Sony's PSVR 2
Image: Sony

Sony’s PSVR 2 will be a major test for the VR market

Protocol Entertainment

Hello, and welcome to Protocol Entertainment, your guide to the business of the gaming and media industries. This Tuesday, we’re taking a look at Sony’s upcoming PSVR 2 headset, its steep price, and what it will mean for the future of the VR market. Also: the developers behind the next major Final Fantasy entry respond to diversity complaints, and why we’re all so obsessed with Marvel Snap.

Who is the PSVR 2 for?

Sony last week finally announced pricing and a release date for its sequel to the PlayStation VR headset. At $550 and a confirmation of at least 20 launch games with no support for original PSVR titles, the company is making a bold wager for the future of consumer VR with a focus on gaming and enthusiasts. Bloomberg reported last month that Sony is optimistic, with plans to sell 2 million units by the end of March.

While market leader Meta is trying to cater both to the mainstream consumer with the $400 wireless Quest and the business-focused “prosumer” with its $1,500 Quest Pro, Sony is falling somewhere in the middle. With few companies interested in competing with Meta, the PSVR 2 will in many ways be a litmus test for consumer VR and whether it stays a niche, expensive hobby or breaks further into the mainstream.

The PSVR 2 comes with plenty of compromises. Sony’s headset isn’t a slam dunk for several reasons, namely price and backward compatibility.

  • The PSVR 2 costs $550, more than the PlayStation 5 console (at $400 or $500 with a disc drive) it requires to run. Additionally, PSVR 2 can’t run older games or apps initially developed for Sony’s predecessor.
  • Instead, the company is porting over a handful of Quest and PSVR 1 titles, contracting with third-party developers, and relying on some of its first-party talent to fill the library.
  • So far, Sony says it will have 20-plus games at launch, including some exclusives like Guerrilla Games’ Horizon Call of the Mountain, but it has yet to confirm the full lineup.
  • The PSVR 2 sports some impressive specs, especially when compared with Meta’s Quest 2 and Quest Pro, including higher-resolution OLED optics and superior field of view. But Sony’s headset is tethered and decidedly non-portable. That means avoiding a cable as you bumble around your living room.
  • Oh yeah, and you also need a PS5, which remains supply constrained around the world and, as of August, is 10% more expensive in most markets at a time when inflation is high and consumer spending on entertainment is down across the board.

Reception on Sony’s strategy has been mixed. Many industry analysts and critics saw Sony’s $600 price tag as confirmation that this device is not, and likely never was, designed to be a true Quest competitor.

  • “The question isn't is the price good for the tech included,” wrote NPD executive director and game analyst Mat Piscatella. “[T]he question is will anyone beyond the core niche want to spend that kind of money regardless of the tech. The way down this road is well traveled.” Piscatella pointed out that the original PSVR headset never attained a double-digit attach rate, meaning fewer than 10% of the roughly 100 million PS4 owners at the time had bought the device when Sony announced in 2020 that it sold 5 million units.
  • Sony has sold only 25 million PS5 units, so it will likely take many years for the company to achieve similar results with PSVR 2.
  • Piers Harding-Rolls with Ampere Analysis said the challenge will be “convincing lapsed VR gamers who bought the original PSVR for the tech novelty factor to buy again.”

Sony wants its own premium PlayStation enthusiast market. One key difference between PSVR 1 and its successor is Sony’s direct-to-consumer strategy. At launch, the headset won’t be available at major retailers and instead will be sold through preorder via Sony’s own website.

  • Sony is targeting customers who have built their gaming identities around the growing PlayStation ecosystem and will line up to buy direct, in many ways similar to Apple’s approach to selling accessories, subscription services, and software to iPhone owners.
  • “They want the customer relationships and all of the data that comes with managing sales directly with consumers,” said Baird analyst Colin Sebastian in an interview with “Long-term, I don't think they necessarily see a big role for retail if their platforms are largely virtual and their services are managed online and through the cloud."
  • Last quarter, Sony said around 90% of all software revenue came from digital sales and add-ons like in-game purchases.
  • Sony now has a PlayStation-branded Backbone One mobile controller costing $100, a soon-to-launch premium gamepad called the PlayStation DualSense Edge for $200, and higher-priced PS Plus subscription tiers on par with Netflix’s priciest plans.

Competing with the Quest was always Sony’s biggest challenge. According to market researcher IDC, Meta has sold more than 15 million Quest 2 headsets and captured about 90% of the VR hardware market in the first quarter of 2022. Sony’s decision not to compete with a wireless headset of its own and instead target PlayStation enthusiasts may prove to be a shrewd one in the long term.

