the_dengle said:
Doomed how? Doomed to what? It's just such a vague word. Its meaning isn't consistant enough around here. The bottom line is: will Sony profit from the Vita long-term? That's the only appropriate way to measure success. By that standard, the Vita can't be "doomed" until it has reached a point where Sony has lost so much money from it that it would be impossible for it to make back its losses. |
There are many negative outcomes for a console, and not being profitable enough is one of the more mild negative outcomes ... Market failure is almost as bad as it can get, and about the only way it can be worse is if the failure kills the brand associated with it.
Videogame consoles tend to involve substantial up front costs in research and development as well as substantial long term costs associated with marketing the system that are not included in the cost estimates of the system. These costs tend to be amortized over the entire userbase of a system, and are generally recovered from licensing fees. When the userbase is huge these costs don't really matter, after all $4 Billion R&D cost of a 100 Million selling system works out to $40 per system and the $500 Million per year marketing budget is covered if every system translates into 1 game sale in that year; but when sales are low these costs represent substantial losses, after all that same $4 Billion R&D cost works out to $160 per system if you only sell 25 million systems and that $500 Million marketing budget requires 3 or more games per system sold every year.
At the current pace it is impossible for Sony to cover costs on the PS-Vita based on its sales, and the primary way for Sony to increase sales will be to undertake substantial up front losses in the hopes that sales improve.
I am holding off judgement on whether the PS-Vita is heading for market failure until after the Christmas buying season, but if the Vita is below 5 Million units sold worldwide on January 1st it will certainly be in a lot of trouble; and it should be past 8 Million units sold to be in the clear.
