Is Sony’s PS4 Prediction Too Ambitious?

video games

Sony Corp. (NYSE:SNE) announced that it has set a goal to sell 5 million PlayStation 4 consoles by March, a much higher prediction than figures met by Sony’s previous PlayStation iteration, according to a report from The Wall Street Journal.

Part of the reason for that confidence is a lower asking price on the gaming console. The PlayStation 4 will cost $399, $100 less than what the PlayStation 3 cost at its launch, and $100 less than what the Xbox One, Microsoft’s (NASDAQ:MSFT) competing system, will cost when it debuts one week after the PlayStation 4.

Still, the 5 million figure is ambitious. The PlayStation 3 and Xbox 360 were released a year apart and weren’t going head-to-head during holiday season like the new consoles will. In theory, hardcore gamers who wanted both devices had time to save between purchasing the PlayStation 3 and the Xbox 360, but now, consumers are more likely to have to choose between the PlayStation 4 and the Xbox One.

In addition, Sony isn’t releasing the PlayStation 4 in Japan until February 22, which doesn’t give the company much time to build sales on its home turf before it’s expected to reach that 5 million number.

Sony and Microsoft are both launching their new gaming consoles into a shaky video game market. Traditional — and expensive — games and gaming systems are seeing their market share get eaten away by cheap or free games designed for mobile devices.

Sony and Microsoft need to answer two big questions: Are there enough diehard gamers out there to support turning out the expensive consoles, and can the companies build enough extra features into the devices to make them appealing to non-gamers?

Game developer Take-Two Interactive (NASDAQ:TTWO) had some good news for the gaming industry this week. The company announced that its new Grand Theft Auto V game made $800 million in the first 24 hours it was on sale. That puts the game on track to rake in $1 billion in the next month, or four times the cost it took to develop and market the game, according to a report from Bloomberg.

The early success of Grand Theft Auto V shows that there is still a market for $60 video games despite the fact that retail sales of new video games fell 15 percent in the first half of the year while mobile games and online subscriptions rose 10 percent.

Sony set its ambitious target during a presentation at the Tokyo Game Show. “Our first priority is to satisfy our core users, but the possibilities of the PS4 will not end there. … The PS4 will bring people together — not just virtually — but through shared experience, whether it is through dance, karaoke, or party games,” Sony Computer Entertainment CEO Andrew House said.

Both Sony and Microsoft have posted reassuring preorder figures, showing that consumers do have interest in the consoles. At the beginning of the month, Microsoft announced it had sold out of pre-sale Xbox Ones; Sony said in August that it already received 1 million preorders for the PS4.

So taking the smash performance of the new Grand Theft Auto and the skyrocketing pre-sale orders both companies have received for the consoles, perhaps the gaming industry isn’t so dead after all.

Follow Jacqueline on Twitter @Jacqui_WSCS

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