Sony’s plans in the 3D TV space have been known for a while now, but the company has finally confirmed rumors that the PS3 is going to be tagging along for the ride.

In a presentation accompanying its earnings report today, Sony noted that it would “release 3D games in line with Sony’s 3D strategy” and that “all PS3 units will be firmware upgradeable to 3D”.

In and of themselves, the two lines are fairly benign. But when looked at in conjunction with the company’s larger ambitions, 2010 is getting very, very interesting on the 3D front. Establishing formats to bring 3D into the home and 3D gaming on the PS3 are the company’s top two goals.

We’ll know a little more about timing in January at CES, but it’s a pretty safe bet that Sony will prominently feature at least one AAA 3D game at E3 next year. There’s no faster way to create enthusiast excitement – and begin the rollout of the new sets. 

The Xbox 360 is losing one of the bigger exclusive weapons in its home entertainment arsenal.  Netflix has announced that it will begin instant streaming of movies via the PlayStation 3 next month.

As an added incentive, PS3 owners won’t have to pay the premium that Xbox Live customers do. (Netflix streaming is currently only available to Xbox Live Gold members – who pay a $50 annual subscription fee.)

The PS3 currently has a much smaller installed base of customers than the Xbox 360 – but is hardly slouching. 9 million US households own the machine, which is roughly 2 million shy of Netflix’s total subscribers.

Watching streaming films via the PS3 will be a little different than it’s done on Xbox. Users will need a special Blu-ray disc (which will be made available for free – request one here) in their system to watch. As with the Xbox version, users will be able to put together a queue via the Web or directly on their console.

It’s a notable expansion for Netflix, which the company teased last week during its earnings call. The question now is when Netflix and Nintendo will tie the knot, since the window of exclusivity has obviously ended. Microsoft’s reaction will also be one worth watching.

Will the company make Netflix streaming available to all customers for free? Will it enhance the service – or might it have another streaming service up its sleeve (perhaps Hulu?) to roll out as a complementary streaming service some time in 2010?

Raise your hands if you saw this one coming. (Wow. That’s a lot of hands.)

Sony, riding high on the sales of its lower-priced PS3, has just introduced a more expensive model. The company today unveiled a new PS3 SKU that will include a 250 GB hard drive (versus the 120 GB drive in the now standard $299 model). The 250GB PS3 will go on sale Nov. 3 for $350.

The system will maintain the PS3’s new slimline form factor, which Sony says has sold 1 million units since its Sept. 1 launch. The larger hard drive will give players more space for digital downloads, including games and movies, via the PlayStation Network Store.

While increasing the size of the hard drive isn’t surprising, it’s funny to note that Sony simplified its product offerings to one just under two months ago – and is now reversing that. The idea, of course, is to keep up momentum as the holiday season arrives.

Sony’s expected to top the hardware sales charts for September. We’ll learn exact numbers later today when the NPD numbers are released. 

(EDIT: Well, we would have learned the exact numbers today - except NPD just announced it has delayed the data until Monday, due to "last minute processing requirements".) 

The PlayStation 3 just got $100 cheaper – and a lot sexier.

Sony today cut the price of its video game console to $299, effective immediately. The move comes after a year’s worth of pleading and even threats from its publishing partners.

At the same time, Sony confirmed the existence of its long-rumored PS3 Slim model. The system, which sports a 120 GB hard drive and is 33 percent smaller and 36 percent lighter than existing models, will go on sale by the first week of Sept. It, too, will carry a $299 price tag.

(Ads for the PS3 Slim appeared early this morning on the Kmart and Sears Web sites, giving an Aug. 25 launch in the U.S. Sony has not confirmed that date at this point.)

The one-two punch of the price drop and slimline model should give Sony a big boost this holiday season. The PlayStation 2 saw a notable jump in sales when the slim version of that console went on sale.

