Sony's PlayStation Vita: The little console that could?
Sony Corp.'s freshly launched PlayStation Vita handheld game console could generate more than $2.2 billion in revenue this year for the Japanese consumer electronics and media giant, according to the Boston-based market research firm Strategy Analytics.
The forecast is welcome news for Sony, which is struggling to recover from a catastrophic 2011, when an earthquake hobbled its home market in Japan and floods ravaged its factories in Thailand, and left the company with a $2 billion loss for the quarter ended Dec. 31, 2011.
The $250 device, which hit U.S. stores Wednesday after being released first in Japan Dec. 17, is a litmus test of sorts for Kazuo Hirai, Sony's newly appointed leader. Hirai had championed the device during his time overseeing the PlayStation business as an example of the perfect marriage between hardware and entertainment content.
As a palm-sized device capable of accessing the Internet, the Vita also represented Sony's broader push toward connected entertainment in a portable package — allowing consumers to summon all manner of digital content on the go, including games, music and videos.
"The real value of the PlayStation Vita is its drive for content revenue growth and its strategic position in Sony’s entertainment ecosystem," wrote Strategy Analytics researcher Jia Wu, who forecast that Sony could sell 12.4 million units of the device and generate $2.2 billion in revenue for Sony in 2012. The estimate assumes that Sony would cut the price of the console sometime this year, bringing the average retail price to $180. The device is also expected to yield an additional $800 million in higher-margin software sales this year.
But the Vita faces headwinds, Wu cautioned. Among them is a cooling of demand for game consoles in general as consumers turn to smartphones and tablets for entertainment.
"Sales of the Wi-Fi version of PlayStation Vita at $249 initially exploded, selling more than 300,000 units in the first week of release" in Japan in December, he noted. "But the new console is barely moving 20,000 units per week in its home market after all the hard-core fans made their purchases."
— Alex Pham
Photo: Kazuo Hirai, Sony's next chief executive, introduces the PlayStation Vita during a news conference at the 2011 E3 conference in Los Angeles. Credit: Jonathan Alcorn / Bloomberg.