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Sony Promises More Games in Order to Boost PS3 Demand

Reuters
Thursday, 21 Jun 2007 | 7:57 PM ET

Sony expects at least 380 new PlayStation 3 games to hit the market this business year and says that should rev up demand for the console that has so far lost out to Nintendo's wildly popular Wii.

There are about 150 games currently available for the PS3, including online titles.

Sony Chief Executive Howard Stringer said at the annual shareholders' meeting that the company will review its dividend policy once it has achieved its profitability target for the year to March 2008, raising the possibility of future dividend hikes.

"Attractive game software is the key to accelerate PS3 growth over the next year," Stringer said on Thursday.

Sony's game division posted an operating loss of 232 billion yen ($1.88 billion) in the past business year because of hefty start-up costs of the PS3, prompting investors to see the console business as Sony's biggest risk factor.

Nintendo Co. Ltd.'s Wii game console has been outselling the PS3 by three to one in Japan and more than two to one in the United States so far this year, according to game magazine publisher Enterbrain and research firm NPD.

A lack of attractive games has been widely cited as a reason for the PS3's relatively weak performance in addition to the fact that it is twice as expensive as the Wii.

More than 200 packaged software titles will likely be released for the PS3 in the year to March 2008, and more than 180 titles are expected to be launched over the Internet, Stringer said.

"PlayStation 3 going forward will be vital to our future and we'll succeed," said Stringer, the first non-Japanese to run the Tokyo-based electronics and entertainment conglomerate.

Sony aims to double its PS3 shipments to 11 million units in the current business year and reduce the game unit's loss to 50 billion yen.

Analysts say, however, that a wider selection of software titles alone is unlikely to turn the PS3's fortunes around.

"The PS3 so far has lacked games that hardcore gamers can enjoy. Many of the popular game series that were widely played on the PS2 have not been launched yet, offering them little incentive to rush to the store," Deutsche Securities analyst Kazu Ejiri said.

"Wider software availability sounds positive, but launches of unattractive software titles would not change the situation. We have to hold our cheer until we know which games will become available when."

Sony plans to launch the latest version of its popular golf game, "Everybody's Golf" in Japan next month for the PS3, and Konami is set to release the latest instalment of its blockbuster fighting game "Metal Gear Solid" by March.

Responding to a shareholder request for higher dividend payouts, Welsh-born Stringer said Sony management is willing to re-examine its dividend policy, but achieving its profitability target should come first.

Sony aims to hit a group-wide operating profit margin of 5% in the current business year, and a 4% margin for its electronics division.

In the past business year, when its earnings were hit by the massive loss at the game unit and costs to recall 9.6 million PC batteries, its overall operating margin came to 0.9%, and its mainstay electronics unit posted a 2.6% margin.

"Upon achieving our profitability target, we would consider whether to change our dividend policy," Stringer said.

Sony's annual dividend have remained at 25 yen per share for the past seven years.

Following Stringer's comments, Sony shares closed down 1.5% at 6,520 yen, underperforming the Tokyo stock market's electrical machinery index, which gained 0.49%.

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