Gamasutra: The Art & Business of Making Gamesspacer
View All     RSS
October 20, 2014
arrowPress Releases
October 20, 2014
PR Newswire
View All





If you enjoy reading this site, you might also want to check out these UBM Tech sites:


Analysis: Why Sony Is Becoming A One-Platform Game Company
Analysis: Why Sony Is Becoming A One-Platform Game Company
February 15, 2010 | By Matt Matthews

February 15, 2010 | By Matt Matthews
Comments
    12 comments
More: Console/PC



[In this analysis, part of his NPD examination for January 2010, Gamasutra's Matt Matthews examines why Sony is turning into effectively a 'one-platform company' with the PlayStation 3, thanks to the PSP and PS2 accounting for perhaps under 6% of the total U.S. market in the month.]

For months after the PlayStation 3 launch, Sony would respond each month to the latest figures from the NPD Group with a press release citing sales figures for the “PlayStation Family” of systems. Even after seven years on the market, hardware and software sales for the venerable PlayStation 2 were still significant.

And, at the time, the PlayStation Portable's fortunes hadn't completely collapsed. The relative strengths of these other platforms masked the weakness of PlayStation 3 hardware and software sales for more than a year after that system's launch.

Now, however, those other two systems appear to be on life-support, precisely as the $300 PlayStation 3 Slim is finding a surer footing.

Let's look first at the PlayStation 2, which is now in its tenth year on the market. Recently we've become accustomed to sales records set by the Nintendo Wii, but prior to this era the PS2 was the dominant, record-setting system.

Sony reports that it has sold 140 million systems worldwide, and according to NPD Group figures 45 million of those have been sold in the United States. The figure below shows the trajectory of the system's U.S. life-to-date (LTD) hardware sales.



Sony reported several years ago that software unit sales had exceeded 1.24 billion units, with over 500 million of those just in North America.

Yet, in January 2010 the PlayStation 2 hit a historic low of just over 10,000 systems per week. And according to Wedbush Securities analyst, Michael Pachter, the system's software revenue has been down well over 60% for the last six months, compared to the time one year earlier. In fact, PlayStation 2 software revenue dropped to around 2% of the entire U.S. video game software market in January.

According to the NPD Group, the five best-selling games on the PS2 in 2009 included three sports games, a music game from 2008, and Grand Theft Auto: San Andreas (originally released in 2004).



At the same time that the PS2 has become irrelevant, Sony's PSP has been suffering declining hardware and software sales of its own. From 2005 through 2008, the handheld has achieved sales of nearly a million units in the U.S. in the final month of the year. Yet in December 2009 Sony sold just over 650,000 of the handheld, including the newer PSP Go model.

As the figure below shows, hardware unit sales in the last four months of 2009 were 30% lower than in the last four months of 2008.



On the software front, PSP software has hovered around 4-5% of the total software revenue in the U.S. but in January 2010 the system generated less than 3% of the industry's software revenue. The decline in PSP software sales is far more severe than what the industry has seen overall, as the figure below shows.



Sony tried to push the PSP back to the forefront with the PSP Go launch and the arrival of several high-profile games at the end of 2009. Among these were Gran Turismo, a game promised and expected since the system's 2005 debut, and Grand Theft Auto: Chinatown Wars.

Yet with Sony heavily backing Gran Turismo and an established GTA fanbase on the PSP, these two games still failed to make the top 5 PSP games in 2009. Instead Square-Enix's Dissidia: Final Fantasy was the top-selling PSP game for the year. The only other 2009 title to make the top 5 was EA's Madden NFL 10.



It's difficult to say where Sony should go with the PSP at this point. When it launched, it was a strong internet-enabled gaming device, but in the era of the iPhone and Nintendo DSi the PSP's advantages have largely disappeared. We don't see the advantage of the rumored PSP-4000 (thought to still contain a UMD drive), but would favor winding down the current hardware platform and preparing a successor with backward compatibility to hasten the transition.

The problem is made more complex by the PSP's continued strength in Japan, where it continues to sell relatively well and where several PSP titles sold well in 2009.

