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PlayStation Vita Launches Into Challenging Market

2/28/2012 01:41:00 PM Eastern

NEW YORK – Sony’s launch of the PlayStation Vita
next-generation handheld video game player in North
America and Europe is expected to bring the company
a significant revenue boost, but the platform’s
success will ultimately hinge on gamers seeking
quality over convenience and cost, industry observers
said.

Strategy Analytics, a Boston-based research firm,
has forecast the game player to sell 12.4 million units
globally this year.

In making the prediction, the firm cited a major promotional
blitz behind the product and assumed the
company will cut the price at some point this year, resulting
in a $180 average selling price. The Wi-Fi-only
version is currently selling for $250, while the Wi-Fi,
GPS and AT&T 3G model goes for $300.

Vita will be competing in a market rife with smartphones
and tablets that play games costing less than
$1 in some cases, while many of Vita’s games will sell
in the $20 to $30 range.

Strategy Analytics said Vita’s hardware sales could
generate $2.2 billion this year, which would equate to
a $1.2 billion annual revenue increase.

“The real value of the PlayStation Vita is its drive
for content revenue growth and its strategic position
in Sony’s entertainment ecosystem,” said Jia Wu,
Strategy Analytics connected home devices senior
analyst. “The PlayStation Store will have a vital role
in selling games, videos and other content through its
online access. We believe that PlayStation Vita will
cause Sony’s 2012 portable console software revenue
to grow by $800 million compared with 2011.
We expect it to bring in $2 billion incremental revenue
from both hardware and software sales in 2012.”

The cross-platform availability of content will also
boost Sony’s position in competition with giants Apple,
Samsung and Microsoft, the report noted. Sony
can leverage its console gaming business, which
Apple and Samsung do not have, to build its online
content Cloud.

Sales of the Wi-Fi version of PlayStation Vita at
$249 in Japan initially exploded, selling more than
300,000 units in the first week of release. But the
new console is barely moving 20,000 units per week
in its home market after all the hardcore fans made
their purchases, mirroring the experience of the Nintendo
3DS, Wu observed.

Strategy Analytics said it expects sales of Play-
Station Vita in North America and Europe to follow
the same pattern, and predicted a price cut will be
essential to stimulate sales and forge a competitive
position.

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