Today the PSP celebrates its third birthday, and what better way to celebrate than speaking with John Koller, Sony’s senior marketing manager for the platform. Since getting off to a rocky start, the system enjoyed a rebirth of sorts in 2007. After a price cut and slimmed-down redesign, the system has been flying off shelves—85 percent over last April, according to Koller. A steady stream of firmware updates has enhanced the system significantly, allowing users to talk to friends worldwide via Skype or listen to online radio through the nearest wireless hotspot. Koller is quick to point out that games remain the focus of the PSP, but that consumers are picking up on its other uses, too. We talked to Koller about upcoming features, sometimes-troublesome firmware updates, what took so long for colors to come to the U.S. and much more.
Game Informer: What’s going on with the PSP now that it’s hitting the three-year mark?
John Koller: We’re entering the third year of the platform, and we talked about it really being the biggest year, and it turned out to be so. Ever since we launched in 2005, we’ve been talking about the multifunctional aspects of the PSP, but really centering on gaming. I think what a lot of the consumers found last year to their liking was really an expansion in gaming, unique genres, unique games, but the price drop certainly helped us target a whole new demographic, going after that teen consumer group with a little bit less discretionary income than maybe the 20-something consumer. They were able to get into the market and really adopted the PSP as their own. The PSP hardware SKU we launched in September, the PSP-2000 made the PSP more portable, and a lot of consumers started adopting the PSP for music and for video and for some of their portable travel use of Internet browsing. I think what we saw was the price drop really assisting, but that the new hardware SKU pushed sales over the top. Our sales for the holiday season were spectacular—we actually couldn’t keep it in stock. We were in a really in a very good position; from a demand perspective it was very, very strong, and as we go into this year it’s remaining very strong. We’ve seen a real uptick year over year, a significant uptick—we’re up 85 percent in sales since the price drop last April. It’s a platform that’s got a ton of momentum, a lot of wind on our back. I think as we embark on our usual trip to talk to publishers and other people about the platform, I think it’s a lot easier conversation when you’ve got the strength of a very solid install base at this point. This year, I think is going to be another very good year, and we’re looking at a number of key launches—both software and peripheral—to really aid the momentum that we’re seeing now.
GI: The PSP really does seem to have a dual personality. It’s part device and part game machine—it’s in a pretty unique position in the marketplace. How had that been, positioning it in the marketplace, the fact that it can be used for so many different things?
Koller: You’re bringing up exactly what we wrestled with when we first launched the PSP. What it’s centered in, and how we positioned it in the market, is that it’s a multifunctional device with a gaming heart. It’ll always be a gaming system. We have such a solid lineup of games and will continue to do so, highlighted most recently by God of War. It’s primarily centered as a gaming machine. That said, the multifunctional aspects really round our what the PSP is and differentiates it from any competitive platform—and that’s including the DS and the iPod, the Zune and the Zen and all the other handheld products that are available in the market, inclusive of mobile phones.
The way that we market the product is to continue to promote the gaming portion, but add ancillary messaging about the multifunctional area—the addition of Skype and Internet radio. You can play your music and your movies on the PSP. It makes for an all-in-one device. I think as consumers start to find that there’s this integration of functionality between their various mobile devices, they want one or two screens to bring with them. We’re finding in a lot of our research that the consumer’s using the PSP because of its gaming but then also because it has these other elements as some of the other devices they own, but they don’t want to bring four or five devices with them in their pocket. The PSP solves all of those multifunctional demands in one product.
GI: The PSP seems to be getting better and better with each firmware update. How much of the recently added functionality—like Skype and Internet radio—was actually on the radar while the PSP was being designed? Were those always planned to be a part of the system eventually, or were they added because they seemed suitable for the platform?
Koller: That’s a really good question, and it’s actually pretty insightful. The way that we planned the product, to have these firmware updates and to be able to unleash new aspects on the consumer set—we didn’t always plan some of these since March ’05. Some of these are the result of consumer demand, quite honestly. Skype’s one of those. We had a real groundswell of reaction in a lot of our quantitative research and a lot of consumers asking for VOIP or a way for them to communicate with the PSP. As they brought it around and found that more and more wireless hotspots were available and becoming a little more ubiquitous, I think a lot of consumers were saying, “Let’s be able to communicate with this so I can talk with someone while I play SOCOM or while I play Madden or whatnot, and I can meet them online.” When we saw that interest, we took it back to Tokyo and met with the product-planning group, and Skype was added. It’s something that we’ve noticed in the few months since its been launched, we’ve noticed an uptick in consumers who have bought the headset and remote control. I think we’re seeing the results of that demand. Not every firmware update is something that was originally planned. I think a lot of those were the result of consumer demand in our territory and I think some other territories globally.
GI: Can we expect to see more PSP and PS3 cross functionality in the future? Is that something you’re going to continue to be putting a big focus on?
