I love this kind of strategic question! Sony really wants the Blu-Ray HD format for video to be successful. It lost the Betamax race. It is supposed to be the ultimate leader in consumer electronics. It is betting heavily on Blu-Ray, heavily enough to have made it part of the proposition for its market-leading videogame console, the Playstation 3.

But a key pattern in the early adoption of new video formats is which format pornography tends to favor. So what’s a market leading, gigantic consumer electronics company to do? Sony decided to discourage pornographers from creating Blu-Ray based DVDs. It did the same thing when it was promoting the Betamax format; now people say that was a critical error. (That sounds like revisionist history to me, but I don’t remember exactly what killed Betamax: maybe the refusal to license; maybe the shorter storage times; maybe no porn; maybe all of the above.)

Sony did embed it in their videogame console; Can you imagine the reaction of parents if they saw the leading proponent of Blu-Ray endorse the idea that porn could be easily viewed with the PS3? Greedy self interest versus the “public good” and family values. What would you do?

Sir Howard Stringer, CEO of Sony Corp. and a long time media executive known for his acerbic wit and impolitic tongue, had to decide: The company has formally instructed its reproduction subsidiary not to produce Blu-Ray discs with pornographic content.

I went to BestBuy on Thursday (January 25) to see about buying a new house computer (the one in the kitchen nobody owns but everybody uses). There were two computers on display; that’s right, two. BestBuy usually (in my personal experience) has around 30-50 computers on display, between all the notebook and desktop models from the 7-8 brands they carry. On Thursday, the shelves were empty except for a couple of computers running Vista in demo mode. But those computers didn’t have pricing.

I discovered that those computers didn’t have pricing because Microsoft decreed that Vista wouldn’t be for sale until the following Tuesday. Now, isn’t that just the most interesting thing you can imagine. I wanted to buy a computer and was ready to walk out of the door with one. But I wasn’t able to buy one and BestBuy wasn’t able to sell me one.

Going forward, I will only be able to buy computers running Microsoft Vista. As far as I can tell, Windows XP has been removed from the market. Microsoft knows better. Too bad I wasn’t able to get the computer.

Big news! Videogame sales in Japan had their worst week ever! No wonder since the console business is sick. That’s exactly what Stewart and I predicted in June last year. We said the videogame industry is due for a major overhaul. (Download the Powerpoint presentation in our Library.) Our premise was that the next generation of games is going to be too expensive to produce and that the new games that do get produced are versions of old, stale games.

The news from Japan this week: the PlayStation 3 has had its worst week ever (ending January 14th), selling only 25,531 units in Japan. The Nintendo Wii had its second worse week selling 93,708 units. The Microsoft Xbox 360 couldn’t even sell 10,000 units. Retailers in Japan are reducing their PS3 prices by upwards of 20% in order to stimulate sales.

After buying two of the three new boxes and playing with all three platforms (Wii, PS3, and the Xbox 360), I have to say that I haven’t been impressed with any of the platforms.

The Xbox 360 is the worse of the three. Even on my 10-foot high definition projection screen at home, I can’t really tell the difference between the games that are shipping on the 360 and those I can buy for the PS2. Even worse, most of my old Xbox games are not compatible. Of the 100 plus titles, I can’t name one that is exclusive to the 360 that I would buy that machine to play. Of course, the Xbox has that special Microsoft feature that requires you to update your machine on the network out of the box otherwise your games will just crash without any warning.

The graphics on the PS3 are great, but the current crop of games are more of the same with just prettier graphics and for $599 for the machine and $60 per game, I want significantly more than just eye candy.

Of the three boxes, only Nintendo’s Wii offers anything new and compelling. The controller is fantastic even if the strap is cheap. The problem with the Wii is that the box suffers from an anemic graphics co processor and CPU. While the current set of games are fun, the novelty of the controller is already beginning to wear off (not to mention how sore my wrists are getting).

That’s not to say it’s game over but we better start seeing some compelling and platform defining titles soon, otherwise it’s going to be a blood bath for both the console manufacturers as well as the software publishers. (And we’re open to pitches for new kinds of game companies, as we describe in our presentation: more television-like, episodic kinds of content with a business model that works.)