Today’s action doesn’t make Sony the cheapest system on the market, though. Microsoft still holds that crown, with the $199 Xbox 360 Arcade. (The system is decidedly on the low end of the current console spectrum.)

Now all eyes turn to Nintendo, which (despite its protests to the contrary) is expected to lower Wii prices before the end of the year, perhaps at the Tokyo Game Show in late September.

And then there were three…

Sony today joined the motion sensing controller club, unveiling the PlayStation Motion Controller, a new controller that works in concert with a video camera that it says it plans to launch in the spring of 2010.

It’s a controller that has a lot more in common with Nintendo than Microsoft’s “Project Natal”. A remote works in conjunction with the Sony EyeToy to reflect onscreen movement.

But where Nintendo is chasing the casual audience, Sony has its eye on the hardcore. The company showed several tech demos, including using the controller in a first person shooter context and as a mace, which takes out advancing demons with a swing.

Sony and Microsoft are both offering more advanced devices than the Wii, even when you take the Wii’s forthcoming WiiMotion Plus add on into account. But both are at least a year away from being available – and neither company has the current installed base of the Wii. The Wii, though, lacks the graphical power of the Xbox 360 or PS3. 

Should be an interesting fight when the three start slugging it out.

Sony's much rumored motion sensing controller for the Playstation 3 is real and it will likely be unveiled at E3.

That's what I've been hearing from several sources, one of whom has seen the device and two of whom are familiar with Sony's plans to show it at E3 next month.

Rumors that Sony will come out with a motion sensing device have abounded for over two years, ever since a patent was first reported on in January of 2007.

A good source saw a working prototype several months ago that largely fit what was in the patent. Sony's controller apparently used LEDs (light emitting diodes, essentially little electric light sources) and a small webcam to track the device's movements. Because the camera can read different color lights and the shape and angle of each light, it's much more accurate than the Wii-mote. It can track precise movements, including along the Z axis (pushing toward and away from the TV; something the Wii is really bad at) as well as velocity.

As Kombo.com reported last month, Sony is apparently reaching out to select developers and publishers to get some early software coming.

I'm not sure when the device will be unveiled (later this year or mid-next year, I'd think given the E3 timing) or what software will initially be available. Or even what it will look like (the prototype apparently looks kinda funky with a bulb to house the LEDs on the end). But apparently we'll find out the answers soon.

It will be the second new product shown by Sony at E3, if 1UP's report about a new PSP that will only play downloadable content proves accurate.

A Sony rep declined to comment.

Update: As some astute readers have pointed out, the PS3 of course does have a motion sensing controller already. But this new one will be much more advanced than the Sixaxis and more in the shape of a stick, a la Nintendo's Wii-mote.

As Sony announced yesterday, Playstation Network has 20 million users.  Xbox Live, by comparison, has 17 million But PSN is for the Playstation 3 and PSP (around 70 million devices), while XBL is only for the Xbox 360 (about 28 million). PSN has been around for 27 months. XBL? 67.

What does it all mean? Who knows? There are dozens of variables that make comparisons difficult. But more importantly, "registered user" statistics are virtually meaningless. How many websites have you ever registered for? "Second Life" has over 15 million registered users, but it's struggling to survive and find a reason for being.

If you're interested in the business of video games, there's only one statistic of any significance: Sony has generated $180 million in gross revenue from PSN two-plus years of life. As of the last E3, after about five and a half years, Xbox Live had generated over $1 billion.

On that basis, the advantage goes to Microsoft. PSN has been around about 40% as long as Xbox Live, but made less than 20% as much money. Given how much more content there is available to download on consoles today (more games, video content, etc.) than the first few years of XBL, the advantage is even more dramatic.

EXCEPT... A little more than half of XBL members pay for the service. Without knowing how long they have paid for, and under what plans, it's tough to  estimate with any precision how much revenue that has generated for Microsoft. But it's safe to guess it's well into the hundreds of millions.

