Sony Computer Entertainment (SCE) Australia chief executive Michael Ephraim predicts he can sell up to 750,000 units of SCE's soon-to-be released PlayStation 2 home entertainment unit in Australia by Christmas next year. That is more than 20 times the sales its predecessor achieved in the period - even though it is much more expensive.
It is a very bold prediction and many people are dubious, particularly given there is expected to be a shortage of units over Christmas this year. But Ephraim maintains that SCE's own market research shows there is that sort of demand for the $749 machine, which is both a video games console and a DVD player with Internet capabilities.
"Based on what we think the demand is, from November 30 to the end of 2001, we feel we have the potential to sell around 600,000 to 750,000 units.
"You can buy a DVD player for as little as $399 so that makes the games console price around $350.If you look at the comparison to Japan, they sold 24 times as many PlayStation 2 consoles as they did PlayStations in the first six months. From November 1995 to April 1996, we sold about 20,000 PlayStations, so on a ratio of 24 to one that would put us at about 480,000 (units sold in the equivalent period).
"We are basing our predictions on the sell-through in Japan and we feel that the price of $749 is a very affordable one because it is not just a games machine. In the future, PS2 will have total connectivity to a range of other devices such as camcorders, keyboards and printers. It is DVD-compatible and DVD is just starting to take off in Australia. There have only been about 150,000 DVD players sold here and the uptake has been a lot slower than in the US and Europe, so there is that market. There is also the games market, and based on the Internet and peripheral connectivity, PlayStation 2 will become the digital hub in the lounge room," Ephraim added.
Retailers expect strong demand for PlayStation 2 over Christmas. It should easily be the number one games-related item on people's Christmas list. However, shortage of supply and the price could mean it stays on just as many wish lists as shopping lists.
"We are still waiting for the final numbers of what will be available from Japan," says Ephraim. "We know that supply is going to be limited initially but by January, February and March we should start being able to supply the demand."
Because of the supply problems, SCE is planning a sustained marketing campaign beginning in November and continuing through to March and, over that period, the company will spend up to $5 million in marketing.
"Our initial market plan is to go after the core game user, because that is an important market to us. As the supply increases, our marketing strategy will be to the larger market and as the system has added functionality we will extend our marketing reach further," says Ephraim.
He says there will be up to 25 games available for PlayStation 2 by Christmas, the largest selection ever for a new machine, but they will retail for $99 - higher than the premium price for standard PlayStation titles.
SCE will also release a new version of the original PlayStation, called PlayStation 1. It is about a third of the size of the original, and will eventually be able to link to the Internet via mobile phone, but apart from that, it is essentially the same machine. While it has a recommended retail price of around $179 compared to the current $149 for the existing model, that price is expected to be forced down by Christmas.
Harvey Norman national software co-ordinator Paul D'Ambra agrees PlayStation 2 will be the hottest item this Christmas but he is reserving his judgment on its long-term sales potential.
"It is a fairly expensive unit but early adopters will still buy it. I don't have a crystal ball as good as Michael Ephraim's, so I don't know if his figures are correct, but it will all come down to stock availability.
"With the stock situation as it is, we have not been able to pre-sell or hype the market up. The feedback we are getting at the moment is there are a fair few people interested, but we don't know how many.
"That 600,000 to 750,000 estimate is a very high number, it is a very aggressive number, but if you look at it worldwide, Sony obviously wants to get as much hardware out there as they can before Microsoft's X-Box console comes out.
"Can they do those numbers? They have that much of a stranglehold over the marketplace they can do whatever they want. But, at $749, it is a bit pricey for the mass market and it will be interesting to see how that affects [sales], especially when the likes of K-Mart, Big W and Target hold the majority of the marketplace anyway," D'Ambra says.
Apart from PlayStation 2, D'Ambra is tipping PlayStation games overall to do well, with Driver 2, Gran Turismo 2 (Platinum), and Crash Bash being among the big sellers.
Nintendo's big hope will be Donkey Kong Country on Game Boy Color and, of course, Pokemon Gold and Silver - if there are stocks.
