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PlayStation Vita 10m sales guidance may include price cut

PlayStation Vita 10m sales guidance may include price cut

Mon 14 May 2012 8:59pm GMT / 4:59pm EDT / 1:59pm PDT
BusinessHardware

Analysts not so bullish on Sony's projections for Vita

Sony Computer Entertainment

Sony Computer Entertainment is a Japanese videogame company specialising in a variety of areas in the...

playstation.com

PlayStation Vita certainly still has time to turn things around, but the picture so far is pretty dismal. With just 1.8 million units sold worldwide, financial analysts aren't so optimistic that Sony will hit its own goal of 10 million sold by the end of the fiscal year next March. RW Baird's Colin Sebastian told GamesIndustry International that 10 million at this point looks like a "stretch."

"10 million looks like a stretch goal at this point.  Perhaps there is a price cut baked into that guidance later in the year, or Sony believe that there are titles such as Call of Duty for Vita that will be meaningful platform drivers," he said. "Vita is a great dedicated game device, but the market for those products continues to shrink as smart devices become better platforms for games."

The price point is something that many have questioned ever since Vita's launch. At $249 for the Wi-Fi version, many consumers may feel the price isn't justified.

"The best thing Sony could do to spur Vita sales would be to lower the price of the device"

Asif Khan

"I am not surprised that the Vita is having such sluggish sales as their launch lineup was nothing to write home about and the price point of the device is too high. With Wii U coming out this fall and 3DS sales gaining momentum, the 10 million unit sales target seems a little too optimistic.  The best thing Sony could do to spur Vita sales would be to lower the price of the device," commented Asif Khan, CEO of Panoptic Management Consultants.

Given Sony's bigger financial woes and the need to overhaul its business, however, a price cut on Vita may be too much to swallow.

"Sadly, this poor start to Vita's sales is just compounding problems surrounding the ongoing restructuring of the company. We never believed Vita would be a true profit driver for the company, so its disappointing start is not that shocking. Sony needs to rethink their entire business model, streamline product offerings, and focus on making higher margin quality products," Khan continued.

"Unfortunately, PS Vita's margins will have to suffer through price cuts if they want to start moving more units out of stores. The price cut of the 3DS was exactly the catalyst Nintendo needed to jumpstart sales after a similar lackluster launch. That being said, Sony has bigger problems than a Vita price cut can solve."

Lewis Ward, IDC Research Manager, agrees that Vita hitting 10 million sold by March 2013 will be tough, but it's not impossible. "My global estimate for Vita hardware sales in calendar year 2012 is a little over 9 million. 
Vita only had about a month of sales beyond Japan in Sony's last fiscal year so I think it's likely the 1.8 million total will be matched or beaten in the next couple quarters."

"I suspect the holiday 2012 lineup will be pretty solid - especially if the Call of Duty rumor is true"

Lewis Ward

A lot will be riding on Vita's 2012 holiday lineup, and you can bet that Sony will try to shine a spotlight on it during E3 next month. "I suspect the holiday 2012 lineup will be pretty solid - especially if the Call of Duty rumor is true - which could push total Vita sales over 9 million this year. I think it's an excellent device for the 'core' gaming community, so hitting their hardware sales target will mainly boil down to delivering uniquely great gaming experiences," Ward added.

While Vita certainly hasn't performed as well as Sony would have liked just yet, Billy Pidgeon of M2 Research was quick to remind us that hardware sales in 2012 so far have been pretty soft for just about all platforms.

"I would have liked to see stronger PS Vita sales, but hardware performance has been poor overall in Q1 2012. Like any new hardware, PS Vita needs exclusive software to spike system sales," he noted. "There are some promising titles coming up, including Resistance: Burning Skies, Gravity Rush and Little Big Planet, along with some third party titles including Street Fighter x Tekken, Silent Hill: Book of Memories and Metal Gear Solid HD Collection."

Pidgeon agrees that E3 could be a key event for Sony to lay out its Vita plans and perhaps spark some more interest in the portable.  

"Sony should announce more must have titles for PS Vita at E3.  Ideally some of those will come out in Q4 2012, as that will be the crucial sales period to close in on an installed base of 10 million for next fiscal year."

9 Comments

Jim Webb Executive Editor/Community Director, E-mpire Ltd. Co.

2,270 2,439 1.1
10 million is absolutely a stretch under the current circumstances (known price and known game release schedule). I'm sure the 10 million figure has presumed a price cut by most people that are aware of the target figure and current sales rates.

Some of you analysts put way too much emphasis on CoD. You guys haven't figured out yet that CoD isn't a portable experience that drives sales. Will it sell OK? Sure. Will it push Vita at current price over 10 million in the fiscal year? Not at all.

It's barely pulling in 60k per week right now. That's ~250k per month. Without any drastic changes, that figure will hold or get worse for the next 6 months. Holiday increases for November and December will see sales double to quadruple. This will drop back down to 60-80k for the Jan - Mar period giving a likely FY total of 4-5 million with no price cuts.

If E3 announces a few unexpected big games that release during the FY, you might be able to add a million or two. That's 5m-7m. Hitting 10 million will require a price cut that will eat into the already thin (if existent at all) profit margin. And Sony has suggested they don't want to take losses on hardware for the upcoming FY thanks to the losses they took last FY. They'll have to give somewhere. Either take the loss on the books or take a loss on market share.

Edited 1 times. Last edit by Jim Webb on 15th May 2012 2:55am

Posted:2 years ago

#1

James Brightman Editor in Chief, GamesIndustry.biz

242 367 1.5
@ Jim, you're probably right about Call of Duty on Vita, which - if you're right - is a big problem for Vita, since one of the touted advantages for the portable is how it's great for FPS because of its dual analogs. But if people don't get super excited for COD on Vita, then other FPS games probably won't fare so well either.