So on download revenue, the two might be roughly equal. But Microsoft still has an advantage. Revenue, after all, is revenue. And running Xbox Live certainly costs, ballpark, about as much as it costs to run Playstation Network. So Microsoft is making more revenue on around the same costs.

Sony's reason for making PSN free is, of course, to make the Playstation 3 and PSP more attractive. But given the weak sales of the PS3 and so-so sales of the PSP (whose main competitor, the DS, also offers free online play), it's not particularly working.

I think it's really tough to argue that, at this point, Sony wouldn't be better off by cutting the price of the PS3 as much as possible and making up at least some of the difference by charging for online play via PSN.

It’s no surprise, after seeing the 2008 NPD numbers, that the videogame segment of Sony’s earnings today were pretty dismal, while Nintendo’s were pretty fantastic. Just as in the U.S., Playstation 3 worldwide sales declined during the quarter ended Dec. 31 -- 9 % to be exact, to 4.46 million -- which is decidedly not good for a two year old console. Nintendo Wii sales, meanwhile, surged 50% worldwide to 10.41 million. (Microsoft, we previously learned, sold 6 million Xbox 360 consoles last quarter, up 28%.)

However Sony did point to one positive: a 57% jump in PS3 software sales. But software sales only matter compared to the total number of consoles (a ratio known as the attach rate). And after working that out, we find that the PS3 has virtually the same attach rate as the Wii. Meaning Sony really has nothing to brag about.

By Dec. 31, the PS3’s worldwide install base was 21.39 million, about double what it was last year. The Wii’s grew 123% to just under 45 million. On the software side, Nintendo and other publishers sold 82.4 million Wii games in the quarter ending Dec. 31, up 74%, while Sony et al sold 40.6 million PS3 games, up 57%. The comparative software sales growth rates for the quarter almost exactly mirror the comparative growth in the two consoles’ install bases.

So if software sales compared to hardware sales are growing at the same rate, are they ending up anywhere different? Nope. Sony says 40.6 million PS3 games were sold last quarter, or 1.89 for every console on the market. Consumers bought 82.4 million Wii games, or 1.83 per piece of hardware. Almost identical.

(Microsoft, alas, doesn’t reveal its worldwide software sales. And while it has traditionally had a very strong attach rate in the U.S., it’s tough to know how it all ads up when you combine that with the weak Japanese market and Europe.)

Playstation 3 owners might be willing to shell out more for a console, it turns out, but they’re not buying more games (though they are, to be fair, spending about $10 more per game). Microsoft has the advantage, in the U.S. at least, of a much higher attach rate than its competitors. Sony doesn’t have that. It’s third place in consoles and tied with its biggest competitor in comparative software sales. And compared to Microsoft, it’s not making nearly as much money online (since Sony doesn’t charge for subscriptions or run ads). Which means after two years, Sony still has a fundamental problem to solve: What is the business advantage of the PS3 over its competitors?

(Sony also has a problem in common with Nintendo: the devastating impact of the strong Japanese Yen on earnings. That's one of several reasons why struggling Sony has had to cut earnings forecasts, but the only reason why otherwise prospering Nintendo did the same.)

As expected, Sony finally launched its video download store on Tuesday after announcing it at its E3 press conference. But despite the fact that as of just a few weeks ago it didn't have many studios on board, it has wrapped up thsoe deals quickly.

Every major studio is now renting and/or selling movie downloads via Playstation network except for Universal (which, ironically, just signed onto Xbox Live on Monday). Currently Fox is the only TV network on board though, leaving Sony far behind Microsoft in TV content, though pretty even in movies.

As I reported earlier, film downloads to the Playstation 3 will be transferable to the PSP (the transfer can also be done from a PC to PSP). That's a possible competitive advantage over Xbox Live and it's also a new feature for Internet downloads that, studio insiders say, made these deals more complex than they otherwise would have been.

More details are in my story on today's E3 developments.

As promised in my earlier post, I spent the day doing some reporting on Sony's PS3 video download service that's launching this summer. You can get the full story right here on Variety.com.

