Disappointing initial sales cloud the PS Vita
Recently, Forbes Magazine carried a series of articles on how the failure of PS Vita is going to kill the portable console market. This article is a reaction to Forbes’ assessment. To read the Forbes articles, please refer to the links at the end of this article.
PS Vita was launched in Japan on December 16, 2011 and sold about 3,25,000 units in less than a week. This appeared quite
encouraging to Sony, especially after increased investing lot on building a support system of popular games to boost initial sales. But the second week brought bad news: only a little more than 72,000 units were sold. According to VGChartz, Nintendo’s 3DS crushed the PS Vita in sales last week, with a little under 500,000 units sold. Admittedly, Nintendo has been a leader in the portable console category while Sony has been playing the fringes. Even then, to extrapolate this information to say it is the end of portable gaming is probably stretching it a bit too much. If this is indeed the end of portable gaming — and it might well be so — it will not be because there is no market for it, but because companies have failed to understand market needs.
The PSV may not be doing all that well, but the 3DS is still running strong. Source: VGChartz
The key challenge that portable games face comes from mobile gaming. To face this challenge, companies need to understand a) what their core value proposition is and b) understand what the customer segment is willing to pay for.
GET YOUR VALUE PROPOSITION RIGHT
Mobile games and portable PS games are fighting for the same pie. All PS owners have mobile phones but not all mobile phone owners have PS. As a result, Sony has a bigger task of upselling its console to mobile phone users (who may already be playing games on their phones). The PS Vita (or any such console) has to be significantly better for mobile users to turn to it for their gaming needs — and the advantages have to be apparent, given that a non-gamer (or casual gamer) is unlikely to conduct too much research before deciding on a portable console. Do portables have better screen resolution? Are they faster? Are the games easy to find/download? Are they well-priced? Chances are you just answered no to all of these questions. If companies have to compete with mobiles, they are just going to have to step up to the challenge. They have to understand what their target segment wants (not just what the target segment is) and design a value that not only beats the value proposition of mobiles but is also different in kind. The fact that kids are a key segment here is evident by the fact that the Nintendo 3DS is still doing well and has not been impacted by Sony’s PSV. Nintendo knows its segment well and promotes games that this segment wants. Of course, the prices of Nintendo games could do with a reduction — although, in my opinion, Nintendo manages with the premium (over mobile games) because a) parents do most of the purchasing and possibly hold their children to guidelines for when they will buy a new game and b) kids don’t finish a game overnight and the games are long enough to keep them occupied for a month (or months).
The Nintendo 3DS is still running strong.
I personally like to keep my media player (an iPod), my phone (a Blackberry), and my portable gaming console (a PSP) separate — my belief is that products that are meant for one thing do better than one that tries to do everything. Now the iPhone is fast challenging that belief because it is a great media player, phone, and gaming console all in one (but also costs as much as all of them put together).
UNDERSTAND WHAT THE CUSTOMER IS WILLING TO PAY
You can’t sell a portable game for 2,000INR when the nearest substitute (mobile games) costs 50INR. You don’t need a management degree from Harvard to tell you that. As I mentioned above, portable consoles have so far failed to differentiate the additional value they provide to justify a 39X premium. Apart from kids whose discerning parents want family-friendly games for their children, “core” gamers usually look at portable gaming devices as a stop-gap — to be enjoyed only until they can afford that 40″ TV and a real console, or for times of travel. Neither of these two segments will want to spend excessively on this pastime. Portable console manufacturers, especially Sony, has to understand where their consoles are placed in the bigger scheme of things. There is no such thing as customer loyalty in the Internet age when every consumer has free access to information that allows him/her to make an informed purchase decision. A simple Google search will show how bad an idea it is to buy a portable console over a high-end mobile phone.
There is no reason for one product or another to be obsolete as long as it fills a compelling customer need. Companies just have to innovate to meet customer needs. Do we see the portable consoles disappear (like we saw the pager disappear from public eye)? Most likely not. But will we see another failed product in PS Vita? Maybe. There is still a market for portable consoles, now whether a company manages to meet customer needs and create a product that people are willing to buy — that is a different deal altogether. We have seen Sony take multiple wrong steps with the portable playstations (anyone remember the PS Go ?) and while some amount of market experimentation much be encouraged, it seems that Sony hasn’t yet cracked the code. We have not had a chance to review the PS Vita yet and are eagerly awaiting its worldwide launch, but we are pretty sure we won’t be disappointed with the product itself.
What are your views on the portable gaming market? Do you like your gaming equipment to be different from your mobile phone? Is mobile gaming for n00bs? Post your opinion below!
References:
Sony in Big Trouble with PS Vita
GamesINC 