Which brings us to the PlayStation 3, the only part of the PlayStation family that doesn't appear moribund. In fact, it seems notable that SCEA president and CEO, Jack Tretton, did not even mention the PSP or PS2 in his recent comments posted on the PlayStation Blog.

At $300, the newer Slim hardware model has revitalized the prospects of the PS3 for 2010. Sony still expects to launch several big titles, like God of War III and Gran Turismo 5, sometime this year.

Other titles, like Square-Enix's Final Fantasy XIII -- the latest in a franchise closely associated with the PlayStation brand -- could also figure into the system's popularity with consumers, although the game will also be on Xbox 360. On the other hand, we have yet to determine the value of Sony's upcoming, unproven motion controls and 3D television compatibility.

Yet, even these hardware and software sales will not cover the losses from the other two systems. Compare our estimates of Sony's software and hardware revenues in January 2009 and January 2010 below, and it is clear that the PS2 and PSP slices are shrinking faster than the PS3 slice is growing. We estimate that the combined software and hardware revenue from the PS2 and PSP accounted for less than 6% of the hardware and software market in January 2010.



In the coming year we expect the winding down of the PlayStation 2, including the end of the iconic Madden NFL series on the system. We think it's likely that Sony will announce a true successor to the PSP, perhaps not due until 2011.

Then Sony will effectively be a one-platform company, at least for 2010. To that end, Sony will spend most of the year touting the out-of-the-box value of the PS3 while declining to respond to any price drops by competitors. After all that, it seems likely that Sony's share of the market (in dollars) will finally end up around the same as that of its most direct competitor, Microsoft.


Related Jobs

Cloud Imperium Games
Cloud Imperium Games — Austin, Texas, United States
[10.20.14]

DevOps Engineer
Cloud Imperium Games
Cloud Imperium Games — Santa Monica, California, United States
[10.20.14]

Gameplay Programmer
The Odd Gentlemen
The Odd Gentlemen — Los Angeles, California, United States
[10.20.14]

Sound Designer
Cloud Imperium Games
Cloud Imperium Games — Austin, Texas, United States
[10.20.14]

Release Engineer










Comments


David Crooks
profile image
"According to the NPD Group, the five best-selling games on the PS2 in 2009 included [...] Grand Theft Auto: San Andreas (originally released in 2004)"



If ever you needed a good example of a game with a long tail...

Gary Beason
profile image
The Touch has had very little to do with it: How often have you seen a PSP title in the NPD top 20 game sales? The PSP sales have just not had a lot of game sales to go with it. I've been tempted to buy one, but the game library is too depressingly full of ports and bad games. (The DS has its share of bad games, but it has a steady stream, too, of good and even excellent titles.) The Touch and iPhone have few good games beyond casual ones, which may explain a loss of PSP casuals but it doesn't explain the totality of the PSP collapse.



Add to that the asinine PSP Go!--a more expensive handheld that cuts gamers off from the bin of cheap and used games. You couldn't ask for a bigger FU to gamers.



But I think with handhelds, you have to be more than a small console: You have to bring something else to the game table, like different controls or just being a cool fad.

Chris Remo
profile image
Homer,



There's a difference between "just knowing" something and having hard, empirical data behind it. It may be generally obvious that PlayStation 2 and PSP are becoming less successful by the year, but articles like this are what allow people to present arguments conclusively with actual confidence of degree. This article explains the EXTENT to which these systems are suffering, not just the vague assumption that they are. It also shows the extent of the PlayStation 3's improvement relative to them.

Alan Rimkeit
profile image
IMHO it is time for Sony to stop producing the PS2. It is just dragging them down now and they need to cut the dead weight. 10 years and 140+ million units was a great run.



If they really do have the PS2 emulation for the PS3 they keep teasing us with then it is time to bring that out the same day that they announce plans to kill PS2 production.



It is also time to just drop the PSP and bring out the PSP2. It is time for a PSP re-boot. Bring two analog sticks and a slicker design. Add in a wireless G connection at least. Preferably I would like a faster connection like N, but hey costs are an issue right? A faster internet connection would make it a better system all around. They also need to drop the lame web browser and get someone to redesign it for them. Maybe look to the Opera or Chrome designs. Both of those are very compact and functional.



