PlayStation bets the farm that 'true gamers' are enough to sell its new machine

- Sony Computer Entertainment America president and CEO Jack Tretton tells CNBC that the reason people will upgrade to its PlayStation 4 is because "there are more gamers than there have ever been before," and those gamers want triple-A titles enough that they'll justify buying a new console to play them. "I think people are willing to pay if they see the value there, and I think there's more choice than ever before for consumers," he said. Tretton's comments left us scratching our heads and wondering if he's living in some parallel universe where the retail video game console business is thriving. Wasn't it just last year that we saw a 24 percent decline in retail video game sales in the U.S. (and numbers even worse in the UK)? Wasn't it last month that the Wii U saw a performance so miserable that its third month sales (when averaged per week) were worse than what any of the previous generation's machines had ever seen in the eighty-six months since its first machine, the Xbox 360, debuted? And what of Sony's own Vita? If players purchased expensive machines based on games with high production value alone, why did Sony have to reduce its sales forecast twice since launch? Consumer habits are changing. The NPD Group's annual report shows that in the United States, money is shifting away from retail and toward digital as Americans continue to embrace smaller, cheaper digital content. According to a recent report by SuperData, the money spent on microtransactions of free-to-play games in the United States rose 42 percent last year. And yet, when confronted with this, Tretton seems to see these games as little more than a distraction. "I think those are additive experiences. They demystify gaming. They bring people in with a bite-sized experience. But ultimately I think people migrate up the food chain," he said, though he did admit that the PlayStation 4 will support free-to-play games. "Conversely, if you're someone who considers themselves a true gamer, and wants to play the most powerful devices and the most deep enriching gaming experiences, you're not going to find yourself migrating down the food chain, other than to maybe kill some time or to complement that core gaming experience." Tretton's comments echo those made by Sony's Shuhei Yoshida in an interview with Gamasutra Thursday morning. According to Yoshida, "Once we provide something great, there will be more and more people who are willing to spend money." It would appear, then, that Sony is banking its future as a console maker on the notion that big, triple-A content alone is enough to convince enough people to buy a PlayStation 4 to make it a worthwhile business. When confronted with the thought that smaller games are taking market share away from consoles, two Sony executives have gone on record now to say that the quality of its new console games alone will, somehow, reverse that trend. And according to Tretton, the expanded video game market (he says there are now "a billion gamers worldwide") that is now spending money on games thanks to the accessibility and appeal of smartphone titles will, eventually, "migrate up the food chain" to become traditional triple-A console game players. They will, according to his logic, purchase expensive new machines (Tretton didn't even flinch when a CNBC reporter suggested the PlayStation 4 might be $600) in order to graduate from Angry Birds to Killzone. And with its PlayStation division's operating income down 86 percent last quarter, we're not sure that's a gamble Sony can afford to make.