Sony questions value of handheld consoles

Sony Corp.’s gaming chief Andrew House sees limited global potential for handheld gaming in the age of smartphones, saying that the company doesn’t have any concrete plans to take on Nintendo Co.’s Switch

“The Nintendo device is a hybrid device and that’s a different approach and strategy,” House said in an interview at last week’s Tokyo Game Show. “We have not seen that as being a huge market opportunity,” he said, referring to handheld gaming outside of Japan and Asia, where Sony still sells the Vita portable device.

PlayStation Vita.

Photographer: Krizstian Bocsi/Bloomberg

Sony’s focus for now is to deliver more products and services for the living room, including virtual-reality and non-gaming entertainment such as TV shows and music, with the PlayStation 4 console serving as a key digital entertainment hub. Although Sony has been selling portable gaming machines for more than a decade, they haven’t caught on and no updates for the Vita were announced at the show. Since taking the helm in 2012, Chief Executive Officer Kazuo Hirai has pushed the Tokyo-based company to be more focused on fewer products.

“The Vita experience was that outside of Japan and Asia, there was not a huge demand,” House said. “The lifestyle shift toward the dominance of smartphones as the single key device that is always with you, was the determining factor.”

Some game developers had been anticipating a new Vita device, the latest iteration of the PlayStation PSP handheld gaming machine that was introduced in 2004. While the PSP has sold well, shipments of portable machines have been steadily declining, according to data from Sony and Vgchartz.

“Developers who create games for PS4 and Vita will stop working on Vita” without an update, said Hideki Yasuda, an analyst at Ace Research Institute. “Then they’ll develop for the PS4 and Switch.”

Konami Holdings Corp., Square Enix Holdings Co. and other large publishers prefer to create games for multiple platforms, so that they have a larger potential market of buyers regardless of whether they own the PlayStation, Microsoft Corp.’s Xbox or personal computers.

“Naturally, to reach as many people as possible, we’d prefer to release our products on various devices,” said Takayuki Kurumada, a spokesman for Konami’s video games subsidiary. “Games are becoming multifaceted and being played in various ways at various places.”

House is essentially betting that smartphones are well on their way to becoming the main portable gaming platform for most people. That’s why Sony last year established its own studio to create mobile games. The unit, called ForwardWorks, is doing “fantastic,” House said.

Attendees play a video game on Nintendo’s Switch console at the E3 Electronic Entertainment Expo in U.S.

Photographer: Patrick T. Fallon/Bloomberg

With the Switch, which debuted in March, Nintendo is betting that there’s going to be a robust market for a hybrid console-portable gadget that lets people play games in their living room or on the go. So far, it’s been a success, with sales on track with the Kyoto-based company’s forecasts and helping to add about $21 billion to its market value this year.

Sony shares are up 25 percent this year, while Nintendo has surged 64 percent. The TOPIX Index has climbed 10 percent.

Still, the verdict is out on whether the Switch will become a mainstream device. Tsunekazu Ishiharu, the head of Pokemon Co. and one of Nintendo’s closest partners, said in a recent interview that the device, although an important platform, still has prove that it can last.

So far, though, House says he hasn’t seen any signs of the Switch having an impact on Sony’s sales of content or hardware.

“That draws me to the conclusion that they’ve really been additive to the business in the last year or so,” House said. “The folks at Nintendo have their strategy and that’s great. We remain focused around a highly connected gaming experience and also coupled with having a great range of other entertainment experiences so you can reach multiple people on the big screen in the household.”

Source: Bloomberg