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PSP Launch Met With Bundling

24 Mar, 2005 By: John Gaudiosi

With 1 million PlayStation Portable hardware units expected to hit stores over launch week, including as many as 700,000 on day one, retailers have taken a different approach.

After dealing with shortages with the launch of PlayStation 2, many retailers have offered a limited number of PSP hardware pre-orders. And those pre-orders that have been featured include pre-selected software bundles of two to five games that increase the $249 price of the hardware to $370 to $520, depending on retail location and games and accessories per bundle.

Consumers were able to walk into retailers like Best Buy, Toys “R” Us and Target and pick up a $249 PSP Value Pack March 24 — the North American debut — although lines were expected. Many EBGames and GameStop stores opened at midnight to allow hardcore gamers the first chance to get their hands on PSP.

“The hype around this launch has become much larger than we had originally expected,” said Curt Burgess, operations manager at GameStop.com, who expects interest in PSP to grow as consumers see xactly what it is.

Because the PSP movies won't be shipping until April, all of the major retailers have focused on games at launch. And there are plenty of them — 24 games in all, which makes PSP the largest game launch of any kind. Each of those games present unique opportunities for rental chains — even those that won't have the hardware for rental.

“With the retail prices for PSP games at $40 to $50, we believe rental will be a key part of PSP's business,” said Frederick Jones, buyer of retail games for Blockbuster/Game Rush. “We can let our customers rent from an assortment of launch titles, and then they can decide which games they want to buy. Rental will help grow the PSP market going forward.”

All 450 Game Rush stores will stock the PSP, five accompanying PSP portable accessories and all of the PSP game titles available at launch. Like EBGames and other specialty retailers, Game Rush stores also allow trade-ins of old games for credit towards a new PSP.

“Gamers will rent PSP games as well as movies, and the rental market will prosper as game prices will continue to rise across many platforms (especially next generation),” said Billy Pidgeon, video game analyst, Go Play Research. “PSP software will make a significant impact on sales and rentals in the industry when hardware penetration reaches 5 million to 10 million in North America.”

As with any game hardware launch, Sony is targeting the hardcore gamer, which is the male 18- to 34-year-old demographic. Most of the marketing for PSP will focus on the multimedia capabilities of the device, which plays UMD games, movies and music videos, as well as MP3 music.

“PSP movies will play a larger role in PSP as holiday 2005 approaches and Sony tries to broaden the market demographics beyond the hardcore gamer,” said PJ McNealy, video game analyst for American Technology Research.

Although many retailers did not have PSP movies listed on their Web sites, all of the major game and electronics retailers are expected to carry the UMD movies from Sony Pictures Home Entertainment, Buena Vista Home Entertainment and Lions Gate Home Entertainment beginning in April. Jones said Blockbuster/Game Rush will carry all PSP movies and believes travelers will pick up a UMD copy of a film for the road. These movies, like the games, will offer rental opportunities.

There are already price cuts on UMD movies. Amazon.com is offering April 19 UMD movies, including Hellboy, XXX, Once Upon a Time in Mexico and Resident Evil at $13.97 (compared to the suggested retail of $19.95), as well as House of Flying Daggers at $20.27 (suggested retail $28.95). That's 30 percent off the retail price of UMD movies. The Hellboy UMD retails for less than the DVD, but UMD movies don't come with the extras that fans have grown accustomed to on DVD.

“PSP movies might reach an attach rate of 2 or 3 to 1 through fourth quarter, especially if prices are competitive with DVD and the library is deep,” Pidgeon said. “Gamers aren't going to replace their DVD libraries with UMD films, but they'll likely buy their favorite movies if they are available. UMD video will be more viable if home entertainment devices (say Sony DVD players and PS3) support the new media.”

Sony will have 3 million PSPs shipped worldwide by the end of this month, compared to 4 million units sold of Nintendo DS.

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