PS3 is doing great. All they need is more great games of all genres.

Mohammad Musa
profile image
@Alan



The PSP2 will have to offer more than 2 analog sticks, slick design, faster internet, and better browser to compete. The features you mention are important but they are incremental improvements that do not change the main experience that you are getting with the PSP today.

Roberto Alfonso
profile image
I finally bought an original PSP, and it is a really nice machine. Unfortunately, Sony thought they could push it the way they pushed PS2, and let it hover around until it was too late to change. And truth be told, I bought it to play videos and to convert them in a good quality my computer must work for 8 hours for a 30 minute anime chapter, it looks obscene when compared with the time I need to convert videos for the DS (even if the screen is worse and not 16:9, I cannot compare 8 hours against 30 minutes).



Maybe Sony should do what Sega did with the Dreamcast: discontinue it in USA and Europe, and let it alive in Japan :-/

John Gordon
profile image
I found this article about the PS2 and PSP very interesting.



I had been hearing for about three years now from various people that the PS2 was dead, but it was still selling strong and it was the most played console in 2008 according to Neilson. Now the data actually is saying that the PS2 is winding down, although it may be kicking around a little bit in 2011 too. It is an impressive little console.



The PSP on the other hand seems like a tragedy to me. It actually had decent sales at one point, but the flop of the PSP Go may have killed off the PSP platform entirely.

Jeremy Reaban
profile image
Relatively well in Japan? It's outselling everything but the DS.



Anyway, the problem I see it is a lack of software really worth buying. You mentioned Gran Turismo and GTA:Chinatown Wars, but why would PSP owners get excited by a port of GT4 minus career mode (yay, we get to race 10 year old unmodifiable cars) or a port of a game originally for the DS that was going to be released for $30 less on the iPhone in a few months?



And it's no surprise software sales dropped in January. There were what, two new releases? Silent Hill and something else.



The PSP has never really had a killer app, except in Japan, where it has Monster Hunter. The DS has Pokemon, Brain Training and Nintendogs. The closest thing the PSP had was GTA:LCS, but that was damaged by an immediate PS2 port priced $30 less. Crisis Core and Dissidia and Birth by Sleep probably come the closest.



The iTouch/iPhone might not have killer apps, but it does have a huge library of extremely cheap software, including many PSP ports for 1/4 to 1/5 the cost. So it's not a surprise the PSP can't compete.

[User Banned]
profile image
This user violated Gamasutra’s Comment Guidelines and has been banned.

Ben Caller
profile image
Why doesn't your analysis go deep enough to acknowledge that NPD doesn't track PSN downloads? And that there may be a significant loss of UMD sales to digital distribution.



The PSPGo isn't the only PSP model able to download full games.



That being said, the lack of a valid 'New' model last year to generate new interest is obviously hurting hardware sales.

steve roger
profile image
Okay, I have a confession. We own 3 PSPs. A Japanese model I got as an early adopter. The regular US model I got when it rolled out in the US. And a PSP GO. I never cared for the 3000.



I like the GO the best with some reservations. I hate the tiny hard drive. It serves no function. I bought a 32GB micro M2 for movies and games which is twice the size of the 16GB internal hard drive.



Why does the GO have a hard drive at all when it is so tiny.



I do like the PSP digital copy of movies for Blu-ray. District 9 and Zombieland are great on the PSP. The strongest aspect of the GO is the movies.



The games for the PSP in all the years I have it have left me uninspired. I was imagining that that games would be kick ass. But they aren't. Daxter was the last excellent game.



Yes, we buy everything all the time. My house is basically a best buy store. But we mostly buy from Newegg.

gren ideer
profile image
Alan: "IMHO it is time for Sony to stop producing the PS2. It is just dragging them down now and they need to cut the dead weight."



Tens of millions of dollars in profit is dead weight? Since when should a company stop selling something that they make money on? Just to stop NPD articles about declining sales?


none
 
Comment: