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Launches  |  FEBRUARY 21, 2013 11:40 AM

Sony unveils PS4 to revive game-console sales

Story by
www.bloomberg.com

playstation-4-ps4-2.0Sony Corp. unveiled the PlayStation 4, its first video-game console in seven years, introducing new cloud and social-media features as Chief Executive Officer Kazuo Hirai seeks to reignite sales.

Andrew House, CEO of Sony’s PlayStation unit, announced the product yesterday at an event in New York. Consumers will be able to see what friends are playing and take over games in progress from others, and will eventually be able to stream older titles. The console will go on sale in time for the year- end holiday season, Sony said, without announcing prices.

The PlayStation 4 makes its debut amid an industry shift toward mobile play on smartphones and tablets, raising the question of whether gamers will shell out several hundred dollars for a new device. The console will allow self- publishing, mimicking the open architecture of smartphones that encourages smaller developers to create and sell titles to the growing ranks of casual players.

“Game-wise, it was an absolute home run,” said Michael Pachter, an analyst at Wedbush Securities in Los Angeles. The console will appeal to Sony’s core gaming audience with exclusive titles, and could give it a lead over Microsoft Corp. by making games easier to develop using a PC-based architecture, he said in an interview.

Sony is working to combat mobile devices with hardware and software that will make games available to play or share at the press of a button on a console, the PlayStation Vita portable player or even a smartphone. Announcing the product now gives the company a head start in building awareness.

Old game discs won’t play on the new system, said Richard Doherty, head of research at Envisioneering Group.

Social Features

Sony fell 0.7 percent to 1,345 yen as of 10:52 a.m. in Tokyo trading, trimming its gain this year to 40 percent. Nintendo Co., which released its new Wii U console in November, advanced 1.7 percent in Osaka.

The new PlayStation will include social-gaming features that let players tag and share videos and watch what others are doing at the same time, according to Mark Cerny, the lead architect, who demonstrated the new controller, the DualShock 4, which includes a touchpad and “share” button.

“We’ve taken a deeply consumer-focused and developer- centric approach to the PlayStation 4,” Cerny said from the stage.

Personalization will be a compelling feature, Cerny said. The system is designed to learn players’ likes and dislikes. Based on those, it will make recommendations, have potential purchases ready and let customers begin playing new titles before they are fully downloaded to the machine’s hard drive.

Mobile Games

The PlayStation 4 service will offer both free games and episodic titles, the company said. Gamers will be able to broadcast their play to friends.

“What we’re creating is the fastest, most powerful network for gaming in the world,” said David Perry, CEO of Sony’s Gaikai online game service.

Mobile games and those downloaded to computers are taking a bigger portion of sales at the expense of traditional gear. U.S. revenue from those titles rose 16 percent last year to $5.9 billion, according to Port Washington, N.Y.-based researcher NPD Group Inc. Sales of the $60 packaged titles for consoles fell 21 percent to $8.9 billion.

Sony’s new console isn’t “revolutionary” enough to overcome changes in the industry, Amir Anvarzadeh, a Singapore-based manager for Asia equity sales at BGC Partners Inc., said in an e-mail.

Wii U Sales

The company will probably set the price for the device after seeing how sales of Nintendo’s Wii U go, Keita Wakabayashi, an analyst at Mito Securities Co. in Tokyo, said by phone today.

Nintendo cut its unit sales forecast for the Wii U in January as it struggles to compete with Apple Inc. and Samsung Electronics Co. tablets.

Microsoft, based in Redmond, Washington, plans to begin selling a new Xbox by the end of 2013 that includes more processing power and more home-entertainment features, people with knowledge of the situation said last year.

The PlayStation, once a profit center for Sony consumer electronics, lost its lead in the last generation of consoles, while remaining an important launchpad for the Tokyo-based company’s new technologies and services, including DVD and Blu- ray players and its online video and music stores.

Sony’s PlayStation 3 fell to third place. Nintendo’s Wii and Microsoft’s Xbox 360 vied for dominance in the living room, while Sony lost money on the PlayStation 3 for its first four years. PlayStation, through three console iterations, has sold about 332 million units, said Dan Race, a spokesman.

Sony Profit

One long-term goal with the new PlayStation is to tie Sony’s hardware together to let consumers pick up games or movies on one device that they’ve started on another. Perry introduced features that let customers switch back and forth between the console and the PlayStation Vita.

As Hirai divests ancillary businesses such as chemicals and display-making, he aims to generate 70 percent of revenue and 85 percent of operating profit in Sony’s electronics from games, digital imaging and mobile devices by March 2015.

The company’s troubled TV business is being squeezed between Samsung Electronics’ efficient manufacturing processes and Chinese set-makers’ bargain-bin pricing.

The company projects a 20 billion-yen profit ($214 million) this year after selling its New York headquarters for $1.1 billion.

“It’s unlikely that PS4 will boost Sony’s sales and profit in the long term,” said Mitsushige Akino, chief fund officer at Ichiyoshi Asset Management Co., which oversees about $356 million. “Only core gamers buy game consoles like the PS4. Killer content that everyone wants to buy is essential.”

-BLOOMBERG

 
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