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PSP Game System Low on Hit Games

8 Sep, 2005 By: John Gaudiosi

Sony has sold more than 2 million PSP hardware units in North America since its March launch. While there are numerous movies available for the system, it's been starved of hit games.

PSP only recently got its first possible must-have game, Konami's Death Jr.

One look at what Nintendo's smash hit Nintendogs has done for that system's hardware sales shows the importance of exclusive games. The hit game sold 250,000 units in its first week in North America.

Meanwhile, PSP software has been heavy on movies. PSP games are only narrowly outselling Universal Mini Disc (UMD) movies and other programming, 52 percent to 48 percent, noted Bob Hurley, of disc manufacturer Sony DADC, at a recent industry event. More than 9 million games and 8 million other UMDs have been sold to consumers, according to Sony research.

“A limited choice of ‘AAA' game titles for the PSP has been a factor, as UMD movie sales continue to outperform expectations,” said Billy Pidgeon, video game analyst for Go Play Research. “While the release of more and better PSP games will somewhat decrease UMD video sales in the current installed base, ‘AAA' system seller games will increase penetration, supplying a bigger base for films and games on UMD.“

The timeline for game development is longer than the time it takes for us to get movies out for PSP, noted Daniel Silverberg, the new business development executive director for Buena Vista Home Entertainment.

“Games like Grand Theft Auto should spike hardware sales, which will expand the PSP's user base,” Silverberg said. “When you look at the $15 to $25 price points of UMD movies, consumers will pick up both movies and killer app games.”

Over the next four months, the release of several hit titles should help Sony reach its forecasted installed base of 5 million hardware units by year's end in North America. Some of the games that will drive hardware sales include Rockstar's Grand Theft Auto: Liberty City Stories; Sony's SOCOM: Fire Team Bravo and The Con; Electronic Arts' Madden NFL '06, The Sims 2 and Burnout Legends; LucasArts' Star Wars Battlefront II; Activision's X-Men Legends II; Konami's Metal Gear Acid 2; Eidos' Tomb Raider: Legend; Capcom's Viewtiful Joe VFX Battle and THQ's WWE Smackdown! vs. RAW 2006.

Heading into this fall, Hollywood-licensed games should help PSP appeal to a broader audience. There are plenty of new film-based PSP games on the way, including titles tied to Harry Potter and the Goblet of Fire, James Bond 007: From Russia With Love, The Incredibles, Peter Jackson's King Kong and The Lord of the Rings: Tactics.

As the holiday season approaches, Silverberg thinks the PSP will begin skewing younger, in part boosted by UMD movies.

“We're tiptoeing into the children's market with movies like The Incredibles [Nov. 15] and Toy Story [just released this month],” Silverberg said. “We've already adjusted our movie releases to appeal beyond the 24-year-old male gamer. We've had success with movies like National Treasure and Pirates of the Caribbean: The Curse of the Black Pearl, and those aren't gamer movies.”

Alison Biggers, VP of worldwide marketing for Sony Pictures Home Entertainment, said the PSP has become one of the fastest-adopted platforms by the Hollywood studios.“We're trying to help broaden the target audience for UMD movies beyond the 18- to 34-year-old male gamer sweet spot,” Biggers said.

Game companies also are broadening the PSP gaming market with games like SpongeBob SquarePants, NeoPets, Crash Team Racing and Pac-Man World 3. With this growing audience, analysts don't believe the current success that UMD movies have had is a fluke.

“UMD remains a good format for film studios, as DVD sales decline without short-term opportunity on a new mass market format, until the next-gen DVD format is decided and more households buy HD televisions,” Pidgeon said.

Michael Pachter, video game analyst for Wedbush Morgan, believes movies are a separate application, like games are to cell phones, and he doesn't see a tremendous threat of substitution.

“People like to watch movies and play games on the go, and they should continue to buy both,” Pachter said.

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