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Analysis: PSP Go To Face 'Slow Death At Retail' In U.S.?
Analysis: PSP Go To Face 'Slow Death At Retail' In U.S.?
March 16, 2010 | By Matt Matthews

March 16, 2010 | By Matt Matthews
More: Console/PC

[As part of his monthly NPD review, Gamasutra analyst Matt Matthews takes a close look at February 2010 U.S. console hardware sales, estimating just 6-10,000 PSP Go-s sold in the month, and suggesting "a slow death at retail" for the UMD-less SKU.]

It has been several months since we examined the hardware market in the detail, and there are many trends worth examining in that segment.

There are currently 10 different major hardware models on the market across six platforms, and for the first time we wish to provide a one-month snapshot of how we believe each model is selling relative to all the others.

Before showing our estimates, however, we wish to make a few points clear. First, the NPD Group does not provide the level of detail that we are attempting to extrapolate here.

Second, we decline to consider the effect of retailer promotions on pricing, and use only the standard prices set by the manufacturers.

Finally, we have made what we feel are reasonable assumptions about the PSP market to arrive at our PSP Go sales figure.

With that said, based on pricing data provided to us by the NPD Group, the figure below shows what we believe is an approximate breakdown of hardware model sales for the month of February 2010.

There are several notable points on this graph, but we'll start with the one we find most interesting: the PSP Go. By our estimation, between 6,000 and 10,000 PSP Go systems were sold in February 2010.

According to official data, the average price across both PSP models in February 2010 was only $185. The PSP-3000 is currently available both in a standalone package for $170 and in bundles for $200. The standard PSP Go is priced at $250. Given the three configurations, it is difficult at best to get how much each system contributes to the average price but some modeling provides a bit of insight.

For example, given the standard prices, it is effectively impossible for the core $170 package to account for less than 50% of PSP hardware sales. In fact, between 50% and 80% of all PSP systems sold in February were this base model.

The same model reveals that 0% 50% of all PSP systems sold in February were hardware bundles, priced at $200. The remaining were PSP Go systems.

According to figures provided to us in late 2007, it appears that consumers have often found the PSP hardware bundles quite attractive, with those models even outselling the core system in some months. For this reason, we believe that bundles accounted for 40% 45% of all PSP system sales in February 2010.

Consequently, the model shows that the PSP Go would account for between 5% 10% of all PSP systems that month. Again, we stress that this is an educated guess based on some hard data and some experience, and would welcome the release of harder figures from Sony.

With PSP Go sales this low, and the PSP-3000 itself demonstrating historically weak sales, we feel even more confident in our conclusions from last month: Sony will replace the PSP with a successor platform, possibly announcing its intentions sometime in 2010. Beyond that, we expect the PSP Go to experience a slow death at retail.

As for Sony's other modern system, the PlayStation 3, the average price provided by the NPD Group reveals that approximately two $300 models (with a 120GB hard drive) were sold for each $350 model (with a 250GB hard drive). Sony has claimed hardware shortages, and ironically that is good news in light of our sales estimates.

If the $300 PS3 is outselling each of the $200 Xbox 360 Arcade and the $300 Xbox 360 Elite, as our estimates suggest, then that means that Sony has successfully made its case to the consumer for the price/value ratio of its system.

This doesn't mean that it's beating the Xbox 360 Microsoft's two models are still collectively outselling the PS3 but rather that consumers have embraced Sony's system alongside Microsoft's.

In fact, we would argue that Microsoft's Xbox 360 itself is doing quite well for a system in its fifth year. The company has increased sales each February since the system's launch, and the strong software offerings this year including a new Halo title should help propel the platform through the rest of 2010.

We remain dubious on whether Microsoft's Project Natal will actually lift and sustain the platform significantly, but are open to the possibility that the motion controls along with a $50 price cut might welcome more casual players into Microsoft's fold.

According to the average prices provided by the NPD Group, we estimate that the Nintendo DSi still accounts for about 50% of all Nintendo DS sales. That represents no change from the situation in October 2009, when we last got a read on DSi sales. We expect that the installed base for the Nintendo DSi now stands in the neighborhood of 5.8 million units or around 15% of the total Nintendo DS hardware base.

This is the last month in which Nintendo DS sales will be this easy to interpret. On 28 March Nintendo will launch the Nintendo DSi XL at a price of $190. Should that revision be even half as successful as the Nintendo DSi, the average price of Nintendo DS systems being sold in the U.S. will probably have risen by mid-year, an amazing feat for a platform now in its sixth year.

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Fiore Iantosca
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Oh the death is surely imminent. No idea what brains at Sony figured it would sell.

That's right Sony, keep making the PS2.

Prash Nelson-Smythe
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The PSP Go appears to have been a massive mistake and a waste of resources to design and launch and perhaps it hurt the entire PSP platform itself, if only because of the opportunity cost of releasing a more appealing or cheaper PSP variation. And it did not even fail because it made any risky innovations, just bad decisions that everyone hated as soon as they saw the "feature" list. It turns out that most people don't want to want to pay more for a device that allows them to buy higher-priced software over the internet, whilst helpfully eliminating the need to decide whether or not to sell a bad game by forcing you to keep it. It's the ultimate example of a product that ignores the customer completely and Sony are paying the price.

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Wow. I remember when I got my PS2 in...2001?

As that Staind song goes, "It's been awhile".

