Sony’s Games guru races Zuckerberg for lead in VR

Bloomberg

Shuhei Yoshida has reason to celebrate. The head of Sony Corp.’s games development is six weeks away from the introduction of its first virtual-reality headset and demand seems promising. The $399 headset is sold out at retailers around the world, even though most customers haven’t been able to try it out.
But on a rainy evening in Tokyo, the 52-year-old is openly fretting. He says it’s almost impossible to predict how customers will react to the new technology because it’s so different than anything that’s come before it. The closest parallel he can think of is when he helped introduced the first PlayStation game console more than two decades ago. “To be honest, we don’t know what demand will be,” said Yoshida, sitting in a conference room at Sony headquarters beside a high-powered demo set for the new devices. “In terms of disruption, this is the most since PS1 and perhaps even greater than that.”
Virtual reality has caught the attention of everyone from Facebook Inc.’s Mark Zuckerberg to President Barack Obama, but it’s commercial viability is still an open question. Facebook and Taiwan’s HTC Corp. came out with headsets earlier this year and sales have been modest.
Yoshida is determined to create the first breakout hit. Sony is pricing its hardware well below rivals’ and can build an initial user base from the more than 40 million PlayStation 4 owners. The company is also planning to go far beyond games — into music, sporting events, even medicine and virtual education.
Yoshida’s caution is understandable though. Chief Executive Officer Kazuo Hirai is increasingly relying on the games division to turn around Sony, which last year posted its biggest net profit since 2008. Yoshida has to strike a balance between producing enough VR headsets for the anticipated demand without overshooting and blasting a hole in the group’s finances with unsold inventory.
Analysts are optimistic. Goldman Sachs Group Inc. estimates Sony will sell at least 1.5 million headsets this year, well ahead of its primary competitors despite starting months behind. Next year, Sony is projected to hit 3 million devices, three times as many as HTC’s Vive and six times Facebook’s Oculus. The analysts cite “attractive pricing vs. peers and also the availability of various exclusive content” as reasons for Sony’s anticipated edge.
The demo at Sony’s headquarters gives a glimpse of the future. In `London Heist,’ the user plays a gangster in the passenger seat of a car racing away from a crime scene. As a square-jawed driver chatters in a thick Cockney accent, the player can open the car door or toss soda cans out the window. Then an enemy gang on motorcycles roars up behind the car. The player grabs an Uzi to fight back and reloads by jamming an ammo clip in one hand into the gun held in the other. The sensation is far more realistic than current games.
Heart-thumping action is Yoshida’s specialty, but he’s eager to talk about the potential beyond first-person shooters and simulated racing. The headsets could be used for virtual education, where students unable to physically attend can see their teacher and classmates as if they were in the same room.