Sony Sends Mixed Messages on PS Vita's Profitability

[John Funk]

Sony Sends Mixed Messages on PS Vita's Profitability

Sony seems to be of two minds on Vita's financial stakes.

Sony's PS Vita has a ton of nifty hardware crammed into a tiny package, but it will be selling the device expected the hardware to be profitable in three years [http://www.escapistmagazine.com/news/view/110741-E3-Sony-Gives-NGP-a-Real-Name-and-a-Price].

However, Sony Europe boss Andrew House told GamesIndustry.biz [http://www.gamesindustry.biz/articles/2011-06-13-sonys-andrew-house-editorial] that he expected the PS Vita "business" to be profitable from the get-go. "I think as a business it will definitely be profitable from day one."

"In terms of hardware specifically, it's really not something we tend to comment on," said House, even though Kaz Hirai in fact did just that, "[But] I would say it will be a significantly better situation than for example, the PlayStation 3." The PS3, by the way, didn't become profitable until March 2010 [http://www.escapistmagazine.com/news/view/100656-PlayStation-3-System-Sales-No-Longer-a-Money-Pit], three and a half years after it launched.

Compared to the PS3, said House, Vita was "in a much, much healthier place from a profitability stand point."

In all fairness, the messages here aren't exactly being mixed - Kaz Hirai was talking about losing money on the PS Vita hardware, whereas Andrew House is talking about turning a profit on the entire business. Clearly, Sony is gambling that its peripherals and games will make up the difference.

But here's the thing: The profit margin on games is notoriously slim, and I can't imagine it's much different when it comes to peripherals. All it takes is one underperforming big-name title, and the PS Vita business is back in the red. I can only imagine that Sony is walking a very fine tightrope here.

I suppose that's just how the business works, though. Ah well.

(Via Videogamer [http://www.videogamer.com/news/ps_vita_business_profitable_from_day_one_claims_sony.html])

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[ReservoirAngel]

Call me crazy but I don't think all that tech for only $250 is going to be turning a profit right out of the gate.

 

[Fappy]

From what I understand Microsoft wasn't making a profit (on the console hardware) on the 360 until relatively recently either. When hardware becomes this advanced its no surprise they'll be taking chances like this in order to make it affordable for consumers.

 

[EMFCRACKSHOT]

Considering the price in the UK (at least according to the latest POS at game) is £230 or roughly 375 US dollars it may well make a profit in Europe on the hardware right out of the gate

 

[Technicolor]

I think Sony is seriously overestimating the popularity of their handheld. Nintendo can also be at fault of that with their 3DS.

A Handheld is a niche gaming device that at one point had no real competition from other markets. But the smartphones have begun to change that.

If I had the choice between a smartphone or a 3DS/Vita, I would take the Smartphone, I already have a DS, and practically everyone else does, and I'm fully satisfied with it. I don't see the need to pay for another handheld, that is so comparatively limited to popular technology.

 

[vxicepickxv]

From what I understand Microsoft wasn't making a profit (on the console hardware) on the 360 until relatively recently either. When hardware becomes this advanced its no surprise they'll be taking chances like this in order to make it affordable for consumers.

Microsoft first announced profit on the 360 about a month before it's first mass X-Box live console banhammering in 2008.


I'm not seeing a need for a PSV or a 3DS.

 

[Koios]

maybe he's referring to the fact that the PS Vita is launching at 250 Euros in Europe, which is considerably more than $250 for the stateside version?

 

[Technicolor]

I think Sony is seriously overestimating the popularity of their handheld. Nintendo can also be at fault of that with their 3DS.

A Handheld is a niche gaming device that at one point had no real competition from other markets. But the smartphones have begun to change that.

If I had the choice between a smartphone or a 3DS/Vita, I would take the Smartphone, I already have a DS, and practically everyone else does, and I'm fully satisfied with it. I don't see the need to pay for another handheld, that is so comparatively limited to popular technology.

