PlayStation Vita Launches Into Challenging Market

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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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