Pretty good post, couldn't summarize it further in the quote.
Alright, I read through it, and sadly it looks like Sony took good care of the B2B side and let the customer-focused apporach in the toilet.
- Price tag is high
- Accessories outside of the package required to play games
- House-made hardware that is more expensive than the rest of the market
+ Capable hardware
+ Evolutive services (à la Apple)
Nothing on the "+" side can distinguish them in the smartphone-crowded market and they get beaten by Nintendo on the "-" side. Is there a market in this rough SWOT configuration ? That is the real question for the Vita so far.
While I've been avoiding saying this since I think some people will maul me for making the suggestion, I actually feel that Sony has been incredibly upfront in terms of their long term plans for the Vita.
I'll illuminate on why this might be a controversial statement in a moment, but first, I want to break up my argument a bit.
Part 1: The Evidence
- House-made hardware that is more expensive than the rest of the market
So first it's actually pretty important to note here that this is not a custom made system. The CPU and GPU are essentially exactly the same as the iPhone, where the only difference is the number of cores and some slight modifications to the GPU. This will be important in a moment.
Also, here are three quite notable quotes:
GamesIndustry.biz said:
Q: The PS Vita price was a nice surprise at E3. But at that price is the system going to be sold at a loss form day one?
Andrew House: I think as a business it will definitely be profitable from day one. In terms of hardware specifically, it's really not something we tend to comment on, but I would say it will be a significantly better situation than for example, the PlayStation 3. This is in a much, much healthier place from a profitability stand point.
Source:
http://www.gamesindustry.biz/articles/2011-06-13-sonys-andrew-house-editorial
Eurogamer said:
Eurogamer: The Vita price is cheaper than expected. Was that a deliberate move?
Andrew House: I characterise it as a very strong push from the marketing and publishing arm within the organisation. If we were to build not just a core gamer audience for Vita but to move, I would hope very swiftly, towards more of a mass market proposition, having a strategic, aggressive price was clearly a key part of that equation.
I'm really happy we were able to achieve that. Our engineers have done a stellar job of delivering a great product, but also allowing us to hit a price point we feel is attractive.
The strategy, in essence, is we want phase one to appeal to the core gamer audience, technology and entertainment enthusiasts, hope they validate the experience, but then move more swiftly than with PlayStation Portable into a much broader audience.
Price is important. But a lot of the experiences are designed with connectivity from the ground up. We think that's an absolute essential, particularly for a younger audience. Certainly based on the experience of my own kids, they view connectivity and connected devices as a birthright. That is a key part of the proposition.
Source:
http://www.eurogamer.net/articles/2011-06-09-sonys-andrew-house-interview
Gamerzines said:
Sony will be shifting its business strategy to target Vita at a "younger demographic" by 2014, SCEE CEO Jim Ryan has said.
"Day one (buyers are) going to be our good old core gaming demographic: mid 20s, largely male," said Ryan talking to EDGE.
"What we will look to do is go younger rather more quickly and more deliberately than we did with PSP.
"You won't see that so much in 2012, and in 2013 we'll still be very much at the core of it, but shortly that a lot of the business strategy will be (based) around targeting a somewhat younger demographic."
Source:
http://www.gamerzines.com/psp/news/vita-younger-audience-2014.html
Part 2: My Conclusions
So, reading the above, I see Sony stating that their strategy is essentially this:
-The real target market for the PlayStation Vita is teenagers, which is the market that tends to be far less favorable to Nintendo, but doesn't always have enough money for either a smartphone or a brand new console.
-However, to successfully target teenagers, they feel they need a system that can offer a console like experience.
-As mentioned above, price is a big factor for being able to target teenagers successfully, so by making the PlayStation Vita with some of the world's most common smartphones parts, and launching relatively early, they can drop the price to $150-$180 by the end of 2013 without bleeding tons of money. At this point, they can also have a large catalog of cheap games, which is important when selling something to people on a tight budget.
-However, in order to sell the system early and build this catalog, they need someone to sell the system to, so for the system's first two years, it will target core gamers while Sony hopes to make a small profit, or at least break even.
-This does imply that Sony intends to pull the rug out from their original audience a bit when they switch the target audience of the system pretty early in its lifecycle. The answer to not overly displeasing their customers though revolves around doing this switch at the same time they release the PlayStation 4. With older core gamers focusing on that platform and its shiny new games instead, they are less likely to notice that their Vita is getting less games targeted at them.
-Since the PlayStation 4 could very well cost $400+ at the time it launches, it also doesn't interfere with their target audience of teenagers as a large percentage of them can't afford to buy the new platform, especially with its $60 games.
-Teenagers are also an area where Sony has a unique advantage, as they are one of the only publishers who make AAA Western core games that are rated T instead of M. While lots of teenagers can play M rated games, quite a few can't, so when they are upset that they can't buy Halo, Gears, or Call of Duty, at least they can go buy Uncharted and Infamous.
-Sony's software pricing strategy with the Vita also helps them on this front, as they are willing to launch notable new games at $30, and if those are still too much, they intend to have a large suite of $10-$20 downloadable titles on top of their now notably cheaper back catalog.
-Teenagers are also one audience where it is less likely that their customers will feel embarrassed to use their system in public, which is a common problem handhelds face in the West. Quite a few 30 years old might not feel comfortable taking their Vita out on the bus, however, no one is going to bat an eye if a 15 year old does it.
Now, assuming their business doesn't completely implode within the first two years, this plan doesn't actually seem that bad to me.
However, this plan only works in the West where they can release a lot of notable titles themselves and also pretty easily pick up worthwhile third party games for teenagers like sports games and racing titles.
In Japan, as mentioned before, they don't have a strong first party line-up, and they don't really have a set of guaranteed third party games that can sell a lot of copies. Even in the PSP's worst years, FIFA sold quite respectable. In Japan on the other hand, Pro Evo isn't going to do the same for them. Also, I get the impression that Japanese teenagers don't have as strong of a "Kidtendo/Casualtendo" feeling toward the Nintendo's platforms, especially since the 3DS now has much of the Japanese PSP line-up, meaning that it is a much less open market for Sony to try and get.
