(April Fools) Sony Discontinues PSP Production!
Earlier this week we reported that the UMD Movie format was on its last legs, and wondered curiously why Sony's Connect service had yet to integrate increased PSP support as promised, but little did we know how great an impact these seemingly minor issues would actually have on the PSP itself. In a shocking announcement last night, Sony Computer Entertainment head, Ken Kutargai revealed that the company is currently suspending production of the PSP:
"It's no secret that we have been selling the PlayStation Portable at a significant loss. Part of our decision to sell the system at such a low price point was predicated by our analysts' prediction that the UMD format would be successful not only as a way of distributing movies, but music as well. Initial consumer reaction to the format was strong, but for reasons we are unsure of, consumer and then studio support began to quickly drop. Since we planned to recoup part of our losses on the system by UMD licensing, this has left not only Sony Computer Entertainment in a difficult position, but the entire Sony Corporation as well. We cannot continue to sustain these losses, and I regret to announce that we will be suspending production of the PlayStation Portable indefinitely. We will continue to evaluate the system's viability, hopefully resuming production when it makes sense from a business standpoint. We will continue to support the PSP by continuing to release quality titles, and we encourage our third-party partners to do so as well."
Shocking. There's simply no other way to describe the bombshell announcement, which came mere minutes after Sony's fiscal year end. Scrambling to make some sense of the announcement, many analysts feel the move is partially due to the PlayStation 3. "Sony is going to be taking a huge financial hit on every PlayStation 3 sold, and there's no way they can take losses on two systems at once. If you follow Japanese software sales at all, you'll see that PSP titles are rarely in the top ten, and since this is how Sony makes their money, it means the company is nowhere close to breaking even on the system" said Gabe Logan, an analyst for SF Corp. "Couple these issues with the tremendous response of Japanese consumers to the recently redesigned Nintendo DS, and the announcement isn't all that surprising."
Since Sony dropped this bombshell at 12:01 a.m. on April 1st, we were unable to get a comment from anyone at SCEA, but we will be sure to follow up on this story at the start of business on Monday morning. Our forums will no doubt be bombarded with discussions on the subject, so we've created a special area where you can speculate what's really behind this stunning revelation.
4/1/2006 Aaron Thomas