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Commentary > Game Over
PlayStation Portable for $500?
Atari CEO Bonnell predicts high initial price tag for forthcoming handheld.
June 9, 2004: 5:29 PM EDT

NEW YORK (CNN/Money) - It's astonishing how far a slick design and some pre-rendered footage can boost a product's buzz -- even when there are few, if any, real details available.

Last month, Sony showed the world the PSP. Sometimes known as the PlayStation Portable, this all-in-one media device quickly became one of the must-see items at E3. Plenty of people vowed to buy one when it went on sale in the U.S. next year and some overly optimistic folks declared Nintendo's Game Boy to be destined for extinction. Basically, it quickly reached a critical mass of fan boys.

Atari CEO Bruno Bonnell is not one of them, however. While he said he sees the promise of the device and looks forward to having his company make games for it, he believes Sony is doing a poor job of positioning the machine.

"We saw pictures and a nice prototype at E3, but I want to see more," Bonnell said at a Piper Jaffrey consumer conference Wednesday. "Yeah, it's cool. It's nice, like a nice car. But we have no idea if the PSP's pricing is going to be $250, $350 or $500.

"What about the breakable aspects of it? If it breaks, can you bring it back and get another one for free? What about the movie strategy? The wireless strategy? The MP3 downloading? We don't know. What about the connectivity issues? We don't know. What about the video output? We don't know."

Boasting roughly the same graphical quality as the PlayStation2, the handheld PSP will play movies and digital music in addition to games. Sony has referred to the device as the interactive Walkman of the 21st Century.

Bonnell later said he expects initial pricing on the PSP to be at the high end of the scale. "$500 to start would be my guess."

The PSP's sleek design won kudos, but Sony has refused to give a retail price.  
The PSP's sleek design won kudos, but Sony has refused to give a retail price.

That estimate is significantly higher than those made by other game publishers. In January, for example, Electronic Arts CEO Larry Probst predicted a range of $199-$249. Analysts, meanwhile, are expecting a price somewhere between the dueling estimates.

"I think $500 is aggressive," said P.J. McNealy, an analyst with American Technology Research. "I think it's going to be in the $299-$349 range. Keep in mind that [Sony Computer Entertainment president and CEO Ken] Kutaragi has maintained that they want to break even on the hardware."

Other publishing executives on the panel, which looked at trends in the video game sector, were not quite as critical of Sony, but did express concern. THQ CEO Brian Farrell acknowledged his company (the largest independent developer of handheld games) has not yet received any development hardware for the PSP.

"It's a very compelling opportunity for the consumer in some ways, but we'd like to see how it's positioned," he said.

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With details about the machine's functionality still under wraps, publishers are also unsure about how much it will cost to build games for the PSP. Farrell speculated that THQ (THQI: Research, Estimates) will spend somewhere between $1 million and $2 million to create a game for the PSP. Bonnell said there's no way to accurately predict costs at this point.

"Development costs? From one cent to $50 million. I have no idea. I mean, it might be that 'Pong' is cool on the PSP," he said, referring to industry's first success story. "Pong doesn't cost us anything. We're Atari (ATAR: Research, Estimates)! We have Pong! Let's make it!"

By this point, obviously, Bonnell was having some fun at Sony's expense. But his criticisms aren't without merit.

The PSP is certainly an impressive looking device -- and it has loads of potential. But so far, that's all it has. We have yet to see any game running on the system in real time. (All demos have simply been footage of titles under development.) Sony's claims about the device's battery life are being met with strong skepticism, given all of the moving parts on a PSP. And the lack of developer kits has some observers worried that Sony (SNE: Research, Estimates) may not be able to meet its planned U.S. launch date by the end of March.

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No developer is willing to ignore the PSP, though. EA (ERTS: Research, Estimates) has vowed to have four games ready at the system's launch. Take Two (TTWO: Research, Estimates) is currently working on two PSP titles.

That's smart business -- as the PlayStation fan base looks all set to embrace the PSP. But I suspect even that collection of loyal Sony customers is getting a little antsy about the lack of hard information about the system.  Top of page

Morris is Director of Content Development for CNN/Money. Click here to send him an e-mail.

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