Today we had the chance to have a long and very interesting conversation with Wedbush Securities analyst Michael Pachter, and we heard his opinion about quite a few topics. Of course we couldn’t avoid asking about Sony’s Project Morpheus, and our crystal ball holder extraordinaire seemed not to be very enthusiastic about the commercial value of the idea.
I think it’s a bad idea for multiple participants to chase it, and I think it’s a really bad idea for Sony. I have no problem with the Oculus Rift, that they’re trying it, because they’re a startup and that’s a very small market and if they dominate it that’s great, but if it’s a small market and there are multiple players, it’s gonna be hard for anybody to make money.
And I don’t think it’s gonna be a big market. It sounds interesting, but I don’t think there will be enough content to justify making the capital investment to create the headset. I think it’s chicken and egg. If there’s no content you’re not gonna buy a virtual reality headset, and if you don’t buy a virtual reality headset, there won’t be any content, because no one will make a dedicated game for a very small audience.
The Oculus Rift guys are making some games themselves, and they hired some pretty impressive people. Sony certainly is capable of doing the same, and if you wanna think about Sony’s success here, remember all the big 3D games and how those did. Nobody cares. So I think it’s just a super super small market.
Pachter continued by explaining that gamers have demonstrated not to be very interested in peripherals with the exception of Kinect, so they’re probably not going to buy Morpheus en masse:
I think the Oculus guys are gonna be very happy with a million sales. If they get a million sales, they’re gonna get a ton of money. A million sales is a huge success for Oculus Rift. It’s just a hiccup for Sony.
I think people believe that Sony validated the concept by offering something of their own. The Oculus Rift guys, I don’t think they’re looking to sell ten million units. I think that if they sell a million they’ll create some more content, and then the next iteration sells two, the next iteration sells four… I think they have a very patient, long-term plan. A million of this for Sony… they’re better off spending that money on marketing for PS4.
We also asked him about Sony’s profitability in general, and while he was very honest in admitting that he doesn’t know much about Sony’s non-gaming businesses, he believes the PS4 will be extremely successful:
I don’t know a lot about Sony’s other businesses so I couldn’t tell you how their TV division is doing or their movie division, I think that PlayStation is going to be a wild success, and I think the PlayStation division is gonna be very profitable, buy they might lose all that money with TV shows.
It’s like talking about theme parks profits in the context of Dysney. If the Marvel movies don’t work, or if Star Wars doesn’t work, Dysney isn’t going to be as profitable if the theme park business improves by ten percent. I can’t comment on all of Sony’s businesses, because I really jsut don’t know.
While Pachter definitely isn’t a believer, it’ll be interesting to see if the “wild success” of the PS4 will manage to pull gamers in with Morpheus. Hopefully it will, as the concept is definitely interesting, but lack of success from such a big player as Sony could probably put virtual reality as a mass market back into the pipe dreams closet. As usual, we’ll have to wait and see what will happen in the next couple years.