to Netflix and Hulu Plus.