But smartphones have completely different game titles compared to PSP / DS. You're not gonna get stuff like Uncharted, Monster Hunter, etc. So yeah, you may prefer smartphones, but there's definitely a market for people who prefer games like the ones above.

That's the problem, I don't want to play games like that on a handheld. Unfortunately developers seem to not understand the term "pick up and play" in regards to handhelds.

In fact that is specifically the reason games like "Angry Birds" outsells any MGS Portable or even Zelda portable. Despite both being traditionally well made games, they are made for a niche market, gamers that would rather play a handheld than a home console or someone on a 24 hour flight.

But most of the market players don't invest in games as long or complex as the previous titles, and to this day the most popular, well reviewed, and classic handheld games are most importantly simple and fun. Handheld Super Mario Bros., Pokemon, Tetris, and Metroid games are all "pick and play" games. They are all well crafted games that are simple to play.

I can't see the handheld market working if it simply tries to replicate the console market. That's exactly the Gameboy survived so long and destroyed its competition, when the home consoles went on to develop "AAA" games, the handheld market stayed simple (out of necessity) and kept the core elements of fun gameplay that got most into gaming in the first place.

Those are the types of games that any smartphone can play.

 

[Technicolor]

I can't see the handheld market working if it simply tries to replicate the console market. That's exactly the Gameboy survived so long and destroyed its competition, when the home consoles went on to develop "AAA" games, the handheld market stayed simple (out of necessity) and kept the core elements of fun gameplay that got most into gaming in the first place.

Those are the types of games that any smartphone can play.

Very fair points, but the way I see it is that most people don't get smartphones to play games if gaming isn't something they really give a shit about. I.E. Most people that have put a dollar into Angry Birds. That isn't really a market thats lost, most of them wouldn't have touched a PSV anyway. They're hoping that the people that bought PSPs will just buy Vitas, with maybe some new people getting suckered in, cause there is no way around it, the PSV is a serious piece of kit.

I pre-ordered mine off Amazon just now actually... The british site wants me to pay the equivalent of $460(£280 - Man your prices are a blessing to Europe/Me right now). I can get it on the American one for 182 Plus shipping.

I hope this console makes it, my biggest concern for it is that they're going almost completely online with this shit, and that might put some people off. The last time they tried this the PSPgo happened, and that couldn't have helped their bottom line!

The thing is I can't see either system selling until they have that "must have", or "fun as shit game".

The Gameboy came with a free copy of Super Mario Land and most kids either picked up a copy of Tetris or Pokemon. Neither the 3DS line-up nor the PSVita line-up seems to have any game that would catch on like that, especially if the original Nintendo DS is still sucking out the market for either of the two.

Then again Sony is waiting for a long-run payoff, just hope they realize why it didn't work last time and try to fix their problems, Nintendo's in the same boat too, unless they want DS to outsell their 3DS.

 

[mjc0961]

A Handheld is a niche gaming device that at one point had no real competition from other markets.

And currently still don't and won't until smart phones learn to play more than just silly flash games, which DS, 3DS, PSP, and Vita can also play in addition to more advanced games.

People looking for a phone are going to get a phone. People looking for great portable gaming are going to get a portable gaming device. That is not competition, that is two completely different markets and these portable gaming platforms are still doing a great job in their market. Aside from the Xperia Play, what smarphones are doing is currently irrelevant.

That's the problem, I don't want to play games like that on a handheld. Unfortunately developers seem to not understand the term "pick up and play" in regards to handhelds.

In fact that is specifically the reason games like "Angry Birds" outsells any MGS Portable or even Zelda portable. Despite both being traditionally well made games, they are made for a niche market, gamers that would rather play a handheld than a home console or someone on a 24 hour flight.

But most of the market players don't invest in games as long or complex as the previous titles, and to this day the most popular, well reviewed, and classic handheld games are most importantly simple and fun. Handheld Super Mario Bros., Pokemon, Tetris, and Metroid games are all "pick and play" games. They are all well crafted games that are simple to play.

