Sony Corp. (SNE) plans to launch its new motion-control video game device named ‘PlayStation Move’ in late 2010. The company displayed the new device at a Game Developer’s event in San Francisco . The shares of Sony surged 1.35% (or $0.50) following the company’s announcement.
The new ‘PlayStation Move’ includes a motion controller that allows game players to control their games via body movements. It also includes the PlayStation Eye, a camera that helps in the movement of the device. The device has been constructed to work in tandem with Sony’s PlayStation 3 (PS3) console. Sony’s new controller has also been applauded by third party partners, including Electronic Arts (ERTS) and Activision Blizzard (ATVI). 

Sony said that it will sell a starter bundle that includes one Move control, the PlayStation Eye (the HD video camera) and a game for the device for less than $100. However, there were no specific details on the price of the single video game device as well as specific timing of the launch date. 

The current price of Nintendo’s Wii is $250 while Microsoft’s (MSFT) Xbox lowest priced model is sold for $200. In comparison, the PS3 is sold for $399. Although, a starter kit is not too expensive, in our view, to make the Playstation device successful, Sony must give it out at a price below that charged by its competitors.
Sony had been developing the device for quite some time. Sony’s PlayStation Move is very similar to Nintendo’s Wii. In the Gaming segment, Sony’s PS3, the number 3 console in the United States , had been losing ground to Nintendo’s Wii, and Microsoft’s Xbox 360.
Sony’s PlayStation Move has been targeted to provide tough competition to Nintendo’s Wii, which is the most popular console in the U.S. due to its low price point and pioneer features such as the motion-control design that makes the games easier for new users to play. However the PlayStation Move will work with triple-A titles such as “Socom 4,” aimed at core gamers. These new games will be released later this year. Unlike the Wii, the PS3 offers high-definition gaming with a powerful graphics processor. 

We expect the device to be well accepted. The new Playstation model can be a huge positive for the company and help it pick up increased momentum. Further, the motion control is expected to help Sony as it attempts to recover from losing console market share. 

We also believe that the company will have to match supply with demand. Sony had earlier lowered its price of PS3 to weather competition and boost sales, which resulted in huge demand. But Sony could not keep with the demand resulting in huge supply shortages. The lag in production could reduce users for its console.
Sony said that it intends to market and promote the new device heavily while maintaining its appeal for the core gamer, which will help it capture market share from Nintendo’s Wii. Further the company said that although Wii appeals to a larger user base, the PlayStation can offer a more powerful gaming experience to the users. This may hurt Nintendo. 

Sony faces tough competition from other large players in the gaming market with much larger market share. Microsoft is expected to launch a motion-control system, code named ‘Project Natal’, which it announced last June and introduce a number of attractive software bundles to help drive growth. We expect Microsoft to introduce the device very soon, intensifying competition for Sony.
Sony has made a turnaround with new product introductions and we expect the launch of the controller to boost its revenues. While it is way too early to definitely say anything, it will be interesting to watch the development and competitive dynamics in this new product segment among a host of established players in the days to come
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