Raptor-chan
06-28-2009, 04:26 PM
(NOTE: This is a long post.)
Independent UK games retailers Chips (http://www.chipsworld.co.uk/chipsworld/home.dept) and Grainger Games (http://www.graingergames.co.uk/default.asp) are downbeat about Sony’s PSP Go release plans.
Neither retailer has received any pre-orders for the new handheld – which has yet to be officially priced in the UK, but will retail for $249 and €249 in the US and Europe upon its October 1 release – following the system’s official unveiling (http://www.edge-online.com/news/psp-go-officially-unveiled) at E3 earlier this month.
“From my point of view I’ve got to think, ‘Do I want to stock this?’ Right now I can’t see any justification for stocking it,” Chips’ joint MD Don McCabe told us. “Certainly I’m not getting the response from consumers. Normally when a new piece of kit is launched or announced I’ll get a multitude of people saying ‘As soon as that comes out I want one of those.’ [Potential] first adopters are on the phone within seconds of it being announced and you’ve got your pre-orders. I don’t have a single pre-order for PSP Go at the moment.”
Pushed on whether Chips might opt not to stock PSP Go across its 30 UK stores, McCabe said: “It’s a distinct possibility at the moment. If suddenly I get a wealth of pre-orders then I’ll reconsider my position, but right now I would have to say that it’s not our intention to stock the product at this point in time.”
Chris Harwood, a Grainger Games director and the company’s purchasing boss, told us that the company will be stocking PSP Go in small quantities.
“We haven’t got any [PSP Go pre-orders] at all,” he said, adding, “I think we’ll have to stock it just for the customers that want it. For something like a new console we have to give the customer the option.”
The console will likely be offered at “basically” Grainger’s cost price, so while the retailer is likely to make just a small margin - if any - on each sale, it’s reluctant to turn customers away. “So we’ll probably still have the PSP Go, but we’ll probably start with a small campaign, and then stock them as we need them in very little numbers.”
While PSP Go’s UK pricing has yet to be determined, leading national retailer Game is currently taking pre-orders for the portable at a “guide price” (http://www.mcvuk.com/news/34617/PSPgo-priced-at-UK-retail) of £229.99, with just a little over three months to go until release.
Grainger currently sells just five PSPs a week across its 21 North East UK-based outlets, according to Harwood, who says he’s surprised by PSP Go’s prospective £200-£230 price tag.
“It seems really high, especially the way PSP’s going at the moment,” he said. “The models they’ve got out now are struggling at basically £129, pretty much [the] cost price, which we’re putting them out at, and they’re not selling through at that. We’re trying to do some bundles just to push them through and the PSP just seems to have died as a format really… Nothing sells at the minute on PSP.”
Assuming the PSP Go costs between £200 and £230 upon release, McCabe feels the “price is too expensive… I can only go from the response from the consumers,” he said. “It’s not so much that I don’t think the price is justified, but it’s the customers who pay the money and they don’t think it’s justified. We can’t see where that price justification comes in when effectively it’s a lighter, slimmer PSP. It’s got a bit more memory, but memory’s not that expensive. It can’t handle UMD so part of the mechanism disappears, so where does the price come from? To be honest I don’t have an answer for the customers at the moment.”
McCabe’s comments echo those of leading industry analyst Michael Pachter, of Wedbush Morgan Securities, who reacted to Sony’s PSP go announcement by suggesting (http://www.edge-online.com/news/analyst-sony-%E2%80%9Cripping-off%E2%80%9D-consumers-with-psp-go) the platform holder was “ripping off the consumer.”
"$249 is too much, period," he said post-E3. "The $169 PSP-3000 is a profitable device. They make money, so it costs less than that. The disc assembly for a UMD costs more than 16 gigs of flash does. So this new device doesn't cost them as much to make as the PSP-3000 and they jack the price up $80… They're making a lot more money on the PSP Go than they’re making on the PSP-3000."
Pachter later said (http://www.industrygamers.com/news/pachters-podium-ps3-price-cut-iphone-3g-s-and-a-sincere-apology) that he regretted his choice of words, but maintained his belief that the announced PSP Go “price point is too high to generate more than a few million unit [sales].”
Like Grainger, Chips generates little margin on hardware sales. McCabe’s also less than enthused about the system’s download-only software business model.
“At the moment [PSP hardware and software sales represent] about five to six per cent of our overall turnover. You’d never throw that sort of percentage away – they’re not flying machines but they’re nice and steady. [But] on hardware [alone] you make next to no money and in some instances we actually lose money on each piece of hardware we sell, so if you’re going to just sell a piece of hardware and then never see that customer again, from a retail point of view you might as well just shoot yourself in the head.”
In stark contrast to UK independent game stores, Sony Computer Entertainment America’s director of PlayStation Network operations, Eric Lempel, recently went as far as to say (http://www.industrygamers.com/news/sony-retailers-are-actually-embracing-psp-go/) that US retailers are “embracing” PSP Go.
As well as suggesting that the platform holder will release new PSP Go peripherals in the future – which McCabe argues count for little more than fairly insignificant one-off purchases - Lempel said that US stores are doing “a pretty good PlayStation card business.” The executive was referring to prepaid PlayStation Network cards, available in $20 and $50 denominations, which customers can purchase and then redeem to download games. While no plans have been announced to introduce PSN cards in Europe, Harwood and McCabe would both support such a move by Sony.
“You need to see some sort of revenue streams coming off the back of these machines, otherwise from a retail point of view it’s just not worth it, and so Sony will need to come up with some sort of mechanism so that if we’re going to sell the machine it’s beneficial to ourselves and to our customers,” said McCabe.