He's tipping Logitech and Microsoft's new-generation peripherals to sell well, with particular interest in Microsoft's voice recognition Game Voice controller and its new multi-button mouse-like Strategic Commander controller for strategy games.
However, he has bad news for Sega Dreamcast owners - Harvey Norman has dropped the Dreamcast range and won't be selling any games for it.
According to D'Ambra, although sales had picked up since the price dropped from $499 to $299 mid-year, the improvement had not been dramatic.
"We made the decision to stop carrying it and stop ranging it, based on the sales history and looking at the longevity of it. A lot of overseas developers are no longer producing software for it and the range is fairly limited as to what is coming into the country.
"There is a fairly small install base of people who are going to want product for it, but not enough to justify putting a lot of time and energy into it."
Sony is not the only one banking on PlayStation in its various forms dominating the Christmas market.
Australia's three key game distributors, OziSoft, Jack of All Games and Electronic Arts and distribution heavyweight Tech Pacific, a newcomer to the games market, all offer a lineup of PlayStation titles. Entertainment software sales have been soft this year as gamers have held back until the release of the new-generation consoles so distributors and retailers alike are hoping the pent-up demand will show through in Christmas sales.
Of the 100 titles Jack of All Games has scheduled for release in November and December on all platforms, including PC, Mac, PS1, PS2, Game Boy Color, N64 and Dreamcast, 23 are for PlayStation 1 and 10 are exclusively for PlayStation 2. One of the features of PlayStation 2 is that it can play all PlayStation 1 games.
For the first time there will be a strong line-up of educational titles on PlayStation featuring popular characters such as Elmo, Rayman and Winnie The Pooh, as part of Sony's strategy of moving to a lower demographic for PlayStation 1.
OziSoft, which took over GT Interactive's titles and distribution network through its association with Infogrames, will play a major role over the next two months.
According to OziSoft chief executive Gerard Noonan, although the market had been soft during the year, there were still some star performers such as Tony Hawk Skateboarding, World Touring Car Championship and Colin McRae Rally 2.
The Triple A titles are still performing well so we are pretty confident about Christmas in that respect.
"We see Christmas as being a fairly significant PlayStation business for OziSoft, predominantly PlayStation 1, but I think we will do fairly well on PlayStation 2."
OziSoft will have nine PS2 titles out in time for Christmas and Noonan expects several of them to do very well.
However, OziSoft's main marketing thrust will be on Driver 2 for PlayStation 1.
"Driver 2 will be our pillar title over the holidays. We will be spending about $400,000 to $450,000 on TV, print and in-store promotions and we have bought a car that we'll be using for promotions with the Seven network.
"The budget range of PlayStation titles is also going to do exceptionally well. The $29.95 price point is the magic price point and has brought people out that had stopped buying."
Noonan says sales of PC games, once considered almost a dying market, had picked up in the latter part of the year.
"We will have a particularly strong line-up of PC games over Christmas including Hitman, Earth 2150, Settlers 4, Tomb Raider: Chronicles and Carmageddon TDR," he says.
Noonan says sales of Dreamcast consoles, which OziSoft distributes, have picked up since the price cut earlier in the year and he is expecting a "reasonable sell through" over Christmas.
There will be several new titles available including some that can be played online.
The Christmas market will be an interesting one for Tech Pacific, which recently created an entertainment software division run by former Mattel Interactive marketing manager Jeremy Hinton. The company has taken over the Interplay distributorship from Roadshow and at the end of October announced it would share distribution of Hasbro products with Acclaim. It also has the Microsoft games and peripherals account.
Hinton says the move into entertainment software made a lot of sense for the company, which was already the number one distributor into a large number of retail accounts.
"Although Interplay is predominantly a PC game company, it has had a capital injection from Titus Software, which is predominantly a console company, and we will be handing those titles as well."
Tech Pacific will have two of the major PC titles this Christmas in Giants and Sacrifice, both of which are contenders for game of the year. It also has four PlayStation 2 titles scheduled for release in December, however Hinton says he will be neither surprised nor too disappointed if the release dates slip to next year.