Summary
With the abandon of UMD system in the PSP Go has spread a large wave of disappointment among the retailers all over the world and they are less enthusiastic about selling this product. With the download only system in PSP Go, it won't be requiring much help from retailers in the retail distribution channel.Sony has to find another way to market its product and make it available to the end users like online marketing, targeting its existing customer base
Analysis
The smaller, more lightweight PlayStation Portable Go (PSP Go) may be sparking consumer interest thanks to its snazzy slide-out screen and pseudo Smartphone aesthetic, but its incompatibility with already-owned UMD titles is causing traditional retailers to squirm uncomfortably on the high street. This kills price competition and used game sales in one fell swoop, while also making owners of any original PSP games unable to play them on the new hardware. More pointedly, Sony’s decision to completely abandon the ailing UMD format in favor of a hardware platform capable of downloading and storing all of its content at source means retail videogame outlets are on the verge of being completely cut from the supply chain. This can majorly affect the profit margin of the retailers. Since most of the profit in the gaming market is made from software sale. "They're not getting a significant profit margin off of the hardware," says Eric Handler, senior equity analyst at MKM Partners. "If you're not benefiting from software sales, why should you allocate any significant floor space to it?” Due to this retails are telling NO to PSP Go. They are not very interested in providing the floor space if Sony is getting the major chunk of the profit. Many gaming specialty stores like EB, biggest specialty store in Australia, dutch retailer Nedgame and many of the European retailers, GameStop etc is not very interested to stock the newest hardware device.
Since the PSP Go lacks a UMD drive, the online release of the PSP software library factors heavily in that system's success. As of the last U.S. PlayStation Store updates shows, exactly 50 such UMD Legacy games were available. According to various sources -- like Sony's own PlayStation.com game listings -- the PSP's domestic UMD catalog consists of around 450 games. Given that it has only 16GB flash memory which restricts its download capacity.
Other issue device is facing is its pricing. The price of the device is quoted as $250 and 249 Euros. Price analysts are saying that Sony's PSP Go is simply priced too high compared to competitors in the portable media space. Other players like Apple Corp. announced sweeping cuts to its Iphone and iPod Nano lineup, which brings the feature-rich 16 GB iPod touch down to $249. Microsoft has also introduced its newZune HD deviceat the more competitive price of $219.99. This pricing of the device may also affect its sale.
This author consults with leading institutions through GLG
Analyses are solely the work of the authors and have not been edited or endorsed by GLG.
