Sony's Gaming Sales Collapse; PS4 Launch Looks Increasingly Desperate

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News Posted: Thu, Feb 7 2013 1:49 PM
For years, Sony's game division has been one of the major revenue earners at the beleaguered company; in 2011 gaming provided more operating income than any other division. That leg was rudely kicked out from under the company this past quarter; Sony's gaming revenue fell 17% while operating income dropped by 86%.

Yearly sales for the PS2 and PS3 are now projected at 6.8 million units, down from the 7.4M devices the company moved in 2011. The really ugly story, however, is in handhelds. Sony counted all of its PlayStation Vita sales as part of 2012, but only expects to move seven million PSPs and PlayStation Vita's by the end of the year. In FY 2011, Sony sold 6.8 million PSP's.



That means Vita has barely managed to replace the falling volume of PSP sales and provided no net increase to Sony's bottom line. In fact, the product will have cost the company dearly; Vita's hardware is far more expensive than the chips inside the older PSP and its screen is much nicer. Game sales, at least, are expected to match their 2011 levels.

For the year, Sony expects revenue and income to be down dramatically. That's standard operating procedure for a company launching a new console, but it comes at a tricky time. Microsoft, after all, can afford to eat the cost of Xbox development, even if its own Windows and Office empire appears to be eroding. For Sony, games and the PS3 were a strong and necessary pillar to staunching the blood flowing out of its TV business.

The PS4's unveiling is less than two weeks away, and Sony has an opportunity here to establish itself as a next-generation leader -- if it can avoid jamming both legs in its own mouth and swallowing frantically. When the PS3 was unveiled the company came off as incredibly out-of-touch, arrogantly predicting that "the next generation doesn't start until we say it does." Executives defended the unit's price as justified, claiming they wanted to inspire workers to work overtime just to afford one.

Then there've been the network hacks and the decision to throw supercomputing and scientists under a bus when it looked like piracy might threaten the platform.

I've avoided writing anything to the tune of "And if Microsoft locks out used games, Sony could win gamers by allowing them." For 20 years, Sony has pursued a policy of locking content down on specific hardware, even when doing so destroyed any chance of creating a standard around its products. The chances that it wouldn't jump at the opportunity to prevent used sales is negligible, despite the negative impact it might have on sales.

Still, money is on the PS4 being top dog in hardware power this time around. With the Xbox 360 and PS3, the two consoles essentially split the difference -- the Xbox 360 had a more flexible, programmable GPU and was easier to program; Cell could offer huge performance in certain circumstances, but lacked some of Xenos' GPU features.

If the PS4 is based on x86 hardware as is expected, it could turn AAA titles around much more quickly than was possible in 2006, and could drive adoption up at a much faster rate. With Vita tanking, Sony needs a major win in this space -- and the PS4 is its best bet for delivering one.
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sevags replied on Thu, Feb 7 2013 9:42 PM

I still think this could be Sony's last gaming console and will turn to produce just the titles down the line for other platforms like Sega did. I still think the next gen Xbox will be the "winner" a word I use loosely because it almost feels like console gaming is slowly coming to and end... Sky rocketing hardware costs, really expensive peripherals (the Kinect does fall into that category), ridiculous game pricing I'm sorry but NO game is worth $60+tax unless you're like me where you buy only 1 game and always play it (cod for me) and with locking out used games it further reduces any value someone might have seen in spending that much on a title, can no longer take your games to a friends house to play unless they have an Internet connection AND you're able to log on to your personal account there, falling game sales, and many other factors. Even kids seem to be talking less about games and consoles every day.

This seems like the perfect time for a SteamBox type of PC gaming console where title can still be bad for cheap without a bunch of expensive proprietary hardware. I was thinking that I would be buying the new Xbox... But why? $400+ for console, $150+ for 3 additional controllers, $100-150+ for Kinect 2, and $60 for a new COD all before tax..... So that I can have an $800 call of duty machine? I can build a desktop or buy a laptop for that... Nopes ill be skipping the next generation.

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The reason i see Consoles including sony going this way is firstly that they have WAY too long product cycles...my last console was a PS1 my friend got me into PC gaming and ive never looked back being a mature player one thing that really annoyed me being a console freak back in the day was game release dates, youd be waiting for games for months wereas and i dont know if this is just me playing MMO's for years and games inbetween there doesnt seem to be that delay and its a world wide lauch not america or japan then the euro zone which i ALWAYS felt was totally unfair on the gaming comunitiy.

TcM

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