I can't see the handheld market working if it simply tries to replicate the console market. That's exactly the Gameboy survived so long and destroyed its competition, when the home consoles went on to develop "AAA" games, the handheld market stayed simple (out of necessity) and kept the core elements of fun gameplay that got most into gaming in the first place.

Those are the types of games that any smartphone can play.

Yep, you're totally going to be able to play Super Mario Bros, Zelda, Pokémon, and Metroid on smartphones... Oh wait, no. Nintendo doesn't make a smartphone. Oh well, enjoy your Angry Birds and Cut the Rope.

 

[Technicolor]

A Handheld is a niche gaming device that at one point had no real competition from other markets.

And currently still don't and won't until smart phones learn to play more than just silly flash games, which DS, 3DS, PSP, and Vita can also play in addition to more advanced games.

People looking for a phone are going to get a phone. People looking for great portable gaming are going to get a portable gaming device. That is not competition, that is two completely different markets and these portable gaming platforms are still doing a great job in their market. Aside from the Xperia Play, what smarphones are doing is currently irrelevant.

But most of the market players don't invest in games as long or complex as the previous titles, and to this day the most popular, well reviewed, and classic handheld games are most importantly simple and fun. Handheld Super Mario Bros., Pokemon, Tetris, and Metroid games are all "pick and play" games. They are all well crafted games that are simple to play.

I can't see the handheld market working if it simply tries to replicate the console market. That's exactly the Gameboy survived so long and destroyed its competition, when the home consoles went on to develop "AAA" games, the handheld market stayed simple (out of necessity) and kept the core elements of fun gameplay that got most into gaming in the first place.

Those are the types of games that any smartphone can play.

Yep, you're totally going to be able to play Super Mario Bros, Zelda, Pokémon, and Metroid on smartphones... Oh wait, no. Nintendo doesn't make a smartphone. Oh well, enjoy your Angry Birds and Cut the Rope.

First off, let me explain I myself, I do not own any smartphone to speak of, nor have I played "Angry Birds" or "Cut the Rope", and myself am also an avid gamer of the nineties with fond memories my GameBoy Color and all the games made for it. Clearly you have at least played the GameBoy advance if you a have Mega Man Zero avatar.

But looking at this from a a technological standpoint, it is easier for a smartphone to try to replicate a Gameboy Advance game, than it is for a PSP Vita to try and replicate a PS3 game. Even simple flash games can reach GBA standards. Essentially, on a handheld, the GBA-esque games will be more likely to catch on and sell than the PSP game trying to be like a PS3 game.

I"m not trying to knock on the handheld platforms, but rather I'm disappointed that many of these handheld games and market strategies forget why the market is popular, and at the same time trying to transform the market into what its not. From my own context I still remember why I loved my GB Color games & my GBA games, they were all simple and fun.

This strategy didn't work before when the SEGA Game Gear competed against the Gameboy, despite the GameGear's capabilities to run up SEGA Genesis standard it didn't develop any simply fun games to keep it afloat. The Virtual Boy also relied on its tech capabilities, itself being stronger than a Super Nintendo in a age before the N64 or PS1. However it was impractically complex and so were its games, they even managed to fuck up a Tetris game.

To sum things up, you don't need a technological powerhouse to play or make games the handheld market is created for.

 

[drisky]

The Gameboy came with a free copy of Super Mario Land and most kids either picked up a copy of Tetris or Pokemon. Neither the 3DS line-up nor the PSVita line-up seems to have any game that would catch on like that, especially if the original Nintendo DS is still sucking out the market for either of the two.

Then again Sony is waiting for a long-run payoff, just hope they realize why it didn't work last time and try to fix their problems, Nintendo's in the same boat too, unless they want DS to outsell their 3DS.

You're right, the DS is still going to be large and in charge for a little while, but the PSV is appealing to a smaller, more dedicated market then the DS. The DS plays game, but the PSV is actually sophisticated tech, and a true next gen handheld. I think the 3DS is going to end badly for Nintendo, they don't have the games and the tech isn't improved on the DS really, it just has a 3d switch, which the 3 people I know with a DS all play with is switched off.

The games are shite too lol.

