Should Apple Buy Sony and Develop PlayStation 4?

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A match made in Heaven or Hell?
Roughly one year ago, I questioned whether or not Apple
AAPL
should
design its own game console
. I argued that by not making a console of its own, Apple was missing out on billions of dollars in game sales. I also argued that Apple could cash in on the devoted hardcore gamer market, which includes millions of people who don't yet own an Apple device. Apple could also steal market share from Sony
SNE
and Microsoft
MSFT
. Finally, I pointed out the simple fact that when Apple strives to be number-one, consumers are typically happy with the results. Despite my
complaints about the iPhone 4S
, it is still the best smartphone on the market. This proves that even when Apple underwhelms, it has the potential to be the best in its class. Twelve months later, not much has changed. Apple has sold a few billion more apps, launched a few more hugely successful products, and announced record-breaking earnings. But its strategy toward the video game industry remains largely the same. Over at Sony, however, we know that the company might not last long enough to
launch the fourth PlayStation
in 2016, which would be the official release date if the company stands by its 10-year plan for PlayStation 3. In terms of marketability, there is no brand in gaming that is as strong as PlayStation. That's why consumers were willing to spend $600 on a new PS3 – because, despite the fact that it did not launch with any groundbreaking games, we could not bear the thought of living without the machine.
“Apple Doesn't Need Sony”
Ask any Apple loyalist about the company's future in the game industry, and almost all of them will agree that regardless of Apple's strategy toward game development, it doesn't need Sony. This 100% true. But Apple shouldn't acquire Sony out of need, but instead out of want. PlayStation 2 sold more than 150 million units worldwide. Eventually, PlayStation 3 may reach that number as well. Call me crazy, but I'm betting that Apple could do a lot with that many customers.
Someone Must Save the Industry
I'll admit that my reasoning here is selfish and self-serving. But right now, the game industry is in a serious rut. It's not because of iOS or Android games, but because the three companies in charge – Sony, Nintendo and Microsoft – have no clue what they are doing. This has happened before, mind you. When Nintendo and Sega lost their way in the ‘90s, Sony appeared and saved the day. That's how the PlayStation brand became so strong: when consumers abandoned Sega and Nintendo, they came to Sony and were rewarded with years of entertainment. Right now, there are no significant alternatives to the Big Thre. You can stick with the aging consoles, scour the PC market for a decent title, switch to Zynga
ZNGA
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and bore yourself to tears, or play alternative (and often simplistic) games like those developed for the iPhone. As you can imagine, these aren't the kinds of options that will appeal to the Halo- and Call of Duty-buying crowd. They won't excite the masses and get new people to play (and stick with) gaming. Yes, iOS has broadened gaming. But it hasn't converted anyone into a hardcore player that's willing to spend $50 on new games and $400+ on new consoles. Apple has the power to do that – but needs to
want
to do that. Buying Sony could greatly help, as Apple could take advantage of Sony's development expertise and use its own marketing brilliance to take the PlayStation brand even further.
iOS to the Max
There's a little secret about gamers that very few people know: if you get us to buy a few games, you can get us to buy a zillion more. Right now, Apple sells a lot of apps. The most popular apps tend to retail for much
less
than $5. By comparison, the most popular game downloads on Xbox 360 or PlayStation 3 retail for $5 or more (most are in the $10 to $15 range). Now imagine what would happen if Apple brought the app store to PlayStation 4. Gamers would have access to full, $60 games, older/cheaper games, $15 downloadable games, and thousands of low-cost applications that may or may not be actual games. Now because Apple would be selling these items to gamers and not the Average Joe who buys an iPhone, the company could easily sell – and charge more for – higher-quality game and game-related apps. This would be a huge opportunity to elevate the status – and the price – of items sold withn the App Store.
Without an Acquisition, There Might Not Be a PlayStation 4
Sony is skating on thin ice right now. It has been a long time since the company posted anything but a loss. While it is possible for some companies spiral downward for five or 10 years without filing for bankruptcy, it seems unlikely that Sony will be able to go down this path much longer. If someone doesn't acquire Sony in its darkest hour, there definitely won't be a PlayStation 4. I understand that by saying this I have guaranteed that fanboys will shout and whine and call me crazy. But PlayStation 4 is
four years away from release
. Who here honestly believes that Sony will last that long? Anyone? Thus, it is inevitable – perhaps even vital – that someone acquires Sony as soon as possible. It doesn't have to happen in 2012. In fact, I'd recommend that prospective buyers wait until 2013. By then, PlayStation Vita will have had the chance to flop in all regions, thus ensuring that Sony continues to post massive losses. And by 2013, Nintendo's next console will have already launched. If it does well, Sony's stock may decline, which would decrease its acquisition value. But if Wii U flops, Sony shares aren't likely to go anywhere. So either way it's better to wait. In the coming months, Sony is likely to announce a Windows 8 tablet. Judging by its success in tablet development thus far, Sony's next offering should be a total disaster. In fact, I'm willing to bet that Sony won't launch a single successful product this year. A few hit games, maybe. But an actual product? Not likely at all.
Follow me @LouisBedigian
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Posted In: TechApplePlayStation 4Sony
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