Changing niches – a PSPanic attack?

I haven’t been writing in this space too long, but one thing I’ve been committed to in any of my posts is that in niche marketing, you need to respect your audience, but even more importantly, to really know your audience. That’s why it’s really surprised me to see Sony have a mild panic attack lately with its PSP handheld game system.

The reality is that even though the gaming industry as a whole is extremely mainstream at this point in its lifecycle (which I’ll blog about at a later time), the handheld gaming industry is indeed a niche. While a very wide and diverse audience might enjoy the odd game of NHL 07 or Mario Kart in the comfort of their home, the audience who would seek out a (somewhat large) device to allow them to replicate that leisure experience on the go and in public spaces, is a much more targeted group. And apparently, they’re not the same folks that Sony initially thought they were – a critical error for a company that should be able to afford to find this stuff in.
Having been a leader in the gaming space since the release of Playstation in 1995, it’s surprising to me that the one time industry giant has made so many missteps with the roll out of the PSP. As Advertising Age points out, the PSP has been victim to a number of pitfalls since the all-in-one device’s original launch when its anticipated cool factor was teetering on the brink of iPhone-level buzz. While setbacks such as the graffiti advertising controversy were noteworthy, what was really surprising to me is that Sony simply did not know their audience for this product.

The original target for the PSP was the late 20s ‘urban nomad’, but reality quickly set in as the large frame of the device, its lack of any real functionality such as a phone application or a solid web browser, and its high price point seemed to be barriers to this crowd getting in on the action. Heck, I won a PSP back when it first launched and promptly pawned the thing – it was just too clunky and I really couldn’t see myself carrying the thing around when I already had an iPod, an MP3 phone and a PS2 at home! I didn’t need another device. Especially not one that took up so much space to add so little value.
Trends soon began to show it was the teen crowd who were gravitating to the device and now, after two years in the market, they’re completely shifting their niche to attract an entirely new audience with an entirely different lifestyle. The reality is, Nintendo DS is killing PSP in the market with its small, sleek design, low pricepoint and dedicated gaming-only functionality. They picked one thing, did it right, and talked to the right people about it. As a result, Sony, the one-time undisputed leader in the gaming market is panicking – slashing prices, changing its content strategy and trying to talk to an entirely new crowd. One thing about niche markets, especially those as connected as the gaming community, is that they can smell panic, and Sony is reeking of it at the moment.
So it would seem that Sony killed itself in this race by trying to be all-things-in one, without really providing more value that a distraction at a high price tag. But even worse, they tried to be all things to an audience that they clearly didn’t understand – and that’s like committing niche suicide.

Good luck with the price chop, PSP. You’ll need it.

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