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Now Gamer: Sony Needs To Lower PS Vita Price - Analysts
GamesIndustry.biz: Vita Launch Will Be "a Car Wreck"
PS Vitas quite expensive, said Takeda, 36, an event planner in Tokyo, who owns both a PlayStation Portable and Nintendo Co. DS handheld machine. I dont think Ill be one of those people rushing to buy it on the release date.
Takeda helps illustrate why pressure is building on Sony to cut prices of its newest game machine after Nintendo slashed the cost of its new 3-D portable player to as low as $169 and as more gamers flock to Apple Inc. (AAPL)s iPhone and iPad to play titles such as Rovio Mobile Oys Angry Birds.
Kazuo Hirai, Sony Chairman Howard Stringers top lieutenant, signaled yesterday the company wont engage in a price war with Nintendo.
Gamers are increasingly anticipating Sony to lower prices, especially after the 3DS cut, said Hideki Yasuda, a Tokyo-based analyst at Ace Securities Co. Sony is under major pressure to cut the price of the Vita or risk a major failure.
U.S. consumers will be able to lay their hands on PlayStation Vita, the successor for the model that went on sale in 2004, after Christmas, starting at $249 to $299 for a 3G version. Japanese consumers will be able to buy the Vita, which feature an organic light-emitting diode display and touchpads at the back, by the end of this year from 24,980 yen ($313) to 29,980 yen.
We have a very good product at a very affordable price, Hirai, president of Sonys Consumer & Products Services group, said. Theres no need to lower the price just because somebody else that happens to be in the video game industry decided they were going to.
Sony, which lost 34 percent of its market value this year, rose 0.1 percent to close at 1,925 yen in Tokyo yesterday. Nintendo climbed 1.1 percent to 11,950 yen in Osaka, narrowing its loss this year to 50 percent.
Reviving demand at the games division is key for Hirai, the frontrunner to succeed Stringer as the head of Sony, as the company faces an eighth consecutive year of losses at the main television business and the online service recovers from its worst hacker attack ever.
Cutting Forecasts
Last week, the maker of Bravia televisions and Walkman music players cut its full-year profit forecast 25 percent, citing sluggish demand for TVs. Nintendo lowered its annual profit forecast 82 percent.
Sony, Nintendo and Microsoft Corp. (MSFT), maker of the Xbox 360 and Kinect gaming devices, are confronting new competitors in the gaming industry who are beginning to reshape the field.
Among them is Cupertino, California-based Apple, which estimates its sold more than 200 million mobile devices capable of downloading and playing games. Apples App Store offers a choice of more than 100,000 game and entertainment applications to users of the iPad, iPhone and iPod Touch.
The market opportunity for specialist devices is shrinking rather than growing because of the convergence of activities into a single device, said Piers Harding-Rolls, a senior analyst at a research firm IHS.
Angry Birds, a popular mobile-phone game where players slingshot birds at pigs hiding behind barricaded wood and stone shelters, is aiming for 100 million downloads in China alone. Customers are also flocking to online games such as Farmville and Cityville on Facebook Inc.s social-networking site.
The environment for portable game players has become more difficult because of smartphones, said Koki Shiraishi, an analyst at Daiwa Securities Group Inc., who estimates shipments of the PS Vita will be about half of the PlayStation Portable sold during the products first two years.
Hirai isnt alone in expecting Sony to resist price cuts.
The customers Sony is targeting with its Vita are those willing to spend a lot of money, said Shiro Mikoshiba, an analyst at Nomura Holdings Inc. in Tokyo. Thats a valid strategy even if the volumes low as long as it can sustain the higher price.
Sony is unlikely to cut prices until next year, said Harding-Rolls, a London-based analyst at IHS. The company may sell 36 million PlayStation Vitas by 2015, short of the 46 million PSPs sold at the same stage of its lifecycle, he wrote in an e-mail.
If strong titles arent there for Vita, there is a risk I might have to cut my targets, said Kazuharu Miura, an analyst at SMBC Nikko Securities Inc. in Tokyo, who expects Vita sales will reach 2.5 million units by March.
Now Gamer: Sony Needs To Lower PS Vita Price - Analysts
Industry-watchers say PS Vita will struggle at confirmed RRP
Sony came under pressure to lower the price of the PS Vita following Nintendo's announced price-cut for the 3DS. PS Vita is set to launch in the UK for £229 or £279 for a 3G version.
Sony has since confirmed that the PS Vita won't launch in the US and Europe before 2012.
"We suspect Sony will lower the price of the Vita if they are unable to launch the hardware this holiday for US / Europe," Janco Partners' Mike Hickey told NowGamer.
"It seems unlikely under our current economic profile that a $250 price point can sustain meaningful channel velocity within a seasonally less significant period," added Hickey, citing Nintendo's struggles with the 3DS which launched in March.
The analyst also mentioned increasing pressure from mobiles and tablets which continue to generate "momentous market buzz."
Meanwhile Wedbush Securities' Edward Woo says Nintendo's woes are a warning for Sony. "I think the 3DS price cut and lack of consumer interest is a bad signal to Sony that they also face significant demand challenges for handheld consoles," he told us.
"I think they will try to maintain a much higher price given the likely high costs to build the device, but I think they will end up like Nintendo with weak demand after initial launch so they will have to cut the price soon too."
Sony has hinted that PS Vita launch details will be revealed at Tokyo Game Show next month.
GamesIndustry.biz: Vita Launch Will Be "a Car Wreck"
Sony is about to launch its new handheld games console into a market that has fundamentally changed since the success of mobile devices, and is likely heading for a costly and ultimately doomed launch.
That's according to Lyle Hall and Matthew Seymour at Heavy Iron Studios, who believe the console is over-priced - but more importantly - that consumers have already demonstrated that they are no longer willing to pay out for single-function games devices.
"If people aren't willing to pay $249 for a Nintendo 3DS why would they pay $299 for Vita? People don't want to carry more than one thing in their pocket, thats why Android and iPhone have done so well, they are the devices of choice, they offers multiple functions outside of gaming," Hall told GamesIndustry.biz.
"People dont want it. That's Nintendo huge challenge - how do they add value to that?
Seymour, who has worked for 2K Games and Microsoft Games Studios in a career spanning 20 years, was more blunt in his assessment. "With all due respects to Sony and Vita, it's a car wreck. And how about Xperia Play? I'd love to pull up the numbers on that."
The PlayStation Vita is due this year in Japan and early next year in the US and Europe. The system will be taking centre stage at Gamescom this week, as Sony looks to position itself at the forefront of portable gaming after rival Nintendo launched the 3DS to muted response from consumers.
Less than six months since the launch of the 3DS the system has had its price unceremoniously halved in Europe, and is suffering from a lack of software and the perception that it's a simple upgrade to the DS family of consoles.
Sony's most recent attempts in the handheld market haven't been successful either. The digital-only PSPgo is largely forgotten and its mobile collaboration with Sony Ericsson - the Xperia Play - had no significant marketing push behind it.
Despite a harsh assessment of the Vita, Heavy Iron would like to see the machine succeed, said Hall, but it's the consumer that has voted with its wallet and changed the market.
"The technology is sweet, I'm a huge fan of mobile technology, but I just don't know there's a market out there anymore for the hardware. I cant see why you would want to put a device out that only does games.
"The consumer has spoken. We wanted to see that world exist - more players, more opportunities for us, but at the same time people don't want that. Unless there's a super technology paradigm shift its not going to shift back."
