Sony's financial situation makes it difficult for it to cut the price on the Vita where it would have to take a loss/take a larger loss on each unit sold. (I have heard it is making a profit on each unit but that has been unverified and typically Sony sells hardware at a bit of a loss at introduction).

While price cutting may not be an option, other design decisions could be much more of a problem.
1. The required non-included proprietary memory increases the real purchase price (by at least 10 percent or $25 in the US). In other words, the difference between the PSV and 3DS is $105 not $80.
2. Charging $50 for the top-of-the-line Uncharted title (at least Gamestop is doing that) may give people pause. It took a while for $40 3DS titles to be accepted. (That is the only game at that price so far).
3. Charging the same for a digital download as for a physical copy of the game is not going to make a lot of people buy the tangible product. It probably could make just as money as a physical sale by charging $10 less and probably sell more too. (For example, wholesalers charge small game stores $43 for $50 games -- so there is some thought to this statement).
4. Not having backward compatibility -- and scrapping the method to port over UMD games -- eliminates almost all reason for PSP owners to upgrade to the new Sony machine when they change handhelds.

Mike from Morgantown

PS -- When Nintendo cut its price and lost money for the first time ever over a reporting year, there was much "Doom and Gloom" talk. Given Sony's situation, I am surprised not to see any similar talk about the company as a whole.

Some developers did move projects off the 3DS though. Assassins Creed: revelations is a key example. And boy does it show, the console version is a massive step backwards. 

I think actually the most damning thing about this story is the response from Sony's senior vice president of Worldwide Studios. Look at the language he uses. If it was flat out wrong he would say so instead we get marketing spin.  The original article states that some MAJOR Japanese companies are shifting focus, his retort?
''there is no way anyone could stand in front of a camera and say that all developers are changing focus from one platform to another''
Erm great that doesn't address the original point AT ALL. He simply changed the question, most likely because it's true about major companies. 

He guesses it is exagerrated, still true mind you but he guesses exagerrated. He then states ''I know many, many, many third party developers and publishers are feverishly working on Vita titles''.... erm that's great but again not the issue. The statement wasn't 'ALL developers are stopping work on it'' it was that some major ones are. Saying there are still lots of games coming refutes it in no way at all. 

Is it a real trend? '' No, I absolutely haven't heard.''......Right so we know that you don't know about it. Perhaps it's your job that you should be in a position to categorically state 'No it isn't a trend'. Instead we get what is the marketing equivalent of ''I don't know'' 

''There's always going to be the hot platform of the moment in the industry'' right and that isn't the Vita right now and the question is 'Is that making it lose developer support?' Something he hasn't bothered to answer. 

I also don't remember developers cancelling HD console projects to work on facebook games like he seems to claim. I remember developers doing small experiments while continuing their development on HD consoles. 

My guess is that this is very likely true. We saw the 3DS get cancelled titles such as AC, Saints Row, Mega Man, bloodrayne was put on hold (seems to be cancelled now) and we have no idea how many unannounced titles were cancelled/put on hold. For these titles there wasn't a clear alternate either. Maybe try and redo the game to work on PSP or DS? Possible but both those are systems on the way out. For cancelled Vita titles there is a very clear alternate option.

The wishy washy  comment from a high up at Sony and the fact we saw this happen with the 3DS mean there is a fair chance it's true. That of course doesn't mean there aren't any big titles coming for the Vita. Just less than perhaps there were before. 

You say "if third party publishers", but who do you mean by that? It's a bit vague. Are you talking about third parties world over releasing in Japan, or major third parties like capcom, or all third parties, or Japan release only third parties?

I think your point's integrity relies a lot on who you are referring to.

As I said, I'm pretty sure it's referring to those "japan-release-only" developers, and not developers who have games popular overseas, so it's confusing that you specifically say overseas. After all, a game that is popular overseas won't be affected by an adverse Japanese market.

I say "I'm pretty sure" because for one, a dev wouldn't scrap worldwide release games just because Japan isn't seeing a lot of sales. The Vita hasn't even released overseas yet, so why can a project a week before release? Very unlikely that that is what happening. So by elimination, we can only be talking about games that don't release outside of Japan, and I'll say again that the indie dev is getting stronger in Japan, NOT the japan-release only dev. 

The writing is on the wall.