Koller: Yeah, absolutely. Remote play is very, very important to us, especially as the PS3 install base grows, and you’ve seen the numbers—the PS3 is on fire as well. We look at the PS3 as the console for the home and the living room, obviously, and we look at the PSP as the travel console or device that you can use to bring content from your PS3 with you. We’ve expanded that in recent firmware updates. That’s going to continue to expand this year. That’s a big, important emphasis point for us.
GI: Are there any plans to call out content that lends itself well to remote play? A fair number of people are playing PixelJunk Monsters on their PSPs through remote play—is there a way to let consumers know, “Hey, this game works really well with remote play,”?
Koller: Yeah, and I think that there will be a lot of messaging around remote play. You bring up one area, and that’s an area where we’re going to place a lot of significant marketing behind to make sure that consumers are educated. But there’s the video component and the music component. One of our sales reps works in Dallas but his family lives in Cleveland, and every night they place the music on the PS3 that he can listen to when he’s in his hotel room in Dallas. The uses for these are many, and I think they’re used in ways that were never thought of. For us, it’s excellent. Tying together the units is something that helps the PlayStation brand overall.
GI: One thing that PSP users and potential PSP users may have noticed is how fragmented the marketing strategies are between the U.S. and the Japanese markets—all the different colors that are available in Japan versus here in the states, being able to watch television on the PSP, et cetera. Why are those two markets treated so differently? It seems reasonable that gamers and users are ultimately going to want similar things, overall.
Koller: It’s a great question, and the short answer is, “Not necessarily.” The situations are quite different in many, many ways—not just in consumer demand. We look at consumer demand as one element, but there’s also a retail component and there’s also a technical component. The TV element that you mentioned isn’t possible in North America, it’s something that’s possible technically in Japan.
With some of the other elements and peripherals, North America and Europe have launched slower than Japan. I can speak for North America, the reason being we have limited shelf space here in North America versus in Japan, which is a different retail environment. We also have a different consumer-demand equation, where the consumer is asking for different things. For example, we announced that we’re going to launch GPS this year. The reason we’re going to launch GPS this year is because now it is at that tipping point as a consumer-electronics product. It’s starting to see the fruits of a lot of momentum behind that particular product. We looked at the overall consumer demand. It wouldn’t have been ready two years ago, although the peripheral was ready. In North America, we would not have been ready, and a lot of our retailers probably wouldn’t have carried it longer than a year, and would probably be sitting on a lot of inventory. We have to look at a lot of different market realities before we launch a product.
Colors are another thing. Last year was the first time we got into colors, and the reason for that was that consumers were saying, “I’m OK with the current black model, but I want other things. A price cut is one priority. I want to have a smaller, slimmer line.” We had those elevated as priorities, and then we brought the colors over to launch with the PSP-2000 model, and obviously we’ve seen a big lift—and I think part of that is because of the colors. I guess the short answer is, “Not necessarily,” and the long answer is, “There are a lot of market realities that factor into the equation when we launch a product.”
GI: Are we going to see movie downloads straight to PSP this year?
Koller: The video-download service is something that we’re working on down here for the PlayStation Network. PSP will be a part of that. We don’t have a firm date, but it’s shortly—I guess that’s the best way to put that. Consumers will be able to take short-form and long-form content and place it on their PSPs and take it with them.
GI: Going back to those firmware updates, every time one hits you can’t install it if you don’t have a fully charge battery—even if you’re connected to AC. Are there plans to revisit that?
Koller: Probably not in the short term. Longer term, possibly. It was an absolute requirement when we first launched in 2005. We lifted that requirement for a short time and found that so many PSPs were bricking that we had to reinstate the full-battery-charge requirement. It turned out to be a technical issue, and we were dealing with a significant amount of bricked returns.
GI: Looking at 2008, what kinds of goals does Sony have for the PSP—aside from obvious things like maintaining momentum and all that marketing speak?
Koller: Continuing very strong hardware sales is I think an obvious one. We have a couple of significant plays with cards we’re going to lay down in the next few months and as we go into E3. We have a number of packs that I think are going to be very impactful this year, leading off with God of War, which launches in June. The peripheral area is going to be of particular interest to us, the GPS, which we’ve talked about, we talked briefly about the camera, the upcoming keyboard—I think all of those will be very relevant to the consumer as we go through the calendar and fiscal year.
And I think an area that we work hard on and will continue to work hard on is the game area. We want to create the most compelling content and work with developers to make sure that these aren’t PS2 ports or console ports, and that they’re priced appropriately. I think we need to get more of the God of War and Final Fantasy types—strong brand umbrellas that have very good gameplay underneath and are unique from the PS2, but maybe have some of that storyline. I think the continued momentum of the platform is very important, and we don’t see any signs of it slowing down. It’s a red-hot market for the PSP right now.
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