Sony Corp. (6758) chose Lou Reed’s “Perfect Day” as the background music in ads for the new PlayStation 4 that goes on sale in U.S. stores today.
Chief Executive Officer Kazuo Hirai, who has made the video-game console the centerpiece of a corporate turnaround strategy, needs the introduction to come off without a hitch.
Robust PS4 sales would provide much-needed momentum after Hirai posted a surprise second-quarter loss last month. If enough people buy the device, and a $50-a-year PlayStation Plus service, Tokyo-based Sony stands to generate billions of dollars from sales of movies, TV shows and music, as well as games. Hirai has a one-week jump on Microsoft Corp. (MSFT:US), which starts selling its pricier Xbox One on Nov. 22.
“Gamers are tired of that PS3 that they’ve had for six or seven years, and they’re ready to buy a new one,” Michael Pachter, an analyst with Wedbush Securities in Los Angeles, said this week on a webcast. “Especially given that the Xbox One costs 100 bucks more, I think that you’ve got to give Sony a nod for faster out of the gate.”
Sony’s lower $399 price gives it the advantage over the $499 Xbox One, according to Pachter. Sony’s forecast for sales of as many as 5 million consoles by the end of March may be low, he said, with the PS4 likely to sell out through January.
The two top combatants in the $93 billion-a-year industry are employing different pitches to holiday shoppers for machines that are similar on the inside. The PS4, with a combined processor and memory from Sunnyvale, California-based Advanced Micro Devices Inc. (AMD:US), is built on a PC-like design comparable to the Xbox One.
Sony is employing a newer, faster type of memory that could provide an edge with graphics and help win over hardcore game players. The company also will benefit from efforts to woo independent developers, according to Andrew House, head of Sony’s worldwide game operation.
The promotional video features two gamers singing Reed’s “Perfect Day” while immersed in the worlds of titles including “DriveClub” and “Killzone Shadow Fall.”
Both Sony and Redmond, Washington-based Microsoft are responding to shifts in the video-game industry, especially the loss of players to tablets and mobile phones. Nintendo Co. (7974), for example, has sold 3.9 million Wii U units since November, far below the company’s estimates. To spur sales, Sony and Microsoft are offering powerful Web-connected consoles capable of delivering games and entertainment, such as TV, films and music.
“It represents a very large opportunity, not just for PlayStation but for Sony overall, to create in essence our own entertainment community,” House said in an interview. “Until now, we didn’t have a large networked consumer base.”
Within 12 months, Sony will begin streaming original programming to the PS4, House said, in a nod to the material owned by his company’s entertainment divisions. It is also courting independent game makers with expanded developer funds, and will offer free indie games with PlayStation Plus.
Sony American depositary receipts (SNE:US) fell 0.8 percent to $18.50 at the close in New York. They have gained 65 percent this year. The stock rose 3.4 percent to 1,846 yen in Tokyo.
To promote the PS4, the maker of Bravia TVs and “Spider-Man” films took over the Standard hotel in New York’s Meatpacking District, lighting the structure with PlayStation artwork and hosting an arcade for players to try the machines.
Sony began selling some of the players from the hotel starting at midnight New York time. The PS4 will be available in 31 other countries by January and will go on sale in Japan on Feb. 22.
Microsoft, which has been pitching the Xbox One’s motion-sensing Kinect camera as a controller for all forms of living room entertainment, has focused its message on applications and exclusive content, such as a live-action TV show from Steven Spielberg. The improved Kinect will make it easier for users to multitask -- whether it’s video phone calls on Skype, playing “Forza Motorsport” or checking scores on ESPN, said David Dennis, a Microsoft spokesman.
There won’t be much in the way of indie games for the Xbox One kickoff, though “you should expect to see plenty coming soon,” Dennis said.
The PS4 camera also supports voice and facial recognition similar to Microsoft’s Kinect. Marketed as optional, it’s required to play the pre-installed “PlayRoom” augmented reality game. Sony has said it doesn’t see the camera as priority, for now, for serious gamers.
“There are plans for innovation on these machines even beyond gaming,” said Tony Bartel, president of GameStop Corp. (GME:US), the Grapevine, Texas-based retailer that accounts for almost half of Sony and Microsoft’s game software sales.
About 70 million current PlayStation owners use the company’s PlayStation Network to access online services. To attract more, Sony will give PS4 buyers in the U.S. and Canada a $10 Sony Entertainment Network wallet credit, a 30-day free PlayStation Plus trial, and a 30-day free Music Unlimited service trial.
“The PlayStation Network and PlayStation Plus are going to be front and center of our efforts, a lot more than it has in the past,” House said.
Over the long-term, Pachter also gives Sony the edge, forecasting sales of as many as 120 million PS4 players, compared with 100 million for the Xbox One and 30 million for Nintendo’s Wii U.
“A 20 percent price difference means 20 percent higher sales, plain and simple,” Pachter said yesterday in an e-mail. “If and when Microsoft cuts the price, they’ll sell the same number of units, maybe Microsoft sells a bit more.”
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