Courtesy: Kotaku, Edge
Independent UK games retailers Chips (http://www.chipsworld.co.uk/chipsworld/home.dept) and Grainger Games (http://www.graingergames.co.uk/default.asp) are downbeat about Sony’s PSP Go release plans.
Neither retailer has received any pre-orders for the new handheld – which has yet to be officially priced in the UK, but will retail for $249 and €249 in the US and Europe upon its October 1 release – following the system’s official unveiling (http://www.edge-online.com/news/psp-go-officially-unveiled) at E3 earlier this month.
“From my point of view I’ve got to think, ‘Do I want to stock this?’ Right now I can’t see any justification for stocking it,” Chips’ joint MD Don McCabe told us. “Certainly I’m not getting the response from consumers. Normally when a new piece of kit is launched or announced I’ll get a multitude of people saying ‘As soon as that comes out I want one of those.’ [Potential] first adopters are on the phone within seconds of it being announced and you’ve got your pre-orders. I don’t have a single pre-order for PSP Go at the moment.”
Pushed on whether Chips might opt not to stock PSP Go across its 30 UK stores, McCabe said: “It’s a distinct possibility at the moment. If suddenly I get a wealth of pre-orders then I’ll reconsider my position, but right now I would have to say that it’s not our intention to stock the product at this point in time.”
Chris Harwood, a Grainger Games director and the company’s purchasing boss, told us that the company will be stocking PSP Go in small quantities.
“We haven’t got any [PSP Go pre-orders] at all,” he said, adding, “I think we’ll have to stock it just for the customers that want it. For something like a new console we have to give the customer the option.”
The console will likely be offered at “basically” Grainger’s cost price, so while the retailer is likely to make just a small margin - if any - on each sale, it’s reluctant to turn customers away. “So we’ll probably still have the PSP Go, but we’ll probably start with a small campaign, and then stock them as we need them in very little numbers.”
While PSP Go’s UK pricing has yet to be determined, leading national retailer Game is currently taking pre-orders for the portable at a “guide price” (http://www.mcvuk.com/news/34617/PSPgo-priced-at-UK-retail) of £229.99, with just a little over three months to go until release.
Grainger currently sells just five PSPs a week across its 21 North East UK-based outlets, according to Harwood, who says he’s surprised by PSP Go’s prospective £200-£230 price tag.
“It seems really high, especially the way PSP’s going at the moment,” he said. “The models they’ve got out now are struggling at basically £129, pretty much [the] cost price, which we’re putting them out at, and they’re not selling through at that. We’re trying to do some bundles just to push them through and the PSP just seems to have died as a format really… Nothing sells at the minute on PSP.”
Assuming the PSP Go costs between £200 and £230 upon release, McCabe feels the “price is too expensive… I can only go from the response from the consumers,” he said. “It’s not so much that I don’t think the price is justified, but it’s the customers who pay the money and they don’t think it’s justified. We can’t see where that price justification comes in when effectively it’s a lighter, slimmer PSP. It’s got a bit more memory, but memory’s not that expensive. It can’t handle UMD so part of the mechanism disappears, so where does the price come from? To be honest I don’t have an answer for the customers at the moment.”
McCabe’s comments echo those of leading industry analyst Michael Pachter, of Wedbush Morgan Securities, who reacted to Sony’s PSP go announcement by suggesting (http://www.edge-online.com/news/analyst-sony-%E2%80%9Cripping-off%E2%80%9D-consumers-with-psp-go) the platform holder was “ripping off the consumer.”
"$249 is too much, period," he said post-E3. "The $169 PSP-3000 is a profitable device. They make money, so it costs less than that. The disc assembly for a UMD costs more than 16 gigs of flash does. So this new device doesn't cost them as much to make as the PSP-3000 and they jack the price up $80… They're making a lot more money on the PSP Go than they’re making on the PSP-3000."
Pachter later said (http://www.industrygamers.com/news/pachters-podium-ps3-price-cut-iphone-3g-s-and-a-sincere-apology) that he regretted his choice of words, but maintained his belief that the announced PSP Go “price point is too high to generate more than a few million unit [sales].”
Like Grainger, Chips generates little margin on hardware sales. McCabe’s also less than enthused about the system’s download-only software business model.
“At the moment [PSP hardware and software sales represent] about five to six per cent of our overall turnover. You’d never throw that sort of percentage away – they’re not flying machines but they’re nice and steady. [But] on hardware [alone] you make next to no money and in some instances we actually lose money on each piece of hardware we sell, so if you’re going to just sell a piece of hardware and then never see that customer again, from a retail point of view you might as well just shoot yourself in the head.”
In stark contrast to UK independent game stores, Sony Computer Entertainment America’s director of PlayStation Network operations, Eric Lempel, recently went as far as to say (http://www.industrygamers.com/news/sony-retailers-are-actually-embracing-psp-go/) that US retailers are “embracing” PSP Go.
As well as suggesting that the platform holder will release new PSP Go peripherals in the future – which McCabe argues count for little more than fairly insignificant one-off purchases - Lempel said that US stores are doing “a pretty good PlayStation card business.” The executive was referring to prepaid PlayStation Network cards, available in $20 and $50 denominations, which customers can purchase and then redeem to download games. While no plans have been announced to introduce PSN cards in Europe, Harwood and McCabe would both support such a move by Sony.
“You need to see some sort of revenue streams coming off the back of these machines, otherwise from a retail point of view it’s just not worth it, and so Sony will need to come up with some sort of mechanism so that if we’re going to sell the machine it’s beneficial to ourselves and to our customers,” said McCabe.
Courtesy: Kotaku, Edge