I admit that part of me is speaking out of fanboyism and hate but I just can't logically see how Vita will become a success, it will not be regarded as successful.

To play devil's advocate, I would say he's acknowledging that the news COULD be true, but that he hasn't heard of anything. Obviously he can't say "that's a lie" as it could be true somewhere, but I think it's a close to saying "that's a lie" without actually doing so.

Remember, this is one rumor from one source. Nobody has stepped forward announcing their intentions, no cancellations have been made, no other source has backed the rumor. He also says something very poignant with, "greatly exaggerated", in a culture where exaggeration really doesn't sit well, I could only imagine that this was the work of incendiary journalism, or a western reporter.

Pretty sure the comparison was meant to be with the events of the 5th generation, with the mass exodus from Nintendo and the N64 to Sony and the Playstation. Keep in mind that, while it is true that the DS saw a lot of support, the list of big third-party franchises that turned up on the system was relatively slim, with most of the bigger franchises that did show up getting spin-offs or low-budget titles. I think the only real exceptions to that pattern, in the end, were Call of Duty, which saw consistent DS releases and only a couple of PS2-port versions for the PSP, and Resident Evil, which really only appeared on the DS and not the PSP. Note that I'm not referring to the many smaller popular franchises (such as Harvest Moon), nor the many franchises established on the DS.

And noticing that thekitchensink was speculating, it seems reasonable to suppose that he was referring to the theoretical case that this happens for the consoles as well as the handhelds - not because it's likely, but because it's amusing to consider.

Now that I've actually explained the joke, and thus sucked the actual fun out of it, I'll be on my way.

You are doing the exact same thing as him though and shifting the focus. It could't be true 'somewhere' as in many places. The original rumour states that MAJOR Japanese companies are shifting projects. If a Vice President at Sony has no contact with MAJOR companies and no idea about their projects for Sony's platform then there is something majorly wrong. He didn't allude to it being a lie at all. He was asked about major Japanese companies and replied that no-one can talk about all developers.... something that no-one but him had done. His response regarding major Japanese developers shouldn't be ''I haven't heard anything''. It should be 'Absolutely no'' or if the answer is actually yes then the correct PR/marketing way to handle it would be to shift the focus of the question to the fact there are still plenty of other games coming i.e. exactly what he did. 

Also of course no cancellations have been made. Simply because at the moment we know of almost no games coming from major Japanese companies beyond the next few months (i.e. finished or nearly finished titles). It is likely we will never know how many projects were cancelled because so few were announced in the first place. We only know of a handful of 3DS titles that were cancelled but you can be sure there were more. It is much harder to cancel an announced project than one only known about internally. 

I think it is obvious that the Vita is going to struggle for a while.  The average American has no clue what it is, plus, mobile gaming is no longer a gaming device centric thing.  I'm thinking a 15% decrease in lifetime sales of the PSP.  I imagine the 3DS will also see this sales decrease as compared to the DS, there are just more options for gaming on the go.  

The thing that perplexes me is that Sony seems to be making all of the boneheaded moves that Nintendo did in the early days of the 3DS.  Well, they will make a price cut, the thing will start selling better, and the crisis will be adverted.  Still, I don't see this thing outselling 3DS, it doesn't have the software library to do so, it might do what PSP did, and get some hardcore gamers, but the kids are gonna want to play Pokemon (ok so do I) and thats just a fact.  Still, I don't think its going to crash and burn. 

I think you're overanalyzing.

What this article says to me is that some projects have been cancelled, but there is still a lot of development going on both now and in the future.
I don't think there is really anything else to get out of that argument. I'd agree with you that it's a loss, or that it has lost some games, but I'm not going to speculate with you over how many actual games are cut and how many companies, because this is at the moment unsubstantiated rumor, and you're just spreading FUD with that kind of talk.

You're forgetting that the attach ratio for the PSP was really low for a core handheld:

Odds are, the PSP wasn't all that used for gaming, but many used it for music, movies, and loading up emulators via homebrew.

The DS had numbers not as high as the Wii or HD twins, but it was a handheld that sold almost 2.5 times the number of PSPs, and many of those sold to casual users.

What I'm trying to say is, PSP hardware did well, but SW, apart from GTA, Sony 1st party SW, FF:CC and MH, didn't do so so crazy.