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Sony expects price, content to up PS4 sales

Bloomberg

Sony Corp. expects the lower price of the PlayStation 4 and wider variety of entertainment services to drive its forecast to sell 5 million units of the game console by the end of March.

The projection for Sony’s next-generation machine, set to be introduced for $399 in November, compares with 3.55 million units sold in a similar period for the PlayStation 3, released in 2006 and offered in some regions for $599, Andrew House, head of Sony’s game operations, said in an interview Thursday.

The PS4 will hit U.S. shelves a week before Microsoft Corp. starts selling its Xbox One for $499, as both companies seek to reignite growth in the console business as casual players switch to games on smartphones and tablet computers. Sony is staggering the release of its machine in an effort to avoid shortages that hurt sales of the PS3, and is positioning the PS4 as a portal for games, films and music.

“The advantage of PS4 is that we already have a network and community in place,” House said at the Tokyo Game Show. “More importantly, we have services from the launch of the device rather than have them appearing gradually, as at the time we did with PS3.”

At least 20 games will be available as the PS4 competes with the Xbox One as Sony works with about 620 software developers to produce content.

The machine will be released in North America on Nov. 15 and in 32 markets by the end of this year. Sales in Japan will start Feb. 22. The PS4 will be introduced in Asia in December, including in Hong Kong, Singapore, Korea, Malaysia and Taiwan.

“This will be well ahead of the Xbox One,” Damian Thong, an analyst at Macquarie Group Ltd. in Tokyo, said in a report. The timing is “a clear positive since Asia is a big opportunity.”

The PS4 is a central element of Sony CEO Kazuo Hirai’s plan to revive the firm with games and mobile devices, and he has set a target of being No. 1 in the U.S. market, which accounts for the biggest chunk of the $63 billion global market, according to estimates by DFC Intelligence. The top position is currently held by the Xbox 360.

“It’s become an old concept that consoles are just for games,” House said at the game convention. “PS4 will not only meet the expectations of core gamers, but (the) possibilities of the console are way beyond that.”

The new consoles will be offered in Sony’s home market for ¥39,980, the company said this month. Orders have already topped 1 million, House said Aug. 21.

The PS4 and Xbox One are projected to each sell 3 million units worldwide this year, Michael Olson, an analyst with Piper Jaffray in Minneapolis, estimates. By comparison, smartphone shipments in the second quarter alone totaled 229.6 million, according to researcher Strategy Analytics.

In the last round of consoles, Sony placed third in the U.S. market, according to NPD Group data through 2010. Microsoft overtook Nintendo Co.’s Wii 2½ ago and has led ever since.

The unveiling of the PS4 in June impressed game enthusiasts and industry analysts with its price and policies that included unrestricted swapping and trade-ins of used games. The PS4, with a combined processor and memory architecture from California-based Advanced Micro Devices Inc., features a PC-like design that Sony executives say will make developing games easier.

Sony’s game unit posted an operating loss of ¥14.8 billion in the quarter that ended June 30, the company said last month.

The yen’s weakening against the dollar is negative for Sony’s game business because it pays for components in the U.S. currency, House said. Still, the depreciating yen versus the euro boosts sales in Europe when repatriated, he said.

“Currencies are obviously extremely difficult to predict,” said House. “As we see sort of some balance between those two movements most recently, I think, the effect overall is rather neutral.”

Namco Bandai’s outlook

Bloomberg

Namco Bandai Holdings Inc., creator of the “Tekken” martial arts video game, expects earnings to rise to a record next business year on sales of toys and games including Pac-Man.

The company is targeting operating profit of more than ¥49 billion in the 12 months through March 2015, Namco President Shukuo Ishikawa said in an interview at the Tokyo Game Show on Thursday, without providing further detail.

The company expects to log profits of ¥40 billion in the current financial year.

Namco, which produces video games and trading cards, is increasing the proportion of revenue from overseas markets to 30 percent from about 18 percent as it drives products under brands it owns, and expands games for mobile devices. The Tokyo-based company is in talks to buy popular intellectual properties in Europe and the United States, Ishikawa said, without identifying potential targets.

“Namco Bandai will be a strong presence in the mobile game field moving forward,” analysts at Goldman Sachs Group Inc. led by Masaru Sugiyama said in an Aug. 12 report. “Namco Bandai’s contents have tremendous popularity in Japanese TV, film, toy and game genres and some, like Pac-Man, are popular overseas.”

New game consoles from Sony Corp. and Microsoft Corp. will be “positive” for software makers such as Namco, Ishikawa said.