Nintendo (OTCMKTS:NTDOY) has been killing it with the Switch, but it has also had a lucrative side business going for the past few years selling miniature versions of its older game consoles. Sony (NYSE:SNE) — a company that also has considerable video game heritage to draw on — is going to make things interesting this holiday shopping season. It just announced the PlayStation Classic, a $99.99 mini version of its original game console, complete with 20 built-in games and two wired controllers.
Introducing PlayStation Classic
Yesterday, Sony announced the PlayStation Classic, a miniature version of the console the company first launched nearly a quarter of a century ago.
The PlayStation Classic will be 45% the size of the original and it will ship with two wired replicas of its controllers. It connects to a TV via HDMI and is powered by USB — although in an odd move, Sony includes the USB cable, but not a power adapter.
The star attractions of the new consoles are its distinctly vintage video games. There will be 20 pre-loaded on the console, including Final Fantasy VII and Ridge Racer Type 4. Sony says all the games will be playable in their original format for that extra nostalgic kick.
Also nostalgic will be the price. At $99.99, including the games, the PlayStation Classic is much more affordable than a current generation console that starts at $200, with many games running $60 or more each. Look for it to arrive in stores starting Dec. 3.
Mini Consoles Turning Into Big Business
Nintendo started this whole mini retro game console market with the NES Classic, which arrived just in time to continually sell out and become one of the hottest items for the 2016 holiday shopping season. Gamers were after the retro games, while parents loved the affordable price and all-in-one approach. The success of the NES Classic led to 2017’s Super NES Classic.
And to show just how big of a business these mini consoles turned into, when Nintendo re-released the NES Classic this June, it was the best-selling game console in the world for that month, outselling the PS4, Xbox One, Switch and 3DS. What makes that even more impressive? The NES Classic went on sale starting June 29, so it only had two days to eclipse all other consoles that had been on sale for the full month.
Considering that these boxes can be made with low-end components, a bit of plastic and the code for games the company already owns, they have the potential to be very profitable, even at low price points.
Sony’s PlayStation division is currently the company’s biggest profit-driver. Last quarter it accounted for $750 million of SNE’s near $1.8 billion in profit. However, the PlayStation 4 is nearing the end of its lifespan. With a replacement still a few years on the horizon, that raises some concern about the prospect of declining PlayStation revenue that could become a drag on SNE stock.
Introducing the PlayStation Classic is a great way to boost the division’s revenue in the meantime. Last December, Nintendo sold 2.6 million NES Classic consoles in December in the U.S. alone. At $100 a pop, if Sony moves that many PlayStation Classic consoles this holiday season, that’s an impressive $260 million in revenue for the month to bolster what the PS4 brings in.
Get Ready for a Mini Videogame Console War
This Christmas, the video game console war will be playing out at two levels. The red hot Nintendo Switch, Sony PlayStation 4 and Microsoft’s (NASDAQ:MSFT) Xbox One will continue the battle for current generation system superiority. But Nintendo and Sony will also be fighting to scoop up nostalgic and budget-conscious gamers with the NES Classic and PlayStation Classic.
That is, unless Microsoft unexpectedly enters that fray with an Xbox Classic.
As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.