The last year of the PSP brand?

by Isaiah Taylor, COMMUNITY WRITER

Monday, January 24, 2011

EDITOR'S NOTEfrom Rob Savillo

With rumors circulating this week about Sony's successor to the PSP, Isaiah's analysis of the mobile platform is as timely as ever.

I am deeply envious of PSP owners, and I hope they continue supporting such a quality platform.The impending announcements of both the PlayStation Phone and the PSP 2 in 2011 should solidify Sony’s fate in the handheld arena.

The position Sony's rumored PSP2 and PlayStation Phone is similar to the last stand at the battle of the Alamo in 1836. Everyone wants these handhelds to hold their ground in their perspective markets, but how many of us are expecting them to win the hearts of the general consumer?

By now, you’ve seen the NPD sales for November and have heard the always trustworthy predictions of market analyst Michael Pachter. At this point in this current gaming generation, Sony’s brand is at a point of no return (no fiscal pun intended). The writing is on the wall for the companies that control the direction of both consoles and handhelds. As a byproduct, this coming year will be the last year that Sony’s PSP platform(s) stand a chance of making a grand impression on consumers outside of Japan.

[Via MarketingCharts.com.]

Although I disagree with a large share of Michael Pachter’s predictions, his claim of smartphones eroding the handheld market seem valid. As of this year, I am a smartphone owner. According to Digital Trends, I am not the only consumer who has decided to make this technological leap. Aside from my new gadget, there were close to 10 years prior to the purchase where Nintendo -- and subsequently, Sony -- had their opportunity to convince me to buy a handheld device. As a gamer, I’m assuming I’m not the norm.

I have a PC with Steam loaded and a current-generation console attached to a high-definition television. In my case, buying a handheld specifically for gaming would be the epitome of excess. Most PSP owners I know are either Sony super fans or the PSP is their only current-generation console (including non-handhelds after 1999).

I’ve painted this picture to illuminate the problems the handheld market has in general. It is hard enough to convince a consumer that he need yet another device in his pocket that isn’t his phone. This works two-fold against Sony, as their marketing endures a product-consumer relationship rollercoaster ride that hadn’t rebounded until a certain, fictional Sony executive became the company’s go-to mascot.

The PSP and PSP Go are genius devices. I say that reflecting on previous generations of handhelds. If you took someone from the 1950s in a magical time machine to the present day and plopped a PSP in his hands, I’m pretty sure a user-interface-related brain aneurysm would follow. With consumer confusion and piracy hindering such a unique system, its almost an achievement the device has made it this far.

Brand management for the PSP has to be fairly difficult considering that a majority of consumers who know of the product also know of the console's biggest flaw. It will be interesting to see how Sony moves away from the piracy aspect of the PSP in 2011.

As someone who has been raised off of the original Game Gear and Game Boy and seen their successes (and failures), the PSP shouldn’t just be selling well in Japan. Make no mistake, this isn’t a "doom and gloom" article. The PSP is definitely a success in my eyes, but I also think The Story of Riki-Oh is a popular movie amongst film goers. General perception use to be Sony’s druthers -- what happened? The slow uptick of high schoolers and college students buying a handheld device in order to pirate and play is a strange kind of success.

Seeing the most recent Monster Hunter game boost sales of the PSP in Japan while the PS3 posted less-than-amazing numbers for the consumerist holiday Black Friday leads me to further conclude that Sony’s brand has gone from mass appeal to market niche. So when I say this is the last year for the PSP, I am predicting (based on statistics) that the handheld device will be that weird table we’ve all seen at conventions. The one that sells those obscure Thailand DVDs but is so inconveniently placed out of sight of general foot traffic.

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Dave Long

January 24, 2011

Yet more (unfounded) doom-and-gloom about the PSP and Sony more generally. Even taking into account that the article is written from a blatantly US-centric perspective, it still pretty skewed. There are 21 million PSP's in the US (give or take), and it still sells multiple tens of thousands per week. I'd put good money that selling tens of thousands of units of a portable electronics device in almost any other situation would be a sign of success, not failure ;). The PSP's (but _not_ the PS3s) issue has always been software, which has been due to a combination of:

- less hours spent on handhelds on average than home consoles;

- PSP games are console games on the go, and generally take as long (or longer) than a console game to complete, and have more replay value than more 'normal' handheld games; and

- the big one - piracy.

However, on hardware alone the brand is hardly dead. Note while total sales have been falling, the 3DS (a clear competitor, particularly with Ninty's focus this time on more 'console-like' game experiences) is only months away, and everyone knows a PSP2 is on the way as well - in these situations, sales do generally tail off a bit.

What I think the issue with this (and many other commentaries on console market shares) falls foul of is failing to adapt to a post-PS2 world. The last two generations, there's been a clear, out-and-out winner, and everyone else has been in their shadow (although I'd note that the original Xbox, with total sales far below those of the PSP now, was never considered niche). So many people seem to think that a console is only successful if it's blowing the competition away.

