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Friday May 23, 2003

Sony Computer Entertainment America Online Gaming Market Overview

Sony Computer Entertainment America Online Gaming Update

Sony Computer Entertainment America has received overwhelming consumer response since the company made online console gaming a reality in August 2002 with the launch of the Network Adaptor (Ethernet/modem) (for PlayStation®2), the gateway into the PlayStation 2 online arena. Due to consistent, high demand for PlayStation 2 online gaming, the company accelerated Network Adaptor fiscal year shipments for North America less than six months into the launch, doubling initial projections from 500,000 to one million units by March 31, 2003.

PlayStation 2 online games via a dial-up connection; 58% play via a broadband connection.

Source: Sony Computer Entertainment America

PlayStation 2 is the only next generation system to cater to the entire online community, regardless of their connectivity preference. Since its launch, the Network Adaptor has consistently ranked among the top 10 accessories sold, according to NPD FunWorld, a division of the NPD Group, an independent research group. In fact, sales of the Network Adaptor have more than doubled that of the Xbox Live Starter Kit in recent months.

With a PlayStation 2 North American installed base of nearly 19 million – almost four times that of the closest competitor – Sony Computer Entertainment America now also boasts the largest online console community. PlayStation 2 online users are playing an average of 3-4 hours of first party online games per day. As new online titles are introduced offering an increased selection of genres, Sony Computer Entertainment America expects the PlayStation 2 online community to continue to grow exponentially.

According to a recent Sony Computer Entertainment America survey, the overall game experience and the best online titles were top reasons consumers gave for choosing PlayStation 2 to explore online console gaming.

Source: Sony Computer Entertainment America

First and Third Party Title Development

Driving the impressive growth of the PlayStation 2 online community is an unmatched offering of quality online games. With continued commitment in driving creation of online titles, Sony Computer Entertainment America is revving up production of stellar online titles from first and third party companies. With the largest and most diverse software library, PlayStation 2 is known among consumers as the console of choice when it comes to games, a perception that now extends to the online world as well.

With 18 online titles currently available, PlayStation 2 offers the most diverse online library with titles spanning top genres, including action, sports, racing, and role-playing games. Additionally, PlayStation 2 online-enabled titles have consistently ranked among the top 10 best-selling titles, including SOCOM: U.S. Navy SEALs and ATV Offroad Fury™2 from Sony Computer Entertainment America, and Madden NFL™ 2003 from Electronic Arts.

"The enthusiasm shown by players is very encouraging -- we plan to build this capability into many more PlayStation 2 games from Electronic Arts."

Source: John Riccitiello, president Electronic Arts, commenting on PlayStation 2 Online

Sony Computer Entertainment America’s open model for third party developers offers numerous benefits, and more than 15 companies are currently developing content with onlineenabled features for PlayStation 2.

As one of the first companies to publicly announce support for the PlayStation 2 online initiative, Electronic Arts has seen much success with its sports franchises. As testament to this success, more than 400,000 fans have registered to play Madden NFL 2003 online, and the company has aggressive plans to introduce online-enabled titles for PlayStation 2.

The PlayStation 2 Online Community

The PlayStation 2 online community is one of the most active groups of online console gamers. The premier destination for online gaming, SOCOM U.S. Navy SEALs, an action adventure title that place gamers in the role of an elite Navy Seal, has become a key driver with more than one million copies sold in the first six months since its release. More than 30 percent of all players are active online, racking up more than 13 million player hours since the beginning of 2003. In March alone, online gameplay exceeded three million hours for this first party hit. On a daily basis, between 50,000 and 60,000 people host online sessions, with up to 13,000 users playing simultaneously for three hours on average.

SOCOM: U.S. Navy SEALs has sold more than one million copies in just the first six months since its August 27, 2002 release.

Source: Sony Computer Entertainment America

The intense camaraderie and competition afforded by interactive, online play is attracting new gamers to the PlayStation 2 online community. There is a clear shift in the demographics for members of the online community in comparison to the overall PlayStation 2 user base. More than 73% of registered members of the PlayStation 2 online community are between the ages of 18-34, whereas this demographic makes up only 47% of the overall PlayStation 2 installed base, illustrating the appeal of online games is helping to further penetrate a key segment of the PlayStation 2 target audience.

The Growing Interactive Entertainment Industry

The videogame industry is one of the largest and fastest growing entertainment industries, generating sales of $10.3 billion dollars in 2002 – a 10% growth over 2001, according to The NPD Group. This tops Hollywood movie box office expenditures ($9.5 billion) and consumer spending on DVD and VHS rentals ($8.2 billion). The music industry is only slightly ahead at $12.6 billion in consumer expenditures for 2002. Today, videogames compete with other forms of leisure time entertainment, such as television, movies, concerts and sporting events.

Videogame entertainment is becoming increasingly appealing to mainstream audiences, as evidenced by statistics from the Interactive Digital Software Association, the videogame industry’s leading professional organization.

Online Gaming Market Opportunity

As the undisputed industry leader, Sony Computer Entertainment America is committed to elevating the standards in gaming, as well as entertainment. As the first company to make online console gaming a reality, the company realized the significant market opportunity afforded by introducing the existing PlayStation 2 fan base to expanded features and functionality via the Network Adaptor.

As Internet adoption rates continue to increase, so will the popularity of online gameplay. It is expected that 18% of North American households will have an online-enabled videogame console by 2007, according to Forrester, February 2003. Additionally, it is widely accepted by industry analysts that PC gamers will shift to console gaming with the introduction of next generation systems built specifically for connected gaming, further expanding the market opportunity for Sony Computer Entertainment America in the near future.

- 60% of all Americans age six and older, or about 145 million people, play computer and video games.

- The average age of a game player is 28 years old.

- 43% of game players are women.

- In 2002, more than 221 million computer and video games were sold, or almost two games for every household in America.

Source: Interactive Digital Software Association

What’s Next for Sony Computer Entertainment America?

Sony Computer Entertainment America’s unparalleled leadership is attributed to the company’s ability to forecast and adapt to consumer entertainment trends. In the future, Sony Computer Entertainment America will continue to lead the industry by providing consumers with technological innovation that delivers on fulfilling their entertainment desires.