Why Overpriced Memory Will Kill The PSVita

How Sony Is Doing The Opposite Of What It Needs To

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When the price of the PS Vita was announced at $250 during E3 2011 it was obvious that Nintendo was stunned. The 3DS price dropped so fast I got whiplash. Shortly after that announcement it seemed like the PS Vita was going to be an unmitigated success. However, if there a company that has how shown they have the ability to snatch defeat from the jaws of victory, that company is Sony. Since their original announcement, the honeymoon has faded and reality has reared its ugly as Sony has let people know more and more about their wonder device: a UMD "conversion" program that charges money to the twenty-two people who didn't pirate all their games and actually supported the system, mandatory external memory cards for some games, lack of flash support at launch, and so on. The other shoe finally dropped when the MSRP for the Vita's memory cards hit the interwebs. As someone who was excited enough about the Vita to pay extra for a bundled system just to get it a week early, I was beginning to smell trouble. If Sony launches the system with this pricing for its memory cards ($25 for a 4GB card!) we are looking at a debacle in the making, one that is completely unnecessary, and one that has the potential to completely derail the system given what it is going up against.

A Little History

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Back in 2005, I read about the PSP with quite a bit of excitement. I was a busy college student without a lot of extra cash, but I'm a lover of "high technology" as well as a hard core gamer, so I read every scrap of information I could get on the system. I couldn't help but be in awe at what seemed like a device sent from the future to bring mankind to a state of gaming enlightenment. And yet, given my busy schedule and low funds, I figured I would wait a year and pick it up once it was hit with the inevitable price drop and a few 2nd generation AAA titles.

When I wandered into Best Buy on launch day I was expecting to see empty shelves. I thought I would just satiate my gadget lust by looking at a demo unit and checking out this "Lumines" game everyone was talking about. Instead, as soon as I walked in, I was face to face with a pile of PSP boxes that was about as tall as me. I picked up a box and looked it over, having forgotten my quest to find a demo unit. Five minutes later I was driving my car home so fast to check out my new PSP it's a miracle I didn't inadvertently kill anyone with my car. Lumines was amazing. Even the free pack in Spider Man movie was, well, amazing. My less geeky college roommates thought I had found an alien artifact. I was in gadget heaven. It was like the moment I pulled my first Sony MiniDisc player out of its box. I was living the future and the future was now.

Even now I wonder what went wrong, why it was that I sold my PSP less than two years after purchasing one, after having spent more hours on my SNES emulator than I had on anything actually designed for the system (even the great Lumines). A lot of analysis has been done to explain why the PSP was not the success it could have been. But ultimately it comes down to this, people didn't buy as many games for the system as one might have expected, and as a result the number of games made for the system dropped precipitously fast (or was it the other way around?), a vicious cycle that has perpetuated itself to this very day. Piracy definitely didn't help. As it death spiraled into irrelevancy, a collection of some unquestionably great games for the original PSP managed to come to market, some of which I'm hoping to play when I get my Vita. But in the end, most consider the PSP an example of wasted potential.

The Second Coming

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With the Vita, Sony has a chance to show they world they've learned from their mistakes (and from Nintendo's success). They are launching a system with superior controls (even Nintendo realizes what a colossal error only one analog stick was with the release of their absurd analog nub add-on). There are some seriously great looking launch titles that look to blow Luminies and Wipeout (the best reasons to get a PSP when it launched) out of the water. The feature set is so extensive that it literally made my jaw drop when I first saw it. I honestly can't think of anything else I would want in the system (removable battery, maybe, but I rarely took advantage of that with the PSP). This puppy will handle everything from the PS3's AAA games (Uncharted as a launch title shows how ambitious Sony is - done wrong, this could just be the uncanny valley of not-quite-there console gaming) all the way down to the ability to tap into a now massive library of new and innovative mobile phone games, thanks to its touch screen and otherwise compatible hardware. There is literally no system that has ever existed that has the ability to do more and be more than the Sony PS Vita. The gyroscope, cameras, dual analog sticks, dual touchscreens, buttons, compass, microphone, quad core CPU/GPU and even the gorgeous 5" screen mean that the only limitations on what kind of games this system can run are in the minds of the developers.

Success almost seems assured. Unless of course, Sony doesn't completely screw everything up.

(Desirability + Free Space) / Price = Probability of PSN Purchase

If Sony's rumored PSN pricing structure is correct and it actually includes sizable discounts on PSN content vs. retail content they aren't as dumb as they look. Cheaper PSN content will drive up consumption, reduce pirating (which is, let's face it, a hassle), compete better with the rapidly expanding market for value oriented mobile phone gaming dollars, and capture revenue currently lost to the used game market. If I was in charge at Sony (and sadly, I'm not) PS Vita games would run 19.99-24.99 when downloaded via the PSN (about what a $40 PSP game runs you when bought and then sold back via eBay). As a Steam user I can say that instead of being sad I can't sell my vast game collection, I kind of enjoy knowing I own them all and can re-download and play any of them at any time down the road, however unlikely that might be. The fact that I bought most of them for dirt cheap probably has a lot to do with that. Thanks to the disappearing emphasis on physical format, the same thing is now a possibility for Sony's handhelds.

Lower prices for content and more revenue from higher volume only work if your customer base has somewhere to put this stuff. Someone deciding they have the money and the desire to buy something but then fail to do so because they don't have room on their memory card is nothing short of an epic failure. Remember that the original XBOX was stuck with 8GB its whole life, but both Sony and Microsoft have been steadily increasing the available capacities for their respective consoles this time around, in large part because of the expanding of stuff they want to sell you. More space means more room for more purchases.

