Sony is expecting its PlayStation VR (virtual reality) headset to sell "hundreds of thousands" of units after its launch Thursday and the company is ramping up production capacity to deal with the expected demand, the European president of the electronic giant's gaming division told CNBC.
PlayStation VR is Sony's first foray into virtual reality and needs to be linked to a PlayStation 4 to work. Sony is hoping the $399 device will help continue the strong momentum its gaming unit has enjoyed amid a slowdown in other areas such as smartphones.
Jim Ryan, president of Sony Interactive Entertainment Europe and president of global sales and marketing at Sony Interactive Entertainment, told CNBC on Thursday that the company is expecting strong sales.
"We know from the data we have from pre-orders that the interest we have is significant," Ryan said in a TV interview, adding that at launch, sales will be in the "many hundreds of thousands".
PlayStation VR could sell around 2.6 million units this year, according to SuperData research. Sony is a strong position given that it already has an install base of over 40 million PlayStation 4 consoles, so even a small take-up of the VR headset could bring in additional revenues for the gaming unit.
But with demand strong, Sony will need to keep up with strong production and supply, something that has been taken into account.
"We know that the replenishment cycle is a good one, production is going exactly as we anticipated. We have made decisions to further increase capacity at the back end of 2016 and into 2017, so there are going to be a lot of PlayStation VRs around the world, whether that's enough to satisfy the demands of the market, we'll see," Ryan told CNBC.
But PlayStation VR will face a number of challenges at launch. Firstly, the $399 price is not inclusive of the hand controllers and camera needed for the headset to operate. And it also does not include the actual PS4 console.
Sony also said it's releasing 50 games, but many of these are not full titles. Instead they are what the company calls "experiences". Some do not even require the player to do anything. This will make the PS VR a product for early adopters and could initially hamper uptake.
"I think that's one of the most worrying things about Sony and VR is that there is no killer title. There is no title where a gamer will say I need a complete VR system otherwise I can't play this game," Serkan Toto, chief executive of game industry consultancy Kantan Games, told CNBC by phone.
Ryan however said that the mix of games will appeal to a wide-range of gamers.
"We think there's a really great range of value propositions…there are full game experiences, 'Final Fantasy,' there's 'Batman,' there's 'Star Wars,' but at the other end, there are smaller, lighter gaming experiences priced accordingly, very affordable. For us, it's really important to have that great range of gaming propositions on PlayStation VR," Ryan told CNBC.
It's a big market for Sony, with consumer spending on VR set to hit $3.3 billion by 2020, according to IHS. Facebook's Oculus and HTC are just two players among many vying for a slice of the pie.
The PlayStation 4 has been the company's most successful console and has beaten Microsoft's rival Xbox One. Sony will be hoping the PS VR can attract new users to its consoles and continue momentum in one of its fastest-growing divisions.
At the same time, Sony has moved to position the PlayStation 4 as an entertainment platform with users able to access streaming services like Netflix, as well as PlayStation's own online store. Ryan said that beyond games, Sony is working with other content producers to bring non-gaming experiences to the PS VR.
"With PlayStation VR the philosophy is that it's first and foremost a gaming platform but that equally people will expect non-gaming experiences on PlayStation VR, we have a number of those at launch and many more will follow," Ryan told CNBC without elaborating further on who the potential partners could be.
The release of the PS VR also comes ahead of Microsoft's Xbox "Project Scorpio" console next year which will have VR capabilities. And the price point – although high when combining the camera, controllers and headset – is still below the likes of the $599 Oculus Rift, or $899 HTC Vive which could give it and edge.
"We think to be able to offer PlayStation VR…at $399 dollars it's extremely affordable and we think the take up is going to be massive," Ryan said.