Struggling electronics giant Sony Corp plans to jazz up the Internet features on its video game consoles, such as the world-famous PlayStation series, to combat faltering demand in Japan.
The domestic game-related market last year shrank 18.3 percent from a year earlier to ¥501.3 billion (US$4.2 billion) -- down for the second straight year -- as a falling birth-rate reduced the number of people who wanted to play, an industry group announced last week.
The Computer Entertainment Supplier's Association estimated 23.6 million people in Japan played games last year, down 7.5 percent from 2001.
Gloom and doom
Adding to the gloom, Sony suffered a 31.6 percent drop in operating profit at its games division in the three months to June, in contrast to analysts' expectations of growth.
Reflecting the wider problems, games unit Sony Computer Entertainment Inc (SCEI) reported that sales of its PlayStation2 consoles sank 42 percent over the quarter to 2.65 million units.
"I can see some gloominess in most of your faces ... after the local survey unveiled the continued contraction in the local game market," said SCEI president and chief executive Ken Kutaragi.
"But I would like to offer some solutions to such a challenging environment," he told an annual meeting of suppliers last week.
Neo-Walkman
The possible answer to Sony's woes lies in the PSX -- a hard disk drive (HDD)-DVD recorder compatible with Playstation2 -- and the PSP -- a handheld entertainment machine, said Kutaragi, who is also executive vice president of Sony.
"We want to make PSP the `Walkman' of the 21st century," he declared, adding that Sony hoped to nurture the PSX "as the post-VHS recorder."
The PSX, which is due to hit the Japanese market before the end of the year, will be able to record and play DVD pictures as well as PlayStation-designated games. It will also permit Internet browsing and work as an HDD unit.
In addition, the new machine can be connected to conventional televisions as well as flat screen sets.
"By offering such a cutting-edge machine at a price that will shock the market, we will further accelerate [the shift to] Internet-ready home appliances," Kutaragi said, without providing pricing details.
Some analysts note PSX sales would likely boom if the gadget is priced at around &$165;70,000 (US$580) apiece as rival products without game-playing functions still fetch ¥60,000 to ¥80,000 per unit.
Sony's embattled game division is also working hard to embed online functions in its portable PSP game machine, now under development.
The firm is desperate to revive its reputation as a brand leader and catch up with Nintendo, which dominates the global portable game machine market with its GameBoy series.
Online opportunities
The decision to increase Internet-ready functions on its game consoles was partly prompted by falling domestic demand for offline games, which has encouraged software houses to seek revenue opportunities in the online segment.
"Amid such a challenging environment, [the launch of] PSP is our solution," Kutaragi said.
Among software makers for the PlayStation series, SquareEnix has attracted 250,000 subscribers for its Final Fantasy XI game -- the world's first-ever online game for non-PC consoles.
More suppliers, including Capcom, are poised to release their own online game titles for the PlayStation2 this year.
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