This is Not the Time to Get Greedy

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Sony has defended going the Xbox 360 route of repackaging what is essentially a standard format into a proprietary one as a means of increasing "security" (aka reducing piracy) and ensuring sufficient minimum read/write speeds. I actually think both of those goals are legitimate and frankly don't care that they are bringing yet another format on the market. However, they have done an equally bad job as Microsoft of explaining why charging a huge markup for something that lets you buy more stuff from them is a good idea.

Let's not kid around, Vita games are on what is effectively an SD card and the Vita memory card is effectively a microSD Card. That means retail games get to use older, cheaper densities to achieve a given capacity and speed (thanks to increased parallelism afforded by using multiple NANDs) and the tiny memory card is forced to exist on the bleeding edge to achieve those same densities and speeds. This means that a 64GB SD card costs $90 right now on Amazon and the mircoSD version that has to use the latest tech is around $150-$170.

However, price disparity exists only on the cutting edge. Drop back to the 32GB size and you'll find that pricing for the two formats is effectively identical (at around $35), although you pay a bit more to get a class 10 card microSD (minimum read/write speed of 10MB/s), which currently sells for about a $13 premium over a 32GB class 10 SD card.

Assuming that Sony is aiming for class 10 speeds, this means that the market would look at a $50 32GB memory card without batting an eye. Charging more than twice as much for what everyone knows is the same thing is nothing short of a money grab (and don't even get me started on the pricing for the smaller capacities). But this move is like killing the golden goose. You might eat well tonight thanks to the wealthy early adopters who are price inelastic, but the lost opportunity from reduced sales is going to end up eating Sony in the even the short term, not to mention the long term.

Memory Should Be The Razor, Not The Blades

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Sony took a massive hit on PS3 hardware sales for years, suffering billions in losses in an effort to gain market share (and to defeat HD DVD), only recently heading into the black. However, failure to aggressively compete on price and instead to attempt to maintain a profit margin on the PS3 would have doomed them to failure within a year of launch.

It is time for Sony to take the same kind of move on PS Vita's memory card pricing. This battle to get people to buy into their system doesn't even need to hurt as much. Those little numbers on the memory cards should do more than indicate the size, they should also indicate the price. I'm not saying Sony should take a loss on these cards (although that wouldn't hurt their cause), but pricing these competitively with market expectations for these capacities will do them wonders.

Sony's goal should be to get as large a card into as many Vita's as possible. That means in addition to aggressive pricing, they need to eliminate the 4GB and 8GB models. This isn't 2008. If Sony wants consumers to gobble up games, music, movies, (and applications?) they are going to need to give us the room to put this stuff. The 4GB card is an insult and reminds me of the 16 and 32MB card digital camera companies used to put in their camera boxes so we could take 14 photos before finding out we needed more room. I'm not dumb enough to get a 4GB card, but that isn't going to stop all those moms out there that don't know any better. Given the likely possibility of some Vita games down the road (and perhaps at launch) exceeding 4GB, selling a card that can't even hold ONE such game is just going to add needless frustration to a consumer base that doesn't need any.

Filling up a 32GB Vita memory card shouldn't cause someone to have wallet anxiety, it should cause them to reach for their memory card wallet where they have three more of those puppies waiting to be filled up. While Sony is going to make it possible to store and transfer Vita content to one's PS3, not all Vita owners are going to own a PS3, be near one when they need more space, or want to have to deal with that kind of micromanaging.

Counterpoints and Conclusion

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There are a couple of things to consider when blasting Sony for their current pricing. One, the market has already shown a willingness to pay exorbitantly for memory pricing. I think Sony took a look at Apple charging $100 for people to get a mere 16GB of additional memory by jumping from the 16GB iPad to the 32GB iPad and they said, "we want some of that." One hundred bucks for 16GB of memory in 2011 is the greatest scam of the modern era, but millions of people have lined up at Apple stores for the privilege of doing so (Disclaimer - I own a 64GB iPad).

Two, the MRSP for gaming accessories has always had little bearing on the market price, even for first party goods. My guess is that Amazon drops the price on these guys shortly after launch. No one pays $60 for Xbox live or $50 for an official XBox 360 controller, despite the fact they both have that as their MSRP. Still, a 20% drop in Sony's MSRP on these cards doesn't quite do enough to take their markup down to earth.

Three, even Microsoft's insane hard drive premium has come down over the years, which gives me hope. They still charge $100, but $100 for 250GB is a lot less painful than $100 for 20GB. This gradual increase in capacity has resulted in a price per GB that approaches market pricing, even if it is still a ways off.

Lastly, just because the format is proprietary doesn't mean Sony won't approve of cheaper third party alternatives. I mean, they've done it before (see above). Given what has to be an insane markup, they've given third parties a lot of room to compete and quite the incentive to join the party. I bet it takes about five seconds for Mad Catz to join the club with a rebranded option that sells for significantly less.

Ultimately, I'm a gadget lusting geek at heart. I haven't cancelled my ridiculous $350 VIta "First Edition" pre-order that comes complete with the puny 4GB memory card that I will likely use only until a reasonably priced 32GB card comes onto the scene.

As much as I love gaming on my iPhone, I want Sony to succeed. I want to play mind blowing games that are only possible on something as unique and multifaceted as the Vita. Given the hard lesson that was the PSP (hard for both me and Sony) I will be that much more disappointed if we see a repeat of the original PSP story. I'm not sure that overpriced storage will doom the Vita, but given the tremendous headwinds of a rejuvenated 3DS and an onslaught of fremium and .99 games with ever increasing quality from iOS and Android, this is not a time to be driving cautiously but to put the foot on the gas.