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Looking toward Vita's future by examining PSP's past

Looking toward Vita's future by examining PSP's past Exclusive

January 30, 2012 | By Matt Matthews




[In his latest Behind the Numbers column for Gamasutra, analyst Matt Matthews looks for hints of what the future holds for Sony's PS Vita by examining its predecessor, the PSP.]

With Sony's PlayStation Vita handheld launching in the U.S. in just a few weeks, the company's first major handheld " the PlayStation Portable or PSP " has just finished what will likely be its last Christmas season as a supported platform.

Times have changed immensely since the PSP launched in the U.S. back in March 2005. At the time, many expected that Nintendo's quirky dual-screen handheld would take second place behind Sony's higher-spec system. Apple's iPod Touch, the cousin of today's iPhone and iPad gaming platforms, was still more than two years away, and the App Store more than three.

It was inconceivable that the PSP would end up at a mere 20 million systems in the U.S. (and over 70 million worldwide) while the Nintendo DS " in its many incarnations " would pass 50 million in the States. In the last year, Apple's iPhone passed a global base of 100 million units and the iPad shot past 40 million, with no signs of stopping any time soon.

All of that is a long-winded way of saying that the PSP sure seemed like a good idea six years ago, but history passed it by. Still, it was Sony's baby, and the company has kept supporting it long after everyone else had moved on, even if the actual support has been inscrutable at times.

How did the PSP get to 20 million units in the United States? Here are the system's hardware sales for each year since 2005.


The PSP came out of the gate very strong, with 3.6 million units sold to consumers in its first nine months. However, the system slowed significantly in 2006, probably due in part to Sony's focus on launching the PS3. It then rebounded in 2007, when the price dropped from $200 to $170, and maintained sales of 3.8 million units a year for two years.

In 2009, the PSP's hardware sales declined significantly and have continued to fall ever since, despite some further trimming of the price. It is this sudden and dramatic shift, along with many other factors, that leads analysts like Michael Pachter of Wedbush Securities to note that Apple's handhelds and the App Store have probably had an effect on sales of dedicated handhelds.

One of the defining features of Sony's system was its disc drive, which used Sony's proprietary UMD format. Originally billed as a medium for games and video, the UMD Video disc has become quite rare. As of this writing, Amazon lists only two new UMD titles in the past year: Harry Potter and the Deathly Hallows Part 2 and the Hangover Part II.

However, I am most interested in the PSP as a gaming platform, so let us focus just on the games. As the system's hardware sales have tapered off, so have the UMD game releases. According to my data, publication of games on UMD peaked in 2006 " the system's second year " and after declines in 2007 and 2008 the system enjoyed a brief revival in 2009. The figure below shows how many UMD titles were released each year since the system's launch.


In the last year, the PSP has averaged just over two UMD titles per month, and its library consists of just under 600 UMD titles in the United States. (Fortunately the PSP is effectively region-free, so interested consumers can import titles from other regions if they wish.)

As the video game industry has focused more on digital distribution, Sony has attempted to keep the PSP relevant by bolstering its library of software through the PlayStation Store. Software available this way was initially limited to first-generation PlayStation titles but has gradually grown to include a variety of content in different formats and of varying types.

On the PSP version of the PlayStation Store, consumers can now buy software created for the original PlayStation (both domestic and imports), the NEC TurboGrafx 16, and SNK's NeoGeo. Some native PSP titles are available only through the PlayStation Store, while many games originally released on UMD are now available for download through the PS Store.

Finally, Sony has created a brand of smaller titles " called PSP minis " which are generally only a few megabytes to download and cost under $5. Some, but not all, of these are also playable on the PlayStation 3 through a kind of PSP emulator.

The figure below shows when and what type of games have been released on the U.S. version of the PlayStation Store for the PSP.


Unlike all of the other graphs, this one peaks in 2009. During that one year nearly 300 PSP software titles " ranging from emulated older games to minis " were made available on the PS Store. (This is minuscule, of course, compared to the sheer number of titles published on the iOS and Android stores each month.)

In that same year Sony attempted to launch its PSP Go, a PSP that lacked a UMD drive and therefore could (ostensibly) only get software through the PS Store. Unfortunately for the ill-fated PSP Go, consumers weren't ready to buy a dedicated gaming handheld with such limited capabilities and a steep price of entry. Even accounting for the 16GB of on-board storage, the PSP Go's $250 price tag was too high for practically everyone.

In its effort to stake a claim in the digital marketplace, Sony ended up getting just over half of the UMD library online. As of this writing, there are 595 games on UMD and 302 of them are on the PS Store.

Having converted over most UMD releases, the software releases for the PSP on the PS Store are now dominated by the PlayStation minis line. We count 220 minis now, and several are being released each month.

But for all that software available, the real question is whether anyone is making good money on the PSP now, and the answer is most likely no. Given all that I've seen, I can't imagine many people are finding a living wage on the PSP.

According to comments from Michael Pachter, PSP software revenue at retail fell 33 percent from 2009 to 2010 and then fell a further 50% from 2010 to 2011. According to a blog post on Gamasutra by ICON Software's Richard Hill-Whittall, nearly 147,000 units of ICON's eight PSN/minis titles have been sold to date. However, that includes over 83,000 units of Bashi Blocks which was given away for free under Sony's PlayStation Plus subscription program.

Which brings me back to the PlayStation Vita. With the new system Sony has addressed the shortcomings that the PSP lived to regret " primarily its lack of a second analog pad and a touch screen.

On the other hand, much of the legacy content that Sony might wish to sell to consumers is extremely heavy. Just downloading a PS1 game like Final Fantasy VII requires over a gigabyte of storage space and bandwidth. The focus on big content appears to be continuing with native PS Vita software, and it isn't at all obvious that consumers are willing to buy those heavy games, either digitally or at retail.

Sony had a good run with the PSP, especially in a market that has seen many try and fail to challenge Nintendo. But times have changed.

The company has attempted to graft a network-focused strategy onto its existing business model. I don't think it's going to work, and I don't think the Vita has any chance of reaching even the level of sales enjoyed by its predecessor.

Check this space next month, however, when we can look over the Vita's launch figures and begin to draw preliminary comparisons to previous system launches.


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