Turns out Sony is thinking about offering more than the same features as Xbox Live. In addition to standard movie rentals, it's talking to potential partners about allowing users to transfer movie downloads to the PSP. It's also thinking about working with the company's own Blu-ray disc format so that users might be able to transfer a copy off the hi-def DVD onto a PS3 or PSP (similar to the "digital copy" for iPods that some studios are starting to offer on DVDs).

But while Sony may feel confident video downloads will be ready to go this summer, it doesn't exactly have a big library lined up. Sources at numerous major studios confirmed to me that while they have all talked to Sony, none have yet made a deal. The only one that's definitely on board so far is, for obvious reasons, Sony Pictures.

Of course, if Sony just offers the same options as Xbox Live, it won't have any trouble getting more content since those deals have become pretty much de rigeur in the industry. But if it is indeed looking to do more, that would be a more complicated deal and could mean the PS3 video download store will launch with a more limited offering.

I should note, of course, that that's not necessarily a bad thing. Xbox Live Video Marketplace debuted in late 2006 with only Warner and Paramount but went on to add most of the Hollywood majors, including Fox, Disney, MGM, New Line, and a ton of TV networks.

Over at GigaOM, a tech news site mostly dedicated to Internet stuff, Wagner James Au argues that "the era of next-gen gaming as a driving force is over." His evidence is that "Grand Theft Auto IV" hasn't boosted sales of the Xbox 360 and Playstation 3, as most industry observers expected.

I'm already on the record as being shocked that the PS3 and 360 got no visible boost from the debut of that monster game, indicating that most of the people buying "GTA IV" already have their system to play it on. That's not great news for Sony or Microsoft.

Nintendo's Wii, meanwhile, maintained its huge lead over both systems in April and May even though "GTA IV," which isn't available for the Wii, was the best selling game both months.

But I think Au is getting ahead of himself by saying that we can conclude neither hardware system has any life left in it sales-wise. "If Grand Theft Auto can’t move more machines, nothing can," he asserts. But "GTA IV" is a bit of an odd animal, since it came out in April, not anywhere close to the holidays, and it wasn't a single system exclusive. So there could still be plenty of people who own a 360 waiting to buy a PS3 and vice-versa.

To make any really definitive claims, I think we have to wait until the end of the year. That's when we'll have seen huge PS3 exclusive "Metal Gear Solid 4," huge 360 exclusive "Gears of War 2," and the holidays. If none of those 3 things, along with "GTA IV," can move hardware sales, then we can probably say that the two systems are about tapped out, at least at their current prices. And then we'll have to start asking some really serious questions about the wisdom of high powered, high priced game systems.

By the by, Au also argues that "['GTA IV's'] predecessor, 2004’s GTA: San Andreas, sold 21.5 million copies.  With GTA IV sales already plummeting, the franchise’s latest installment from Take-Two Interactive will be lucky to move 12-14 million copies total." That's really speculative. Given that it came out in April, I think we can reasonably expect that sales would fall dramatically after the first 9 million people get their hands on it right away. But there could easily be a huge sales boost around the holidays and continued steady sales for a few years as the price of the 360 and PS3 drop and the audience potentially widens. The game could still sell incredibly well. And even if it doesn't quite match "San Andreas'" 21.5 million units, that's understandable since the PS2 was more mature and had a bigger install base when that game came out.

And this statement, ultimately, is way over the top: "In other words, the days when so-called “next-gen” gaming reigned supreme are coming to end — instead, the industry’s future will be shaped by games like 'Rock Band.'" Sure, new kinds of games that appeal to broader audiences are an increasingly important part of the market. But "GTA IV," even if it doesn't quite match "San Andreas," will still be hugely profitable (hell, it grossed over $500 million in its first week). As was "Call of Duty 4," as are franchises like "Halo" and "Metal Gear Solid" and "Gears of War." We'll be seeing games like that for as long as videogaming exists, I predict. But as the industry grows and expands, a big chunk of that growth will be taken up by the new kinds of games and new kinds of systems. That's all. 

