Sony to Challenge Apple -- Will PSP Video Downloads Bear Fruit?

Sony will launch a video download service for its PlayStation Portable [PSP], likely in the first quarter next year. The service could challenge Apple's iTunes. iTunes, meanwhile, has been part of a heated debate whether its sales are slowing. Sony's new service, reportedly developed by Sony Pictures but unconfirmed by Sony, only works with the PSP (for now). First, a video has to be downloaded to a PC and then transferred to the device on a memory stick. Current PSP owners don't need any hardware upgrades, but may need to purchase a larger memory stick. To date, Sony has sold more than 20m PSPs globally, and is reportedly negotiating with download services such as Amazon, Movielink and CinemaNow. However, sales of disc-based movies formatted specifically to play on the PSP have not exactly been popular. Strategic Analytics estimates global sales of video downloads will total $298m this year, jump to $1.5b next year, and reach $5.9b by 2010.
• Sources: Financial Times
• Related commentary: Apple's P-to-P Movie Downloads To Eclipse Wal-Mart and BitTorrent, The Apple iTunes Debate Rages On, Wal-Mart To Launch Movie Downloads in 2007, Blockbuster Considering Downloads; Cuban: PCs Not HD-Ready, Microsoft's HD Movie Downloads: Not Yet Ready For Prime Time. Conference call transcripts: Sony F2Q06, Apple F4Q06
• Potentially impacted stocks and ETFs: Sony (SNE), Amazon (AMZN), Netflix (NFLX), Movie Gallery (MOVI), Blockbuster (BBI). Competitors: Apple (AAPL)

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Comments

[Julian Ivan...:]

How does this challenge Apple? WIll Sony Connect tracks play on iPods? On Macs? In iTunes?? How many PSPs are there? 20m. How many iPods? 100m.

Sony Connect downloads will be great for users of Sony products. They won't create more competition for iTunes. Consumers buy on hardware, not download services. Great news if you have a PSP. No competition for Apple otherwise.

2006 Dec 18 10:08 AM

[jbelkin:]

They should have done this at the start but the problem is this:

80% of PSP users are savvy enough to rip or convert all the video they want by themselves as evident by the slow sales of UMD (another dumb Sony format). These users wknow how to create DRM free video so why bother?

Sony also cannot design an interface and connectivity platform to save their life - just look at the CONNECT store for music. It will serve to annoy their savvy users who can see how easy itunes is.

But most important of all, until they get battery life up from around 2 hours-ish, very few gamers are going to waste their battery and meager storage on the PSP listening to a lot of music or watching video.

So, it's nice but it's not a game changer.

2006 Dec 18 01:23 PM