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INTERVIEW: David Reeves

Ben Parfitt
INTERVIEW: David Reeves
Can you give us your thoughts on the video games market in general over the past year?

Firstly, I think we should really celebrate the growth of the industry this year. The total leisure software market has grown in excess of five per cent in terms of units, and a similarly impressive number in terms of value.

I don’t think there are many industries that have had that sustained growth for so many years. We’re very happy about it, and I’m sure most others are, too.

From a first party point of view, where we have more accurate figures, we’re up about nine per cent in units and about 14 per cent in value. That includes PlayStation 3, which of course is at a slightly higher price. From a corporate point of view we’re very pleased about that.

The second thing is that the underlying trends in gaming are very, very strong and very, very positive – and I think if you speak to our competitors they would say the same.

I think there’s been a revolution in gaming, particularly on the demographic split that has taken place over the last couple of years.

In the past, gaming has been very male dominated, but now with SingStar, EyeToy, Buzz, Guitar Hero, Brain Training and all the other things from Nintendo, there’s been a real shift towards females and families. And that can only be good news. The industry seems to be on a roll.

What we’ve also seen in the last year is a rapid geographical expansion. We have seen the Middle East, Russia, Eastern Europe and India all providing very rapid growth, not just in hardware, but software as well. This is also true of Southern Europe – Iberia and Italy. And what that means is it makes us and third party publishers less dependent on frontline teritories such as the UK, France and Germany. These are real shifts in the business.

How is PlayStation Network doing in PAL territories?

One thing that has surprised us is in network purchases and the level of interest that has been shown around the network business. We’ve gone from zero to almost double digit millions in terms of what people have purchased in euros. And we’re obviously very happy about this. I suppose you might ask whether the retail trade would be worried about it. But what we’re seeing is that most of these purchases are incremental.

And we’re working very closely with the retail trade, particularly countries like France, where Carrefour has its own online retail programme. Even in emerging markets some of the trade are already looking to work with us on joint marketing programmes.

We’ve now got about two million PlayStation Network registrations. That’s about 40 per cent of users who are registering. We’ve also had about 33m downloads which is a huge, huge number. And we’ve got 25 stores up and running across the PAL territories. That, of course, is one of the reasons why it’s sometimes slow to get some of the uploads onto the European PlayStation store; we have so many stores.

What everyone is interested in, of course, are the top line numbers…

Well, Sony Corporation will be announcing the full numbers shortly, so we have to steer away from installed base. But I can give you some figures…

I would call December something of a trinity, because we sold just over a million PlayStation 3s during the month. That’s across all PAL territories and that’s a sell-through figure.

About 20 to 22 per cent of that figure was sold in the UK alone; we’re very happy with our performance in the UK.

And how do you feel PS3 is doing in terms of ‘catching up’ with your rivals who launched earlier?

We don’t often mention competition but I will give you some interesting data. In terms of installed base in some of our major markets, such as France, Spain, Germany, Italy, plus some distributor territories in smaller markets like Switzerland, our current cumulative installed base is now higher than that of Xbox 360.

It has not quite yet reached that in the UK. But the team here expect to overtake installed base of Xbox 360 across PAL territories in late summer. I would say before, but that is when we think we will overtake Xbox 360.

It’s worth mentioning that last week we outsold Xbox 360 in PAL territories by a ratio of 3:1.

And how has PSP performed?

Again, I’m calling December a trinity because it’s all ‘ones’ – PSP sold more than one million units in December. It was slightly more than PS3. And we did have some substantial stock problems, just as Wii and DS did. So we could have been higher.

We’ve also seen some good growth rates: Russia was up 80 per cent, Italy up 70 per cent, Australia up 45 per cent. I don’t have a UK number but it was certainly positive.

We are still suffering from some stock shortages, but we’re air freighting in units as fast as we can. The UK is probably okay. But in Benelux, Iberia, Italy and Russia we’re seeing shortages and that’s where we’re feeding in stock at the moment.

How about PS2?

Again, PS2 did in excess of a million sell-through for December. Distributor markets accounted for about 55 per cent of sales, with Eastern Europe, the Middle East and Russia the key markets. From our point of view, social gaming titles were the ones driving the business. That will continue to be the case for PS2 for some time.

Looking forward, how do you feel about the performance of PS3 and PSP through 2008?

I’m going to use the analogy that it is rather like a plane coming in to a runway and you can just about seeing the landing lights. That’s where we were before Christmas.

But now we can see those landing lights – and they are the big titles, such as Gran Turismo, GTA, Metal Gear Solid, Pro Evo, FIFA and Little Big Planet. These are the building blocks of our strategy for 2008.

We will also bring out the TV tuner which we will be rolling out into five major markets at the end of April.

In terms of Gran Turismo we still don’t have a date but I think that Yamauchi-San said it will come out by end of fiscal year, which is the end of March. That’s what I’m planning on at the moment. And PS3 Home is still on track for the spring.

With PSP our plan is to have more dedicated PSP games. We’re also going to be bringing out Skype, plus Go Messenger and Go Explore in March and April. And we’re tying up with Sky in the UK for the video download service in the summer.

So good news all round then, by the sounds of things...?

I think you’re going to see massive growth this year. It was just the tip of the iceberg in 2007.

I think word of mouth plays such a big part in our industry. As people get their PS3s, Xbox 360s and Wiis out, other people are going to want them. That’s why it’s so great working in the industry. And now that all the formats have got a substantial installed base, we’re going to see that word of mouth fuel software sales.

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