Can Sony's PlayStation 4 Revive Its Dying Vita Handheld?

After two disappointing years on the market, Sony is positioning the Vita as an accessory for the PlayStation 4. Can the struggling handheld find new life by piggybacking on the PS4's popularity?

Jan 7, 2014 at 4:33PM

After two years on the market, the PlayStation Vita handheld from Sony (NYSE:SNE) is in a bad spot. Despite being the second best-selling piece of hardware in Japan in 2014, the system posted discouraging numbers in North America and Europe. Its sales have been dwarfed by the 3DS from Nintendo (NASDAQOTH:NTDOY), and its software support looks sparse in the coming years.

With the Vita floundering globally, Sony is looking to position the device as a PlayStation 4 accessory in order to prolong the handheld's lifecycle. Should the Vita continue on its current trajectory, it would constitute a major failing for the company. Can the early success of the PlayStation 4 breathe new life into the beleaguered Vita?

Lacking the ingredients for success
The original PlayStation Portable sold more than 80 million units worldwide. While Nintendo's 3DS has a shot of surpassing that figure, the PS Vita would be very lucky to manage even a quarter of the number. The rise of mobile gaming and cell phones as multimedia devices has done serious damage to the appeal of Sony's latest handheld, a fact publicly lamented by President of Worldwide Studios Shuhei Yoshida.

While Nintendo has devoted the lion's share of its efforts to propping up the 3DS, Sony's top studios have been focused on the home console front. Premier developers like Naughty Dog Studios and Sony Santa Monica have been hesitant to offer major support for the device. With well-reviewed Vita titles like Tearaway bombing around the globe, it's easy to see why. Western studios have little incentive to develop for the handheld and ports of titles from other platforms look to dry up in the near future. The Vita's connectivity with the PlayStation 4 has become Sony's last chance to steer the device to greater global success.

Mostly meaningless numbers
An official bundle that sees the Vita bundled with the PS4 has already been released in the UK. Meanwhile, other retailers are putting their own bundles together. PR from Sony has sales for the Vita up approximately 68% following the release of the PlayStation 4. This sounds like great news, but the statement has to be in the running for 2013's most misleading bit of gaming PR fluff.

When gaming companies describe sales in terms of percentages, it's rarely a good sign. If a device is posting impressive numbers or showing momentum, you can generally expect that companies will deliver hard figures to back it up. A 340% increase in Wii U sales sounds great on paper, but when the base figure is dangerously low and the growth is occurring in the biggest retail months of the year, superficially big percentages are a way of misleading and obfuscating. The same principal applies to the Vita's 68% growth, but the implications may be even more worrying.

Damn lies and statistics
Sony's post-PS4 growth statistic is a way of disguising the fact that the successful release of its console has had essentially no impact on Vita sales. The handheld's anemic holiday growth may actually be evidence that the PS4's arrival has hurt Vita's hardware sales. Sony has stated that it sees the Vita selling primarily to established PlayStation fans, and it's not unreasonable to assume that a substantial portion of that group's available spending pool was diverted to the PlayStation 4 launch.

With Nintendo's similarly troubled Wii U console posting more impressive growth numbers heading into the all-important holiday stretch, the extent of the Vita's failings becomes apparent. The 68% growth figure is a sign of just how much the handheld is struggling and the fact that the PlayStation 4 has done nothing to drive interest in the device.

What can you buy for $500?
With the right price and advertising push, Sony might still be able to use the PlayStation 4 to better its Vita situation. If Sony were to introduce a bundle that packaged the PS4 and Vita together at an approximate $500 price point, it could have an attractive combo on its hands. This would position the double pack at around the same price as the Xbox One from Microsoft (NASDAQ:MSFT) and give consumers the chance to pick up a Vita for $100 on top of their PS4 purchase. The early sales lead that Sony's console is building could force Microsoft to reduce the Xbox One's price sooner than anticipated. The most obvious way for Microsoft to do that without incurring substantial losses is to release a SKU that ditches the system's Kinect camera.

A divided Sony dooms the Vita
The numbers suggesting that the PS4 is in the process of reviving the Vita are nothing short of statistical sophistry. The two devices may have great interfunctionality, but Sony will need to adopt more dramatic loss-leading practices if it wants to get consumers on board. Unless the handheld becomes a bigger priority for the Western side of Sony's gaming division, the Vita is surely dead outside of Japan. 

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Keith Noonan has no position in any stocks mentioned. The Motley Fool owns shares of Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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