Wow, two posts by me in one week! Kind of a big deal.
I have a love/hate relationship with my PSP Go. I love that it fits into my pocket. I love that I can pause my game and then use it as a s*%%# MP3 player. I hate that I have to pay more for games. I hate that my library of more expensive games isn’t as expansive. I was optimistic about the PSP Go, hoping it would be the “future of gaming” with digital distribution. I was sadly mistaken.
The reasons why the PSP Go will fail are not the fault of the consumer. The PSP Go will be a failure due to a myriad of market and business factors. Let Uncle Yu tell them to you.
1: Lack of Support from Sony
Sony has had some trouble with systems out of the gate, and the PSP Go is no exception. The PSP Go was supposed to be a big step forward for the game industry, as developers and publishers continue to try and find ways to increase their margins. The consumer market is ready, but Sony failed to capitalize on a great opportunity.
Sony’s advertising sucked. Case in point below:
Uh…what? In order to prevent this blog post from becoming a paper for my Advertising class, let me just summarize why this commercial sucks:
- Doesn’t reach the target market (gamers not equal to hipsters, paints the age group in too broad a stroke)
- Doesn’t connect with the target market
- Only advertises the feature of being able to “go anywhere” (can’t the PSP do that too?)
- Fails to excite the market on key features that differentiate it from the PSP, or bring in new customers
- Both timing and repetition are miscalculated (released before the launch date, abruptly stopped after launch)
Also, take a look at this commercial:
Yes, it’s a game commercial. It’s a good commercial. But what’s the focus of it? The original PSP. Sony, didn’t you launch the PSP Go with Gran Turismo to convince users to buy the PSP Go? Then why does the commercial treat the PSP Go as an afterthought? Let me just say, in not-dumbass land, business decisions are made to try and upsell new products when they come out, not downsell old ones. It would be like if when the iPod Touch came out, Apple started a huge marketing campaign featuring the original iPod and then saying “Oh, btdubs, the touch is out too.”
It’s become obvious at this point that the PSP Go is not a focus of Sony’s business strategy. I think they feel it’s more trouble than its worth.
2: Cutting Out the Middle Man is a Sham
Those who don’t know anything about channels of distribution will be the first to say “why do we need the middle man? Why can’t we buy direct!? Cutting out the middle man saves costs!”
So that this post doesn’t turn into a lecture about channels and logistics, let me just tell you: the middle man adds value (and not just location value). It keeps cost down. Can you imagine what would happen if Activision or EA had to create, distribute and sell all their products all by themselves? Retailers add value by creating points of contact with the consumer, allow the manufacturer to focus on making games, create promotions, etc.
Mark my words: digital distribution will not be the game-changer that many gamers think it will. The extra framework, labor and other costs/risks are too great. No business plan involving digital distribution will be successful unless there’s a huge amount of capital that companies invest (which also increases their risk), or a plan that involves the middleman.
GameStop will not go out of business with the new digital distribution business plans. They will simply adapt and evolve.
Case in Point: Promotions. Retailers like Target, Best Buy, Wal-Mart and Amazon constantly have promotions on products. By cutting out the middle man, promotions are limited to that of the distributor. This ends up costing the consumer more money. I’ve seen God of War: Chains of Olympus go for as low as four dollars on Amazon and I paid an extra $10 for Dissidia since Amazon is selling the product for ten dollars below suggested retail price.
Don’t forget, giving one company all the products to distribute eliminates competition and allows for price gouging as well.
3: The PlayStation Store sucks.
Man, this is turning into a business post and not a gamer post. If you have a PlayStation 3, you know. The store blows. It’s like comparing an FTP front to Amazon’s storefront. There’s no screenshots, only a brief description of the product, and it’s hard to navigate. There’s no convincing the consumer to make impulse purchases. Consumers basically have to know they want the product before they buy it. That takes a lot of research and restricts buying to what consumers would already buy anyway.
Sony, take a look at the Xbox Live marketplace. While it’s not perfect, it’s far and away more like a storefront than the PlayStation Store. Consumers can click on a product, view trailers, get more information, etc. If Sony wants to be the sole provider of its products via digital distribution, then it must create a “store,” and all the strategies that go along with it, and not just a download center.
Also, the fact that PSP games are organized alphabetically with only a brief synopsis means I will not have any impulse purchase decisions. All I know about Game “X” is that it starts with a X, which is before Y, but before W. A simple reorganization that allows consumers to browse by developer, publisher or genre would give consumers more information and increase impulse purchases. This allows the consumer to say, “I really liked Persona by Atlus, what other games are available? I’ll try Crimson Gem Saga.”
Is the market ready for Digital Distribution? You bet. Are the business models, publishers and third parties ready? Not even close. More innovation is needed before DD will be brought to this industry. Sony took a chance. Unfortunately they’re gain all the benefits of digital distribution without any of the costs or investments that will come along with it. That won’t work, and that’s why the PSP Go is doomed to fail.
Yu
George