The Playstation 3 will eventually have a video download service, similiar to the one that Xbox 360 has had for over a year. We've all known it for a long time. Here's a story I wrote last summer that Sony was working on the service. Here's a story from the Wall Street Journal last September saying the same thing. Marketing senior VP Peter Dille said on the Playstation blog a few days ago that the video store is coming, but he didn't provide any details, and in fact Sony execs were willing to confirm that fact at any point last year. I know. I asked them. And thought it was so non-newsworthy that I didn't report it.

All of which makes it quite odd that the L.A. Times has a story on the front page of its business section today with the lede "[Sony] is preparing to to launch an online video service through its game console Playstation 3 as early as this summer, studio executives familiar with the play say."

"As early as this summer" is arguably newsworthy, since we haven't known when it was going to launch. But that's still a vague date and it could very easily be pushed back. Studio executives I talk to say that Sony has been talking to them about the service since last year. And a senior Sony insider I was talking to a few months ago said that the video download store is a low priority this year compared to establishing PS3 as the best videogame console on the market.

The Times does put it in interesting context, since the multi-studio Internet download service Movielinkn, which was first developed by Sony, flopped and was sold to Blockbuster at a launch and Sony's online musicstore Connect was also a famous disaster.

But in terms of news... we always knew that Sony would launch a video download service. And now we know it might launch as early as this summer.

(Also worth noting: the first analyst quoted in both last year's WSJ story and today's in the LAT is the game guy, Kurt Scherf of Parks Associates. I guess these repeating stories on the same topic are good for his publicity needs.)

Breaking news on Variety... I have learned from good sources who know what Take-Two is selling into retail that "Grand Theft Auto IV" is poised to gross over $400 million worldwide in its first week, beating the record set in September by "Halo 3," which grossed $300 million.

Also, while I'm always wary of such comparisons since spending on movies vs. games is so wildly different, it's worth noting that "GTA IV" will be right on par with the biggest movie debut of all time, "Pirates of the Caribbean: At World's End," which grossed $404 million worldwide its first day.

All the details are available right here on Variety.com

Also of note to Cut Scene readers is that I spoke to GameStop's senior VP or merchandising Bob McKenzie for the story. He's being a little more conservative with his estimates right now than the people I spoke to who know what Take-Two is selling to all retailers worldwide. Right now McKenzie thinks "GTA IV" will be a little smaller for his chain than "Halo 3" was.

On the other hand, Blockbuster CEO Jim Keyes told me that he expects "Grand Theft Auto IV" to "likely to do two times the volume that 'Halo 3' did" for his store. (More on Blockbuster's plans for "GTA IV" coming in another post soon.)

But I also asked McKenzie how the two different console versions of the game were looking for GaneStop and he shared this:

"Looking at the way pre-orders are trending, we're expecting it to be a little stronger on 360 than PS3," he told me, though he (unsurprisingly) wouldn't go into details on what the exact percentage would be.

So... we've had the poll on Joystiq, we have the GameFly rental data, we've had the debates about whether the highest install base of the 360 and the exclusive downloadable content would trump "GTA's" historical association with the Playstation console... and now we have our first solid data. It looks like Xbox 360 is going to beat PS3 for this game.

HOWEVER... it's worth noting that the 360 currently has a significant lead over the PS3. As of February, it was 9.6 million compared to 3.8 million in the U.S., according to NPD. So if the 360:PS3 ratio of "GTA IV" sales is closer than that, like say 60/40, that has to be considered something of a win for Sony, as it implies a higher tie ratio for their console and could potentially sell more PS3's than 360's. That would at least tighten the race between the two.

There have been many skeptics, myself included about Sony's decision to make every Playstation 3 a Blu-ray player. That added significantly to the console's production cost and it's disastrous $600 launch price, a major factor in stalled sales for the first year. And there wasn't much advantage on the game side. Despite Sony's claims, I haven't seen evidence that the higher data capacity of Blu-ray discs translated into better looking or playing games.

