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Sony Slashes PSP Price

3 Apr, 2007 By: John Gaudiosi

Sony has cut the price of its PSP, bringing the cost of the stand-alone PSP from $200 to $170 and the list price of the PSP Entertainment Pack from $250 to $200.

Sony also added two new games to its $20 Greatest Hits program with Daxter and Syphon Filter: Dark Mirror joining the collection of half-price first-party and third-party games.

“The PSP price drop makes sense,” said Billy Pidgeon, videogame analyst for IDC. “Retailers wanted a price drop to increase sell-through.

“Another positive factor is the increasing availability of better and cheaper PSP games. With the price cut and marketing aimed at the male teen demographic, Sony should be able to increase penetration of the PSP, and should try to leverage PSP to upsell PS3.”

Pidgeon expects further price cuts on the basic PSP hardware when new PSP models with onboard hard drive or flash storage, and custom colors, ship to market. That is expected to happen at some point this year, as Sony hopes to capitalize on the digital distribution of entertainment content.

“We are pleased that we are able to engineer savings for the consumer at this stage of PSP's lifecycle, allowing more individuals to experience PSP for the first time,” said Jack Tretton, president and CEO, Sony Computer Entertainment America. “In particular, we have recently seen a steady rise in the number of teens adopting PSP as their primary handheld entertainment system, and we expect the new price will accelerate that trend.”

Sony has a library of more than 200 games and more than 450 movies on its proprietary Universal Media Disc (UMD). While new games are coming out at a steady pace, movies are trickling in and most are from Sony Pictures Home Entertainment. After a quick start out of the gate, many home entertainment studios pulled out of the PSP market. But gamers still have the ability to download movies from PC to PSP as well as watch movies and TV shows on PSP via TiVoToGo.

There are a number of key franchises heading to PSP this year, including God of War, SWAT, Monster Hunter Freedom 2, Castlevania: The Dracula X Chronicles, and Tales of the World: Radiant Mythology. Sony has also brought out new games like Ratchet & Clank: Size Matters and MLB 07: The Show to PSP in recent months. Gamers who own a PlayStation 3 can download original PlayStation games to PSP as part of the connectivity between the consoles.

Despite the large library of games, Sony has lagged behind Nintendo DS in the portable market. According to the NPD Group, through the end of February, Nintendo had sold 9.8 million Nintendo DS units in the U.S., compared to Sony's 7.1 million PSPs.

“Nintendo's DS is really on its own trajectory right now,” said John Taylor, videogame analyst, Arcadia Research. ”Not many people view the DS purchase decision as ‘either or.' The DS has cache with newbies because of Brain Games and other non-traditional titles, and with kids because of Nintendo's strong first party properties. This price cut might make the competition for teenager dollars a bit more heated, but I think what will determine market share between these two platforms will be software, not price.”

According to Sony, in 2006, PSP hardware unit shipments rose to nearly 25 million units worldwide, with more than one million new PSP systems sold in North America in December alone. Software shipments increased to more than 90 million units in 2006, but Sony did not release sales units of either hardware or software for PSP.

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