The PSV launch line-up isn't really known yet, they're saying they've got something like 80 games directly in the pipeline, and some of those are serious too(SFxTekken being the surprise for me). The launch games could be better, but the Wipeout game and Uncharted are sweet, and there will always be the PSN.

There is still time for the 3DS though. They are charging way more than they have to right now, when the Vita comes out they could lower the price and still be making profits, they just over estimated themselves when they thought people would pay $250, Vita certainly can't go lower. Games will come eventually too, if it can find an audience. And it is more powerful then then the DS, seems to be more powerful than PSP also. At its current price and game line up, the DS won't do well, but those are things that can change.

 

[Fappy]

From what I understand Microsoft wasn't making a profit (on the console hardware) on the 360 until relatively recently either. When hardware becomes this advanced its no surprise they'll be taking chances like this in order to make it affordable for consumers.

Microsoft first announced profit on the 360 about a month before it's first mass X-Box live console banhammering in 2008.


I'm not seeing a need for a PSV or a 3DS.

That sounds about right. Not incredibly recent, but still roughly 3 years after launch.

As for the need for PSV or 3DS, I don't much see it either but the newest handheld I own is a gameboy pocket. I'm not really part of the target demographic.

 

[Harry Mason]

If it makes any money straight out of the gate, it will be from the software they release, not the hardware.

Still, this will be my first ever purchase of a handheld.

 

[Vyress]

I think Sony is seriously overestimating the popularity of their handheld. Nintendo can also be at fault of that with their 3DS.

A Handheld is a niche gaming device that at one point had no real competition from other markets. But the smartphones have begun to change that.

If I had the choice between a smartphone or a 3DS/Vita, I would take the Smartphone, I already have a DS, and practically everyone else does, and I'm fully satisfied with it. I don't see the need to pay for another handheld, that is so comparatively limited to popular technology.

Their handheld is quite popular actually o.o
PSP sold about 70 million units worldwide. Sounds popular to me.
In contrast to you, I'd pick the Vita if I had the choice, cause I don't see the need for a smartphone for me. I don't see the need for shelling out 40 euros per month for something I am paying for already (internet at home) but I suppose these days I'm an exception in that regard.

I have a DS. And just like you I am satisfied with it. But that doesn't mean that there haven't been any titles on the PSP that interested me. I would have very much liked to play MGS Peacewalker, FF Dissidia, Phantasy Star Portable etc. but I didn't want to buy another device for 150 bucks so I refrained from doing so.

Games on a smartphone are like those social games on Facebook. Sure. There is a certain amount of people playing them but only because they are implemented on a platform that they'd be using anyway, whether there are games on it or not. People who have a DS/PSP and a smartphone won't say their smartphone is a fair substitute for their handheld. Kinda like how you'll never hear people say "I quit WoW/CoD for -insert zynga game here-!".

People looking for a phone are going to get a phone. People looking for great portable gaming are going to get a portable gaming device. That is not competition, that is two completely different markets and these portable gaming platforms are still doing a great job in their market. Aside from the Xperia Play, what smarphones are doing is currently irrelevant.

^Kinda like what he said.^

The Vita looks interesting to me. As long as the data package isn't too expensive, I'd like being able to 'skype' with people all over the world with a gaming device that's - not - subpar. And if not for the 3G stuff, I'm still interested in it because of its other qualities, namely games (well we'll see o.o), technology (graphics, touchpad on back, compatibility with my PS3 etc.), price point (in EU not so much but it's still less than I thought it'd cost...) and well: it's not like I can't use the online features with the Wi-Fi model.

 

[Snax]

To sum things up, you don't need a technological powerhouse to play or make games the handheld market is created for.

The problem I have is that I want a portable technological powerhouse to play games on. I have an xbox360 and a PSP. Guess which one has nearly no games and yet guess which one I play more. Yeah, the PSP. I like being able to play decent games anywhere, on the train, on a bus, in the car, at night when I just can't be bothered powering on my console or pc, etc. The only smartphone that has any hope of changing my mind is the Xperia Play as it is the only one that has a decent control scheme and a possibility of having decent games, but something tells me that it isn't going to be enough.