But today it's official: Blu-ray has vanquished HD DVD in the hi-def format war. Which means the now $400 Playstation 3 is one of the cheapest players for the only way to play hi-def DVDs. Combine that with a decent and growing slate of games and you've got a good value. Indeed, if you want to watch hi def movies at home, it's hard to imagine now why you wouldn't get a Playstation 3, unless the cost of stand-alone players starts  dropping or you just don't want videogames in your house. It's certainly already become a topic of conversation for my non-PS3-owning friends and is making me think it may finally be time to get one myself.

The question for Sony is how do they market it? Execs have made clear that their short-term goal is to establish the PS3 as a successful videogame console, something they didn't accomplish in its first year. Adding its capabilities as a Blu-ray player certainly muddles the marketing message and makes Sony Computer Entertainment look like they don't have confidence in it as a console.

On the other hand, Blu-ray is heading into the rest of 2008 with significant momentum and SCE would be crazy not to try and take advantage. It will be very interesting to see how Kaz Hirai and company try to cash in on that while still doing the work they need to do on the videogame front. It's a tricky balance.

As for Microsoft, now that it will be dropping its HD DVD add-on player for the Xbox 360 and writing off the millions it wasted supporting HD DVD, it has two options to mull:

-Start selling a Blu-ray add-on and pay a licensing fee to its biggest competitor for every unit sold

-Give up on hi-def DVDs and focus exlclusively on hi-def downloads through Xbox Live

I wouldn't be surprised if Playstation 3 is in the headline for most stories about the January vidgame  sales data from NPD, but to me the biggest surprise was "Rock Band."

While most of the top 10 games chart was the same as we saw in December, "Rock Band" rocketed from nowhere (at least not in the top 10) to take the no. 4 slot with its Xbox 360 version. Aided by a high price compares to typical games, and even "Guitar Hero III" with its controller, "Rock Band" across all three of its platforms was the no. 1 revenue generating game for the month at $30 million.

"Rock Band" even sold better on the Xbox 360 than "Guitar Hero III," by a razor thin margin of 184,000 compared to 183,000. Of course, "Guitar Hero III" for Wii did even better, though, selling 240,000.

On the hardware side, the shocker is that PS3 outsold 360 for the first time and almost beat Nintendo's Wii (exact sales figures below). As I noted in my story for tomorrow's Daily Variety, there were likely several contributing factors, including:

-More PS3's in stock after the holidays than the competing systems, both of which outsold it all of last year.

-Warner Bros' decision to switch to Blu-ray, essentially ending the format war and putting PS3 in an excellent position as an inexpensive, multi-use Blu-ray player.

-Good old fashioned momentum for the PS3 thanks to the price cut and a growing library of solid games like "Uncharted" and "Ratchet and Clank: Future."

Of course, it's still worth noting that only one PS3 game was in the top 10 and for total system spend on games, hardware and accessories, Xbox 360 remains in the lead (360: $297 million; Wii: $244 million; PS3: $219 million). Clearly, 360 still has the hearts of the hard core gamers with the most cash to burn.

Here's the data so you can make sense of it yourself:

January 2008 hardware sales

Wii: 274,000

Playstation 3: 269,000

DS: 251,000

PSP: 230,000

Xbox 360: 230,000

January 2008 game sales

Call of Duty 4, Xbox 360: 331,000

Wii Play, Wii: 298,000

Guitar Hero III, Wii: 240,000

Rock Band, Xbox 360: 184,000

Guitar Hero III, Xbox 360: 183,000

Super Mario Galaxy, Wii: 172,000

Burnout Paradise, Xbox 360, 144,000

Call of Duty 4, PS3: 140,000

Mario Party, DS: 139,000

Mario and Sonic at the Olympic Games, DS: 133,000