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Sony expects hefty PS4 sales

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By Bloomberg News
Friday, Sept. 20, 2013, 12:01 a.m.
 

Sony Corp. expects the PlayStation 4's lower price and wider variety of entertainment services to drive its forecast to sell 5 million units of the game console by the end of March.

The projection for its new generation machine, set to be introduced at $399 in November, compares with 3.55 million units sold in a similar period for the PS3 which was offered in some regions at $599, Andrew House, the head of Sony's game operation, said in an interview yesterday. The previous console was released in November 2006.

Sony's PS4 will be on U.S. shelves a week before Microsoft Corp. starts selling its Xbox One for $499 as both seek to reignite growth in the console business as casual players switch to games on smartphones and tablet computers. Sony is staggering the release of its machine in an effort to avoid shortages that hurt sales of its predecessor, and is positioning the PS4 as a portal for games, films and music.

“The advantage of PS4 is that we already have a network and community in place,” House said at the Tokyo Game Show. “More importantly we have services from the launch of the device rather than have them appearing gradually as at the time we did with PS3.”

At least 20 games will be available as it competes with the Xbox One as Sony works with about 620 software developers to produce content.

The machine will be released in North America on Nov. 15 with 32 markets to be reached by the end of this year while Japan sales will start Feb. 22. The PS4 will be introduced in Asia in December, including sales in Hong Kong, Singapore, Korea, Malaysia and Taiwan.

‘Clear Positive'

“This will be well ahead of the Xbox One,” Damian Thong, an analyst at Macquarie Group Ltd. in Tokyo, said in an e-mailed report. The timing is “a clear positive since Asia is a big opportunity,” he wrote.

Sony rose 0.2 percent to 2,131 yen as of 9:05 a.m. in Tokyo. The stock has more than doubled this year, compared with a 42 percent gain in the Topix index.

The PS4 is a central element of Chief Executive Officer Kazuo Hirai's plan to revive Sony with games and mobile devices, and he has set a target of being No. 1 in the U.S. market, the biggest chunk of the $63 billion global market as estimated by DFC Intelligence. The top position currently is held by the Xbox 360.

“It's become an old concept that consoles are just for games,” House said at the game convention in Makuhari, near Tokyo. “PS4 will not only meet the expectations of core gamers but possibilities of the console are way beyond that.”

Surging Smartphones

The new consoles will be offered in Sony's home market for 39,980 yen ($402), the company said this month. Orders have already topped 1 million, House said Aug. 21.

The PS4 and Xbox One are each projected to sell 3 million units worldwide this year, the estimate of Michael Olson, an analyst with Piper Jaffray in Minneapolis. By comparison, smartphone shipments in the second quarter alone totaled 229.6 million, according to researcher Strategy Analytics.

In the last round of consoles, Sony placed third in the U.S., according to NPD Group data through 2010. Microsoft overtook Nintendo Co.'s Wii two-and-a-half years ago and has led since.

The unveiling of the PS4 in June impressed game enthusiasts and industry analysts with its price and policies that included unrestricted swapping and trade-ins of used games.

Currency Impact

The PS4, with a combined processor and memory architecture from Sunnyvale, California-based Advanced Micro Devices Inc., features a PC-like design that Sony executives say will make developing games easier.

Sony's game unit posted an operating loss of 14.8 billion yen in the quarter ended June 30, the company said last month.

The weakening yen against the dollar is negative for Sony's game business as it pays for components in the U.S. currency, House said. Still, the weakening Japanese currency against the euro boosts sales in Europe when repatriated in the yen, he said.

“Currencies are obviously extremely difficult to predict,” said House. “As we see sort of some balance between those two movements most recently, I think, the effect overall is rather neutral.”

 

 
 


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