Analysts predicting a $500 PS3 and $249 PSP. has a story up on a report by Wedbush Morgan Securities titled The Definition of Insanity: Why The Next Console Cycle Will Start Off With A Whimper in which they predict that the Playstation 3 may carry a $500 price tag when it debuts. They also think the PSP will hit shelves at a $249 price point.

Sony sticker shock: $500 PS3, $249 PSP are possibilities – News at GameSpot

Probably the most exotic of the report’s predictions was a reference to Sony’s PlayStation 2 update. The report suggests that Sony is considering adding PSX and TiVo-like functionality to the PlayStation 3. If it does, the sticker price on the unit could climb as high as $500. The report states: “We expect Sony to introduce its next console with more functionality than its current console. We base this conclusion on the introduction of the PSX, planned for late this year. The PSX will include a Digital Video Recorder (similar to TiVo) functionality; broadband Internet accessibility; wireless LAN functionality; and DVD read-write functionality. These features add approximately $500 per unit to the cost of production, resulting in an expected launch price of around $700. By late 2006, we expect the cost to include these features to decline to around $250, but speculate that the next generation console, should it include these features, could debut at $500. At this level, we believe that many consumers will be alienated.”

It would certainly put a crimp in any plans I have to buy either console at the time of launch. As it was I had to wait several months before I could afford to pick up a PS2 at its intro price of $300 and had to give up the machine I had on reserve in the process. I’ll probably be taking a wait-and-see approach to the PSP regardless as I’ve never been a big handheld gaming fan. Still, the report isn’t all bad news as they’re predicting a 10% per year growth rate for the industry through the year 2010 with a 14.5% growth in revenues for console and handheld software in the next three to four years. With the trend towards more functionality in consoles (DVD player, TiVO functionality, Net access, etc.) the analysts expect to see the percentage of homes with at least one console rise from 38% during the 32/64 bit generation to 52% during the 128bit. PC gamers aren’t left out of the fun with a prediction that three titles due soon—Doom 3, The Sims 2, and Half-Life 2—will act as market movers and PC sales overall will be driven to “near record levels.” One bit of the report that I found somewhat amusing:

Ultimately, it will be female gamers, the increased spending power of “tween” gamers (8- to 14-year-olds), and aging but committed gamers introduced to interactive entertainment on the Atari 2600, for example, that will fuel the continued and dramatic growth of the industry.

Gee, I wonder which of those demographics I fall into. I’m going to have to practice my “young whippersnapper” rants about how these kids these days don’t know how good they got it with all their fancy schmancy 3D graphics and rag doll physics systems and recognizable celebrities in their games! Why, back in MY day we played video basketball with two stick figures! And the “ball” was a big square DOT! And the sound effects were like DONK! DONK! DONK! DONK! BA-DONK! If you wanted a cheering crowd you had to supply those sounds YOURSELF! And we were GLAD TO HAVE IT!!

Yeah, I’m going to enjoy getting old.

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