I want to be able to play real games when I am away from home, and the Vita is pretty much my only choice. I want to be able to race in 3D with physical responsive controls. I want to be able to play a 3D plat-former with an in-depth storyline. Currently the PSP is already struggling to match the processing power of a smartphone, and yet I still would prefer to game with it instead of a smartphone, and the reason is purely because it is designed for it.

I just hope they keep the instant on/off function that the PSP had and release some more games.

 

[Technicolor]

To sum things up, you don't need a technological powerhouse to play or make games the handheld market is created for.

The problem I have is that I want a portable technological powerhouse to play games on. I have an xbox360 and a PSP. Guess which one has nearly no games and yet guess which one I play more. Yeah, the PSP. I like being able to play decent games anywhere, on the train, on a bus, in the car, at night when I just can't be bothered powering on my console or pc, etc. The only smartphone that has any hope of changing my mind is the Xperia Play as it is the only one that has a decent control scheme and a possibility of having decent games, but something tells me that it isn't going to be enough.

I want to be able to play real games when I am away from home, and the Vita is pretty much my only choice. I want to be able to race in 3D with physical responsive controls. I want to be able to play a 3D plat-former with an in-depth storyline. Currently the PSP is already struggling to match the processing power of a smartphone, and yet I still would prefer to game with it instead of a smartphone, and the reason is purely because it is designed for it.

I just hope they keep the instant on/off function that the PSP had and release some more games.

I think Sony is seriously overestimating the popularity of their handheld. Nintendo can also be at fault of that with their 3DS.

A Handheld is a niche gaming device that at one point had no real competition from other markets. But the smartphones have begun to change that.

If I had the choice between a smartphone or a 3DS/Vita, I would take the Smartphone, I already have a DS, and practically everyone else does, and I'm fully satisfied with it. I don't see the need to pay for another handheld, that is so comparatively limited to popular technology.

Their handheld is quite popular actually o.o
PSP sold about 70 million units worldwide. Sounds popular to me.
In contrast to you, I'd pick the Vita if I had the choice, cause I don't see the need for a smartphone for me. I don't see the need for shelling out 40 euros per month for something I am paying for already (internet at home) but I suppose these days I'm an exception in that regard.

I have a DS. And just like you I am satisfied with it. But that doesn't mean that there haven't been any titles on the PSP that interested me. I would have very much liked to play MGS Peacewalker, FF Dissidia, Phantasy Star Portable etc. but I didn't want to buy another device for 150 bucks so I refrained from doing so.

Games on a smartphone are like those social games on Facebook. Sure. There is a certain amount of people playing them but only because they are implemented on a platform that they'd be using anyway, whether there are games on it or not. People who have a DS/PSP and a smartphone won't say their smartphone is a fair substitute for their handheld. Kinda like how you'll never hear people say "I quit WoW/CoD for -insert zynga game here-!".

There is absolutely nothing wrong with wanting any upcoming Handheld and I for one encourage you to do so, as long as you understand that you are apart of a niche market. Both of the "next-gen" handhelds have to compete with other portable devices, it isn't just about gaming but capability of use and entertainment. You are gamers, meaning you are entertained by more complex video Games, ones you're willing to pay $40 dollars for, which is what the handheld consoles offer. However most other people are just as easily entertained with any Iphone with internet capabilities, thus allowing for a much wider capabilites.

Video Games are apart of the entertainment industry, and as such they receive competition from other divisions of it, such as "AAA" video games stealing the attention from big budget movies, The inverse occurs as well, and the handhelds are in direct competition with the smartphones & music devices. Only in the public masses a handheld has justify itself, "Why should you pick me instead", and that currently is only determined by one's determination to play certain video games. However, as the Nintendo Wii has proven, there is a much larger casual market that arent so willing to pay so much for a gaming device, when in their perspective they can get the games they want to play on any smartphone, its a two way street for the entertainment industry.