This isn't true - a console (handheld or home) is successful as long as it has a vibrant userbase (which the PSP has), a good range of games (which the PSP most definitely has - it's got a deep catalogue, and the best-in-class handheld games in many genres, from platformers to shooters to flight action to driving), and is making the company that sells it money (which it does). It's also important to note that the PSP is more of a 'core' gamers platform than the DS, which has more of a casual focus and that there are always more casuals than core (look a the Wii vs the HD consoles - but that hardly makes either the 360 or the PS3 a failure).

Sure, the PSP is starting to come to the end of its life (shortened in many respects because of piracy), but suggesting that PSP sales tailing off now is a sign that it's the last year of the PSP brand is ridiculous.

And going from there to suggest Sony is on the slide as a gaming company is nigh-on madness! The PS3 sold more hardware units last year than any year in its history (I think that goes for the US as well), and software sales for the PS3 are going from strength to strength (again, even in the US). Sure, in the US the PS3 plays second-fiddle numbers-wise to the 360, but it's still plenty strong. In a neutral market (ie, one not affected by either Japanese (anti-360) or US (anti-PS3) parochialism, the PS3 is not far off outselling the Wii week-on-week, outside of the Christmas period (when the Wii dominates all ;)).

In this context, suggesting that Sony's (gaming) brand is going to be the weird table in corners at conventions is stretching it to say the least. Even when China's economy surpasses that of the US (which, barring calamities, it will), the US will still be a great and powerful country. Similarly, the PS3 may not be the biggest player in the market, but this isn't a one-horse race, and neither the PSP brand nor Sony more generally are in danger of collapsing as a force in gaming.

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Isaiah Taylor

January 24, 2011

[thanks for your spirited response]:

-"Unfounded" and "Doom-and-gloom" are both unsubstantiated when you read the last sentence of the article and follow the links to substantiate the claims I've made in said article.

-two-thirds of PSPs were sold pre-PSP Go. And an argument could be made that a large sum of those PSPs were discounted at retail and double as portable emulation devices seeing as 'when' the sold was when the piracy of the PSP was at its highest point.

-The 3DS hasn't been proven to be a direct competitor with the PSP let alone the PSP2. I think if you were to do that then, yes, you must lump in the iPhone, iPad, DSi etc.

-Everyone knows the newest models of PSPs [Go & 3000s] were the tail end of the hardware. The numbers prove this. Major media outlets have reported this in recent months [this isn't an arguable point, but...you can go ahead].

As I illustrated in this article. The user fanbase is strong...in Japan. Meaning when games come out throughout the year, fans consistently buy. As opposed to a God of War game coming out in the US/UK.

-The original Xbox post Madden 2003 was considered niche, it just so happened that what was niche then isn't niche now. And being regional, doesn't excluded from being niche. The original Xbox console was the goto machine for console FPSs online [other than a PC]. It didn't appear niche, because FPSs reached all-time popularity in the States [see also: RPG & MMO popularity currently in China/Japan/Korea]

-I actually am not in favor of 'one side' beating 'the other side'. However, when the competition isn't...you gotta call it. [Just like you called the 3DS competition for the PSP. If the 3DS outsells the PSP2 2-to-1 does the PSP2 cease being competition? How bout 5-to-1?]

-Can you prove [beyond a shadow of a doubt] that Third-party publishers are turning oodles of money off of a game published and distributed on the PSP. And yes, I think there is a reason Sony opted to NOT have their numbers published via NPD.

-"but suggesting that PSP sales tailing off now is a sign that it's the last year of the PSP brand is ridiculous." So if no PSP [phone/handheld] device was being released this year you could see a bright, sustainable future for the PSP? [Again, outside of Japan]

-I'm fully aware of the SKUs sold have increased, but software sales have declined to just above 2007 numbers: http://www.gamasutra.com/db_area/images/feature/6258/sw-unit-sales-2010.png

-Comparing Wii sales to PS3 sales seems kinda moot seeing as the Wii seems to have met a saturation point that the PS3 is in no way of meeting [which I'm happy about]. So yeah, that's a bad point to make. [Sidenote: At this point in the console cycle, there is no such thing as a neutral market].

-Finally, I actually am at that 'weirdo table' collecting dvds and comics that haven't hit the states yet. Your rant seems a bit hypersensitive. I didn't say Sony was collapsing, but the market has changed [clearly]. And the tactics Sony has depended on aren't working. They've resorted to channel stuffing [PS Move] and amateur advertising tactics which have confused the consumer...again...the numbers prove this.

Over pricing...or better yet...building devices rich with features that only a handful of people will use has hurt sony. They've forgotten how to communicate to people who actually want to buy their products. Case in point: Its been proven [with Xbox 360, PS2 and to a lesser extent, the Wii] that when you spread out your console exclusives, they stand a good chance of fairing better. Why are we still working on a Motorstorm? Resistance 3? And why would you release them in the same year? Note: THESE ARE GAMES/FRANCHISES I LIKE!

Work on what has sold and release them sparingly. Revisit the not-so-hot tickets a year later from the major releases.

Just My Opinion Man