Kale Menges
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The biggest problem that faced the 'Go was that it just didn't seem to have an identity of its own, i.e. who would actually be interested in a portable gaming device that apparently only had half the features of a cell phone and half features of a regular PSP, neither half of which was the correct half. It's more akin to the N-Gage (not even touching that one...) than the PSP....

Rodrigo Cordeiro
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Sony wake up. PSP Go was a big mistake. In my point of view Sony insists to force us using something we dont want. We want to play games, to buy them in the shop to trade them after it. And i think half of the PS3 sold are just to see HD Blueray films. If you want a causual game play DS/DSi if you want a real game play Xbox360. If you want real action play Wii. Sony wake up.

Mike Smith
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The PSP Go could have done well had the price been lower. At the same price point as a Wii / XBOX 360 etc, and with the PSP 3000 undercutting it's sales, there is little motive to purchase it.

Reza Ghavami
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For me the Go has been a worthwhile investment. When I look past the terrible price and weak battery, it's actually a system that has enough versatility to satisfy all of my portable entertainment needs. Not the best handheld system out there, but definitely not as awful as the numbers and criticism suggest.

Roberto Alfonso
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Slow death? It looks like a massacre.

steve roger
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We bought a PSP GO over the holidays. My son loves it. We already have the orginal model. However, I did it to make him happy, not because it was a good deal. I figure based on this report it will die at market and they will become rare and at least increase in value that way. But of course my son will want the new model :).

Josh Green
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Am I the only one thinking that maybe PSP Go was a marketing experiment by Sony? Think about it. Sony went into the release of PSP Go with not much fanfare and limited advertising. They intentionally limit the system so that it has a base set of features. Users must buy games directly through online purchases with no trade-ins of UMD's allowed. This group is untainted by having the option of purchasing UMD's, system hacks, or other phenomena related to previous PSP releases. This group willingly accepts all of this, despite a major price increase.

So within these carefully crafted rules and limitations, a small sub-set of the market purchases the PSP Go and unwittingly becomes subjects of the experiment. Within this experiment, Sony makes various tweaks to its online services and observes how this group responds.

Now what would Sony do with all this useful information? What will they do with this marketplace that has been incrementally improved over the period of 1-2 years? Given the age of the PSP platform and relative stagnation in hardware and software sales with respect to the rival DS, it seems logical that Sony probably has a new portable platform in development. Games for this new platform will only be available through digital distribution. And there will be a marketplace available that's fully functional and ready-to-go on a large scale when this new platform is released sometime in the near future.

So is PSP Go a failure? That depends on Sony's intentions.

Roberto Alfonso
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I think they aimed at combating piracy. However, selling less than the Virtual Boy must be considered a failure, no matter if your purpose was to throw them away anyways ;-)

steve roger
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That is a ridiculously expensive experiment. Therefore, highly unlikely.

Josh Green
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I don't think it's that expensive compared to having a launch failure similar to PS3 (which only starting doing better in the last year). And I doubt the adjustment to the hardware cost that much given that the internal parts are still the same. The added internal storage obviously was costlier. But that was figured into the price. Plus it's simply illogical for Sony to put out PSP Go with the intention of setting the handheld market on fire. They knew it was going to be a dud, yet put it out anyway.

Sean Francis-Lyon
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Before the PSP Go came out and we got all the details I thought it was a good idea. I was planing on buying one. It has 2 very big problems that changed my mind.

1) There is no way to transfer a UMD to it.

This actually isn't a deal-breaker for me, since I don't own any UMDs and don't buy many used games.

2) Price point

I just can't get over that fact that it costs $80 more than the PSP 3000. I figured that since the Go has less hardware it would be cheaper to make and cost less to purchase. Flash memory is dirt cheep. Since it has no way to play the games you have already purchased it is clearly aimed at new customers, people who want a PSP but are hesitant to fork over $170. I thought it would be priced to compete with the DS.

Anatoly Ropotov
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A typical fail from Sony.

Adam Flutie
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"PSP Go To Face 'Slow Death At Retail' In U.S.?"

It wasn't a slow death, it was DOA!

Thomas Lo
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Can't say much about bad or good moves if you are talking about Sony as a whole. Stringer brought the main revenue-stream, electronics, back into the black. Sony and other Japanese companies were hit hard by the recession since they occupy the high-end of the market. The movie division is doing fine and the PS3, despite the constant bitching about it was the deciding factor in the hi-def war. As for whether it was worth it, time will tell but it is clear dvd is no longer the cash cow it once was and blu-ray has only partially filled that gap thanks to massive piracy and dollar-rental kiosks.

As for the psp-go ... it was a huge mistake. Sony really needs to develop a PSPphone but I believe that their agreement with Ericcson precludes it for some reason or another. Big mistake Sony. The smart phone audience overlaps hugely with the more mature PSP audience.

Ian Fisch
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@Josh Green: C'mon man. Your theory doesn't make any sense. So the PSP Go was an experiment to see how gamers would react to an online-only handheld?

So basically they released an online-only handheld (that they knew would fail) to determine how people would react to a future online-only handheld (that they hoped would succeed)? That's the jist of your argument right? Can't say it makes a lot of sense.

Yannick Boucher
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@Ian Well, Ian that's a shame, because I think that is EXACTLY what it was as well. That was the perfect way to get some missing data to predict your future digital distribution market strategy. You know exactly right now, how many people are ready, how much they're willing to pay (or not), and so on and so forth.