Sony game unit says should hit PS3 target

CHIBA, Japan (Reuters) - Sony Corp's (6758.T) game unit said it was fairly confident of doubling shipments of PlayStation 3 game consoles to 11 million in the year to March, and may buy more software firms to boost demand for its console.

Sony Computer Entertainment (SCE) said earlier it had acquired British software developer Evolution Studios and its subsidiary, Bigbig Studios, for an undisclosed sum to strengthen its software lineup. Evolution created "MotorStorm," a million-seller title for the PS3.

SCE Chief Executive Kazuo Hirai also told Reuters in an interview that his firm may buy more software companies to create titles and stir up demand for the PS3, which has struggled since its launch late last year as rival Nintendo Co Ltd's (7974.OS) Wii has roared ahead.

Sony ruled the $30 billion global game industry for about a decade from the mid-1990s with its PlayStation and PlayStation 2, selling more than 100 million units of each, but it was a year behind Microsoft Corp (MSFT.O) in releasing its latest console.

A high price for the PS3 and scarcity of hit games have also hurt the Sony machine in its battle with the Nintendo console.

"We are planning various steps to support our software and hardware businesses ... I think we can do pretty good in terms of the target," Hirai said, when asked about an aim to double the 5.5 million units PS3s shipped the previous year.

Hirai said he had no immediate plan to cut the price of the PS3.

"I think about PS3 pricing every single day. It is that important a factor ... But I am not planning any immediate pricing action now," Hirai said.

SCE's pricing policy is closely watched, and the company had been widely expected to announce PS3 price cuts at the Tokyo Game Show 2007, which started on Thursday.

The game maker has packed the PS3 with cutting-edge technology such as the Cell chip, dubbed a "supercomputer on a chip," and the Blu-ray high-definition DVD player.

Those advanced functions make the PS3 capable of offering life-like graphics and high-speed downloading from the Web, but they have also driven up manufacturing costs.

A PS3 with a 20-gigabyte hard disk drive sells for 49,980 yen in Japan, roughly twice as much as Nintendo's Wii. Microsoft's Xbox 360 with a 20-gigabyte hard drive retails for 39,795 yen.

"HOME" LAUNCH DELAYED

The turnaround of SCE is important for Sony, which is in its final year of a three-year revival plan. The game division reported an operating loss of 232 billion yen for the year ended March 31, dragging down Sony's groupwide earnings.

The electronics and entertainment conglomerate said in May it expects the game unit to post an operating loss of about 50 billion yen for the current business year to March 2008.

Following the purchase of Evolution Studios and Bigbig Studios, Hirai said the game division may buy other software developers, but only after a stringent screening process.

"We wouldn't buy a company just because we can," said Hirai, who this year replaced Ken Kutaragi, known as the "Father of the PlayStation," as head of Sony's game division.

"Talks of an acquisition would emerge only when a company already has tight relations with us, its corporate culture is compatible with ours, its employees are working closely with us, and it can churn out strong software titles."

Hirai said in his keynote speech that SCE would postpone the launch of the "Home" virtual community service for the PS3 to early next year, the latest setback in its battle with Microsoft and Nintendo.

The 3D "Home" online service, in which players can create and "own" characters and content, was originally scheduled for launch this autumn. Hirai said the company was postponing the launch to improve product quality.

Ahead of Hirai's comments in the interview, shares in Sony closed down 0.9 percent, underperforming the Tokyo stock market's electrical machinery index .IELEC.T, which fell 0.5 percent.