PSP Go: Digital Distribution Killer?
http://www.gamesabyss.com/articles/1079-psp-go-digital-distribution-killer
In the weeks leading up to E3, rumors were flying around that Sony would be unveiling a new PSP. Some speculated that the company was preparing a sequel to the mildly popular handheld, while others believed it would be little more than another hardware refresh, adding another SKU to the pile. The end result was a little bit of both, a PSP with many of the same qualities, but lacking a UMD drive or, for that matter, any manner of physical media. And so, not with a bang but with a whimper, Sony threw itself whole-heartedly into the world of digital-only media. It seems somehow fitting then, that the PSP Go will likely die a slow and painful death, and its demise will undoubtedly set back the digital experiment by years.
What Was Sony Thinking?
Some might think it's premature to declare the Go a flop, but the fact of the matter is the PSP has been under-performing for nearly its entire life cycle, and a new coat of paint isn't going to change matters. The PSP is vastly outsold not only by the DS, its main handheld competitor, but by every other console currently on the market with the exception of the PS2—not much to brag about. Strangely enough though, it's the weakness of the PSP which provides Sony with the opportunity to perform a little experiment.
Knowing by now that the PSP isn't going to make waves this generation, it's easy to see why Sony has decided to move to a digital-only model with the PSP Go. It's like a marketing experiment—throwing an all-digital device out there to gauge customer response—and far less risky than trying the concept with a major platform like the PS3 Slim. And since the company has never shown much interest in supporting the PSP anyway, no one will be that upset if things don't pan out. Think of it as Sony making lemonade from a massive load of handheld lemons.
What Sony Stands to Gain
It's clear that the main thrust of the PSP Go is to test the waters and see if consumers are ready to jump into an all-digital space once the next round of consoles rolls around. If they are, then Sony will not only have a jump on its competitors; it can massively reduce costs and increase profits once it gets rid of that pesky physical media many of us are so attached to.
First off, while no one can guarantee Sony would make the PS4 any cheaper than the PS3, logic says that manufacturing costs would shrink considerably if the machines no longer contained Blu-Ray drives. And while manufacturers don't often supply specific information on their costs, a big part of the expense of taking a console to market is the creation and installation of the physical media drives. Eliminate that, and costs come down drastically.
Second, an all-digital format gives Sony (or any other company that follows suit) an effective monopoly on content. It's the same basic concept of Xbox Live Marketplace or PSN expanded to the entire game catalog. Once this happens, you won't be able to shop around for the best price on a game; you'll have to go through Sony or Microsoft's portals and buy your content directly from them. Then they've got you right where they want you.
The Real Reason Manufacturers Want to Go Digital
The above reasons, while surely a part of the equation, only hint at Sony's reasons for pushing the all-digital model. The real objective is to stop used game sales once and for all. The game industry is irrationally sensitive about used games, believing their products to be totally different than books, DVDs, CDs, cars or any other consumer product. They want a cut of used game sales the same way they make money on every new title sold. Of course, stores like Gamestop have built an empire by selling used games and keeping the profit for themselves, and the console manufacturers hate it with the intensity of a million white-hot suns. Thus, the biggest reason these companies are pushing for a digital future is not solely a matter of cost or convenience, but rather to completely consolidate power and effectively make it so that you're leasing your games rather than buying them.
How It Will Implode
Even though Sony believes they're playing it safe by launching the PSP Go with an all-digital game library, what they're really doing is shooting themselves and everyone else in the foot. When manufacturers look at both hardware and game sales on the Go they'll see the same thing Sony's been seeing for years—abysmal numbers and lots of lost cash. Don McCabe, Managing Director of the UK retail chain Chips, summed it up perfectly last summer when he told Gamesindustry.biz, “I'm 99.9 per cent sure it's going to fail miserably, in which case it's going to put back other potential people coming into that digital space.”
In essence, if the Go flops (which it likely will), then it's going to scare other companies away from the digital model for the foreseeable future. Manufacturers will point out that the market isn't ready for the digital format yet (it isn't), and will shy away from any big changes in the next console generation. Instead, what we'll likely see are more games being released on both disc and via download (as Sony is now doing with PSP UMDs and download codes), and in ten years they'll revisit the argument again, hoping for a different result.
Regardless of how the Go sells, Sony will likely harp about lessons learned and how happy they are with its performance. Meanwhile, behind the scenes they'll likely be stewing about how they let the prospect of an all-digital future slip through their fingers due to haphazard planning and poor timing. Sony has killed the digital model in its cradle and it's hard to say whether we should laugh or cry.
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So what does everyone think about this article? Is the PSP Go in trouble?