But it also feels like Sony is simply setting itself up for a PSVR 1 replay. Meta has proven that making VR cheap and wireless can help it break through to mainstream buyers, even if there has yet to be a killer app that justifies its growing metaverse expenditures. Meta is also buying up some of the most successful VR studios, many of which developed games for PSVR.

Sony, on the other hand, seems committed to a strategy of serving a more singular audience with disposable income and an early adopter mindset. With a new library being built from scratch and little money to be made on developing for a fledgling platform, consumer and developer enthusiasm for PSVR 2 is at risk of drying up long before there's a critical mass of PS5 owners to sell to.

— Nick Statt

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“Ultimately, we felt that while incorporating ethnic diversity into Valisthea was important, an over-incorporation into this single corner of a much larger world could end up causing a violation of those narrative boundaries we originally set for ourselves. The story we are telling is fantasy, yes, but it is also rooted in reality.” — Naoki Yoshida, a producer on Square Enix’s upcoming Final Fantasy XVI, responded to an IGN question about the lack of diversity within the game’s roster using a now-familiar crutch.

“It was a little bit of a good finish at the finish line, and that classic runner's mistake of tripping and stumbling as you come across the finish line and we've got to recover there. The burden is on us … and the team is very focused on that right now.” — Matt Booty, the head of Xbox Game Studios, gave a candid response on the “Friends Per Second” podcast last week about the beleaguered launch and ongoing state of Halo Infinite.

In other news

HBO’s “The Last of Us” will arrive early next year. The new series will drop on Jan. 15, HBO confirmed after a leak of the premiere date showed up on the HBO Max app and website in the U.K.

“Stranger Things” is coming to VR. Netflix has partnered with Tender Claws, the studio behind Virtual Virtual Reality, to launch a Stranger Things VR game in late 2023.

Square Enix isn’t giving up on NFTs. The Japanese publisher last week announced a new game called Symbiogenesis, an “NFT collectible art project” that will launch on the Ethereum blockchain.

Apple is building a live video ad network. The company is working on adding TV-like ads to its MLS soccer livestreams.

Call of Duty: Modern Warfare 2 sails past $1 billion. The latest game in Activision’s shooter series has sold more than $1 billion in its first 10 days, making it the fastest-selling game in franchise history.

PlayStation’s subscription business is shrinking. Sony reported earnings last week that revealed its PS Plus platform has shrunk since this summer, when it launched new service tiers. But thanks to higher-priced offerings, revenue is actually up.

The Candy Crush drone ad didn’t go over well. Mobile giant King tried an unconventional marketing schtick last Thursday by flying 500 drones to form the Candy Crush logo over the NYC sky. In true New York fashion, lots of people hated it.

YouTube Shorts are coming to the TV. The short-form format will be available on most smart TVs and game consoles in the coming weeks. We first reported about this in August.

Marvel Snap is a fair, generous, and genius mobile success story

Over the past week or so, I’ve played close to two dozen hours of a single game. Not an immersive RPG, battle royale title, or a grindy looter shooter, but a mobile game called Marvel Snap. Created by lead members of Blizzard’s Hearthstone team, Snap is an approachable digital card game within an astounding level of depth.

Snap fits into your life. What makes the game so compelling is how both bite-sized and dynamic it feels. Every game takes only six turns, letting you slide one in during any five-minute break throughout the day. But if you have the time, it’s easy to get lost in deep play sessions.

  • Each game features a random set of elements you must take into account when playing an opponent, keeping the gameplay fresh and your senses on high alert as you try your best to outmaneuver the enemy’s strategy.
  • Snap also has a wagering system, whereby “snapping” in the middle of a match can raise the stakes for how many points you earn, or lose, at the match’s conclusion.
  • “When we were thinking how we wanted to forge [Marvel Snap], [we thought] ‘Hey, what if a game could be super strategically deep, and what if we could also somehow make it, like, three minutes long?’” Yong Woo, Snap’s chief production officer and co-founder at developer Second Dinner, told The Verge. The team, in fact, succeeded.

Snap is a master class in monetization. Far and away the most generous part of the game is how fair and rewarding it feels for a free-to-play title.

  • The designers at Second Dinner have made a free-to-play game that doesn’t feel like it's encouraging you to spend real money at every turn.
  • Instead, Snap uses a clever system of incentives and timed rewards to ensure you don’t have to spend a dime to feel rewarded for your time.
  • If you want to spend money, you can do so on alternative card designs and a currency that helps you unlock new cards faster. But Snap also features a rewarding battle pass and seasonal events for earning those items organically.

Snap is far and away the most engaging mobile game I’ve played in ages, and I’ve already made room for it as a part of my daily routine for hopefully many months or perhaps even years to come. It’s well worth a try.

— Nick Statt

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