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Analyze This: Is It Time To Refresh The PSP?
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Analyze This: Is It Time To Refresh The PSP?


May 19, 2009 Article Start Previous Page 4 of 4
 

Nicholas Lovell, Gamesbrief

The challenge that the PSP faces is one of content and distribution. As handheld rivals such as the iPhone and iPod Touch start nibbling away at the edges of the PSP's market, Sony has to change its route-to-market or risk a steady erosion of players.

That's not to say that the iPhone is a better gaming platform -- far from it. I completely understand the perspective of those who believe that a dedicated gaming device like the PSP will always outperform the iPhone.

But we're not just talking about gaming performance. We're talking about the ease-of-use of getting hold of, and paying for, software.

And on this score the iPhone with its integrated AppStore and seamless purchasing process wins hands-down. The average iPhone user has downloaded 27 apps (not necessarily games); the tie ratio for the PSP is 4.2.

Obviously, many of iPhone apps are free or have very low prices, compared with $19.99 USD or more on PSP.

But that is only part of the story, since the revenue from the PSP is split between the retailer, the cost of the UMD, the physical distribution, Sony's cut and the developer/publisher royalty. On the iPhone, it's a simpler 70:30 split in favor of the developer.

So Sony needs to embrace digital distribution for the PSP (all the signs are that they are going this way), reduce barriers to entry for developers/publishers, and encourage the reduction in price of games.

The PSP remains a better gaming device than the iPhone -- the challenge is to make sure it stays a more profitable gaming device for developers, publishers and, ultimately, Sony.

Do you have a business-related question about the video game industry that you would like to suggest for discussion in Analyze This? Are you a professional analyst and would like to take part in this column? Email [email protected]


Article Start Previous Page 4 of 4

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