The effective useful life of a game console is usually six to seven years, but according to Sony’s Simon Jeffrey, chief of software operations in the U.S., the PlayStation 2 may be going into a new phase of its life instead of quietly disappearing into the sunset. Jeffrey’s remarks were made in an interview given to BusinessWeek.com.
Although the PS2 was released in 2000, the machine continues to be a strong seller. Jeffrey explained this success by pointing to the large user base the PS2 has been able to develop–over 111.1 million units worldwide–and Sony’s unwavering commitment to the game console. He stated, "The PS2’s very large user base is partly the reason. It’s also that Sony is still actively building, promoting, and selling the PS2. At its current price–we expect another price cut in the not-too-distant future–we believe the PS2 in November-December next year probably has the capacity to sell more than any other format. We think the PS2 will actively be sold for another two holiday seasons (2007 and 2008) and will continue to sell millions of units."
Jeffrey’s statement that the PS2 "has the capacity to sell more than any other format" may very well confirm what many industry watchers are saying behind closed doors–the PS2 may save Sony from its struggling next-gen game console, the PS3.
One of the attractions for consumers to continue to buy PS2 games is the relatively inexpensive price tags, as compared to title on next-gen machines. PS2 games generally cost twenty to thirty dollars less than titles for the PS3 and Xbox 360. But the inexpensive pricing is a double-edged sword. Since the profit margins are smaller for developers, some are hesitant to fully commit to making games for the PS2, unless a high percentage of success can be assured. Jeffrey said of this, "You’ll see price cuts for the PS2 along with cuts for games. That is the historical trend. There is now considerable pricing pressure on the PS2. So while the install base is huge and Sony will still sell millions of machines a year, there’s strong downward pricing pressure on the games themselves–$19.99, $29.99. Developers will find it more difficult to invest a lot in titles unless they are guaranteed to make a big splash and sell large numbers of units."
Jeffrey sees the PS2 reaching a "new" market of gamers who will buy the PS2 as a second game machine for the family. This positioning is somewhat similar to how Nintendo’s Wii is (or at least was) seen in the market of next gen game machines–a second purchase in addition to the PS3 or Xbox 360. "We don’t think people who are looking to buy an Xbox 360, Wii, or PS3 will buy a PS2. We think the people who will buy the PS2 already have a next-gen console but want something for the kids. The PS2 has become a mass-market machine for kids and families. It will be in bedrooms rather than downstairs on the big HDTV."
The first appearance of the PS2 generated a huge positive response from the consumer. Now, with the PS2 entering the senior phase of its life, it seems to have found a new audience: children and casual gamers. This is no market to cough at, and could certainly provide a substantial boost to a struggling Sony.
