Mobile games not a threat to Vita, Sony says

Peter Nowak talks video games with Jack Tretton, CEO of Sony Computer Entertainment America

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Sony’s next-generation handheld video game system, the whimsically named Vita, officially launches on Feb. 22 after shipping out this week to those who pre-ordered it. It’s a very impressive and attractively priced device–you can read my full review here.

At the Vita’s launch party in Los Angeles on Wednesday night, I chatted with Jack Tretton, president and CEO of Sony Computer Entertainment America, about the Vita, PlayStation and game trends in general. The Vita, as it turns out, comes along at a time of major change in the gaming industry.

Smartphones and tablets have opened up an entirely new frontier for the industry, with people who wouldn’t previously be caught playing video games now idling away for hours on Angry Birds and the like. Nintendo, Sony’s traditional rival in the handheld market, has already felt the pain, as people turned away from the more expensive and involved software produced for such devices and toward cheaper and simpler mobile games.

In discussing Sony’s long-term strategy with the Vita, Tretton said he’s not too worried about smartphones and tablets.

Q: Is the Vita being sold through the razor blade model, where the hardware is cheap but you’re going to try to make money on the software?

A: What we do at Sony is we invest in the technology long term. Ideally, with economies of scale we’ll be able to cost reduce the unit, make it more profitable and ultimately hit an even more attractive price point. We invest heavily on the front end and say, ‘We’ve got to bring this out at a mass market price point that people can reach.’ At $249 with the technology under the hood, we’ve clearly delivered that from day one. It’s only going to get better in terms of the product offering.

Q: Was there a lesson learned from the PlayStation 3, which initially came at a relatively high price?

A: It was $599 when it first came and again that was the same investment. It was a steep hill to climb for both us and the consumer back in 2006, but the dividends are really being paid now. There’s no technology out there that comes close to it and while some of the technology from our competitors is looking long in the tooth, PlayStation 3 is just hitting its stride. If you were one of the first consumers to buy it at $600, six years later you still have a state-of-the-art device. If you got it a little later in the game you’re still getting state-of-the-art technology for $249. We’re always making that investment in the long term as opposed to something that’s going to be a short-term win financially and technologically but that’s going to run out of gas. We look at things in 10-year product life cycles and in order to do that we have to invest in the technology. Unfortunately, the consumer has to make a bit of an investment as well, but that’s what’s really the staying power of the PlayStation brand. People have had really good experiences for multiple years and when they go back and amortize their investment dollars and the amount of entertainment they had, they’re very satisfied consumers and they come back generation after generation.

Q: Is that 10-year life cycle accelerating at all? There seems to be a shift toward digital games.

A: Actually, it’s getting longer. If you look at the distance between the PlayStation 1 and PlayStation 2, it was five years. From 2 to 3 it was six years. We had that 10-year life cycle on PlayStation 1, we’re in the 12th year on 2– we’re still selling it–and as I said, we’re going into the sixth year of PlayStation 3 and we’re just hitting our stride. I really think you’re going to look at a 15-year life cycle on PlayStation 3. So, thanks to technology, the tail seems to be getting longer as opposed to shorter.

Q: What happens when competitive forces come into play? Nintendo will have a new console this year–if it’s a big hit, how will that affect Sony’s plans?

A: I’m obviously prejudiced but you’d be hard pressed to find a technologist who can cite a device existing or coming that is on par with PlayStation 3. I’m not an expert on new machines like the WiiU, but the idea of using a second screen exists today with PlayStation Vita. There are multiple games where the Vita acts as the second screen for a PlayStation 3 game.

Q: What about the competition from smartphones and tablets?

A: The irony is, if you’re a gamer, you’re never going to confuse a smartphone or a tablet with a gaming device. It’s just lacking in interface and technology. The way that you’re used to playing a console doesn’t exist without extended peripherals on a smartphone or a tablet. I think they’re the farm leagues for dedicated gaming systems. They’re doing more to add to the interest in dedicated gaming systems than they are detracting from it. They’re demystifying gaming because they take it down to its simplest form, but ultimately you find yourself wanting more and that’s when you graduate to something like a PlayStation Vita or ultimately to a PlayStation 3.

Q: Do smartphones and tablets eat away at some of the casual gaming audience you could have on the Vita?

A: No, not at all, I think they add to it. We’ve got games at retail from free and 99 cents all the way up to the $59.99 console games. It just continues to add to the number of consumers who consider themselves gamers. We’ve got a billion people worldwide who are gamers today. There’s plenty of other forms of entertainment out there so I thank the smartphone and tablet for really demystifying gaming and bringing more people into our wheelhouse.

Q: One of the criticisms of the Vita, not to mention other Sony products, are all the proprietary measures, such as special memory cards and power cords. Some other companies have moved strongly toward standardized features, so what’s Sony’s thinking behind that?

A: Our devices are very ubiquitous in terms of your ability to use them in conjunction with each other. As far as the proprietary memory is concerned, all memory is not created equal. It’s not relative to a gig versus a gig. We have a high level of storage device that ultimately works best with the Vita. If you compare high-speed memory devices at four gigs for $19.99, we’re actually on the low end in terms of pricing. If you look at basic memory in its cheapest form, if we actually gave that to consumers to use with Vita they’d find it wanting from a performance standpoint. We always say you get what you pay for and believe me, we’re investing in the consumer. We’re not trying to get fat on a proprietary format, we’re trying to give people a proprietary format that works best with the technology we’ve created.