Posted:2 years ago

#2

Jim Webb Executive Editor/Community Director, E-mpire Ltd. Co.

2,270 2,439 1.1
James, the single largest cited factor for why the PSP never achieved the same success as the DS is because Sony and 3rd parties tried too hard to make the PSP a portable home console. This has been stated many times over that it isn't what PSP gamers wanted.

That's not to say they don't want franchises from home console IPs to grace the portable but that trying to shoe horn in the home console experience on the go just doesn't work well. CoD will sell OK by name alone and will undoutebly be the highest selling Vita title during the holiday season but it will not drive the system like it does the home consoles.

As for the FPS on a portable angle, I find this touted far more from the media than from actual gamers. Might they be willing to try a FPS on Vita? Sure but the main experience they are looking for. The portables are supposed to offer something the home consoles don't. Nintendo has known this for decades and it's pretty hard to argue with their success.

If Sony wants to ignite Vita sales without a price cut, the software has to be geared for the market better than just expecting home console owners to transition into portable console owners with the same taste in games.

Posted:2 years ago

#3

Zan Toplisek

44 16 0.4
"I suspect the holiday 2012 lineup will be pretty solid - especially if the Call of Duty rumor is true"

Rumour? It's not a rumour if Activision itself announced it on stage last E3.

Also, Jim, I totally agree with what you said. However, I have seen some interest in CoD Vita from some of my friends who are fans of the franchise. But still, it's nothing compared to the media buzz.

Edited 1 times. Last edit by Zan Toplisek on 15th May 2012 7:16am

Posted:2 years ago

#4

Feri Zsolnai 3D All-rounder and Designer

8 0 0.0
I don't get it. Poor sales, disappointing start with 1.8 million units sold?
On the other hand, am I alone disgusted with these so-called franchises? I mean, come on, Call of Duty and Little Big Planet as promising titles? No wonder they will be clones or rather, expansion packs (especially CoD which didn't do anything but changed expansion packs into AAA titles lately).
Why not making innovative new titles instead?

Posted:2 years ago

#5

Terence Gage Freelance writer

1,288 120 0.1
The Vita needs more new titles like Gravity Rush and Soul Survivor, as well as big-name sequels like Monster Hunter and Gran Turismo. But I agree with Jim's point that the PSP felt too much like a handheld trying to be a home console, and not actually playing to the portable strengths - hopefully the Vita wall avoid this same pitfall long-term, and it certainly feels like Sony are a bit more aware of it, considering some of the software so far.

Hopefully the Vita will have a strong showing at E3 - we already know some impressive PS3 games incoming from Sony, so perhaps they can focus a lot of their attention on the Vita instead.

Posted:2 years ago

#6

Rick Lopez Illustrator, Graphic Designer

1,269 942 0.7
They will lose money if they lower the price, however at this rate they will not move many units. They can offset this if the make good games for it. I particularly am open to an appstore type model of distributing games, and have a differant line that includes 5$ games and somehow diffirintiate them from the hardcore AAA games. As long as I know that they can work on future devices. Sony will lose money now, but can offer minor upgrades to new versions of the VITA. And a new console worth 120$ can roll out every 3 to 5 years. With an already available library of games. Its stupid for SONYto make everyone purchase the same game for every differant piece of hardware. Alot of my PS3 games like hardcorps uprising, castle crashers, i bet could play fine on VITA. I would already have those games and I would be able to play them on the go as well as home as well as use the same save files. But games like Dragons crown, tekken vs street fighter or mortal kombat, If I have to choose one, i would go with the home version of it that I can play on a huge TV and sound system. Most of the VITA games I already own for PS3. I am not going to buy them again. SONY's video game business model is old and broken.

Posted:2 years ago

#7

Christopher Bowen Editor in Chief, Gaming Bus

451 715 1.6
@Feri - Because innovative new titles don't move units. Period. We've seen new IP suffer out of the gate, sales-wise, for years. The only guaranteed mover of units are sequels, and that's all AAA - who need to be on board in order to get general attention - is interested in. So you need AAA to get the average player's attention, but AAA won't take risks, so they stick with God of Big Planet Turismo 4 Wipeout, which doesn't move the needle except for the hardcores, but they don't matter because the average fan has moved onto smartphones.

That's the thing. People want innovative games for these systems, but they don't move units anymore. You can get very similar experiences on smartphones and tablets. No tactile feedback yet, but I'll bet that a usable gaming controller that uses bluetooth is less than a year away. Once that happens, that's game.

Posted:2 years ago

#8

Yannick Boucher Project Manager, Crytek

27 1 0.0
"James, the single largest cited factor for why the PSP never achieved the same success as the DS is because Sony and 3rd parties tried too hard to make the PSP a portable home console. This has been stated many times over that it isn't what PSP gamers wanted."

@Jim, seriously? No, this was but one concern from the list. The real killer was piracy. Do you know how many PSPs were sold? Over 71 million. That's more than the 360, by the way.

The "never achieved the success of the DS" argument is as fallacious as they come, as the DS was simply the best-selling console in the history of video games. But look at the PSP attach rate (purchased games, not pirated), and that is where your answer lies.

As for Vita, I'm not incredibly worried. The attach rate so far is VERY good. And the margins are also very good. So those who bought it, are definitely buying games for it (in stark contrast with the 3DS), and willing to pay more for them (in stark contrast with the iOS). I believe simply minor adjustments to the price (possibly just in the form of bundles), and a solid lineup announced at E3 (and coming ASAP) should be sufficient. The Vita as a standalone piece of equipment is a fantastic value. It just needs games. If Sony wants to shave a bit off the price, up to them, but it's definitely not the main concern in my opinion.

Posted:2 years ago

#9

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