Multiple news outlets in late March reported that Sony Interactive Entertainment (SIE; formerly Sony Computer Entertainment) was looking at releasing an upgraded PlayStation 4 (PS4) in time for Christmas. The idea made a lot of sense to some industry observers.
After all, SIE had just announced pricing ($399) and availability (October) for its long-anticipated PlayStation VR system, a virtual reality headset for the PS4 that aims to compete against the more expensive Oculus Rift ($599) and HTC Vive ($799). The new PS4 would reportedly be optimized for VR and even 4K gaming.
But SIE isn’t commenting on the reports. Neither are the 230-odd developers and publishers of the 160-plus VR games being developed for the PS VR. Several of those contacted by Next TV said non-disclosure agreements prevented them from speaking at all about their work for the PS VR.
However, plenty of gaming industry experts are weighing in on what an upgraded PS4 would mean for the industry…and whether or not one’s actually coming.
“The rumors of a new, more powerful PS4 with unique content I think are wide of the mark,” Piers Harding-Rolls, director of games research at IHS Technology in London, told Next TV. “I do not expect the console companies to implement strategies that fragment their audience in any way.”
Harding-Rolls also said 4K gaming would definitely require a hardware revision for the PS4, something he doesn’t expect Sony, Microsoft or Nintendo to support with any of their current generation of gaming consoles (the Xbox One and Wii U for Microsoft and Nintendo, respectively). And if Sony wants to optimize its PS4 for VR gaming, it may not be launching an all-new console; it may just be integrating all the VR functionality needed in the processing box that comes with the headset, Harding-Rolls argued.
VIRTUAL’S REALITY
He’s not raining on Sony’s VR parade… quite the opposite. Research from IHS pegs the worldwide install base for virtual reality headsets at 38 million by 2020, and sales of the sets will be worth $1.1 billion this year alone ($2.7 billion by 2020). And Sony knows it has a new (and lucrative) market to tap: IHS sees the VR games market being worth nearly $500 million in 2016, with the U.S. accounting for nearly 45% of worldwide spending on the format.
“VR is far more transformative as an experience when compared to 3D and will make a more significant impact on games and interactive content as a result,” Harding-Rolls added. “Overall, high-end VR will be relatively slowly adopted until content evolves, prices drop and the usability of technology improves with premium games sales.”
But a new PS4 console? “Both Sony and Microsoft have a track record of improving consoles mid-cycle with new form factors and better components, so rumors of upgrades are not that surprising,” he said. But, he added, “this cycle is different.”
Damian Thong, a Tokyo-based analyst with Macquarie Securities, isn’t so sure. He said Sony is all but assured of releasing a new, upgraded “PS4.5,” geared toward virtual reality gamers, with Sony selling the current iteration of the PlayStation 4 at a lower price, geared toward mainstream gamers, and making the VR-optimized version a premium product.
His firm has Sony selling upwards of eight million PS VR packages by the end of 2017. But while Sony has sold more than 36 million PS4s to date, Thong doesn’t see Sony making an initial killing on a PS4.5.
“I expect Sony to sell fewer of them than the PS4 in the first year of availability [and] I expect Sony to move to a tiered product strategy with price segmentation by performance and price,” he told Next TV. “I think VR will be niche from the broader consumer electronics market perspective since the main initial use will be for games, and even then only a subset of gamers would quickly adopt VR. However, I do think that Sony will still be able to sell a couple of million units in calendar 2016.”
As for 4K, Thong doesn’t believe that will be a huge focus for Sony initially, with 2K gaming at higher frame rates of 60 frames per second being suitable for today’s console gamer, he said. “The resolution is just part of the story,” he added. “I think there is still a desire for more performance, and I do not believe Sony wants the PlayStation consoles to lag too far behind the benchmark set by top-end gaming PCs.”
Then there’s Michael Pachter, analyst with Wedbush Securities in Los Angeles. He sees Sony debuting an upgraded PS4, one that’s “merely the same machine but optimized for VR. In other words, there is no reason to buy one unless the buyer intends to also buy PlayStation VR,” he said. “I’m sure that will be a lot of people, but not necessarily all at once.”
And instead of the two tiered-priced PS4 models, Pachter has Sony eventually replacing the current PS4 with a “PS4K,” one that will play all of the same console games while allowing for a better VR experience. That move would come down to how impactful sales are of the PS VR system, he added. Pachter has Sony selling as many as five million PS VR sets initially, with 2 million in the U.S. alone (and 30% of those through No. 1 brick and mortar gaming retailer GameStop). That’s compared to about a million each for Oculus and Vive (half of those in the U.S.). And if Sony does debut a new PS4, it sure won’t be due to demand for 4K, according to Pachter.
“There is no push for 4K content,” he said. “Current broadcast standards don’t allow for 4K over the air, and we would need a bandwidth auction to allow that to happen. 4K over-the-top works, but it’s a data hog. Since the majority of TV consumption is over cable, satellite or HD antenna, it’s not likely we’ll see any meaningful lift in 4K consumption this decade.
“I think we will see a bandwidth auction later in the decade and conversion of broadcast television to 4K, following a pattern similar to the adoption of HD—it took around three to four years for full conversion—implemented in 2023 or 2024.”
Wedbush Securities has Sony selling an additional 34 million PlayStation 4s—with or without an upgraded, VR-optimized offering—by the end of 2017, with the PS VR driving 10 million of those sales.
On the retail side, Eric Bright, senior director of merchandising for GameStop, said his company is almost sold out of PS VR systems, just a couple of weeks after pre-orders began. He said VR, in whatever form it’s offered, will give the gaming industry a major boost.
“Both Sony and HTC have announced that there will be up to 50 games available at launch and Oculus will have 30,” Bright said. “We believe this shows the commitment to the industry and the launch of a strong platform from the hardware manufacturers.”
