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Sony expects shipments of PlayStation 2 consoles to fall this year for the first time, it said Thursday. If it comes true, the prediction means Sony Computer Entertainment, Sony's game subsidiary, will see sales of both of its game consoles declining at least a year ahead of the launch of the third-generation PlayStation machine.

The Tokyo company, which reported its full year earnings Thursday, said shipments of PlayStation 2 consoles in its fiscal year 2002, ending March 2003, totaled 22.5 million units. That's up a quarter from the year before. Shipments of PlayStation and PSOne consoles totaled 6.8 million, which represents a decline of 8 percent from the year earlier.

For the current fiscal year beginning in April, Sony said it expects to see PlayStation 2 shipments fall by about 12 percent to 20 million units while PlayStation/PSOne shipments will drop more than 60 percent to 2.5 million. The prediction would put total shipments at below the levels recorded in fiscal years 2002 and 2001.

Next Generation Gaming

The company's next generation console, the PlayStation 3, is not expected on the market until at least 2004, if not later. Sony has not commented on when it is likely to be released but disclosed plans earlier this week to build semiconductor plants, along with Toshiba, to produce the Cell microprocessor that is expected to lie at the heart of the machine.

The two companies, which are jointly developing the chip with SCEI and IBM, are spreading their investments in the new factories over the next three or four years. Toshiba said it does not expect to begin mass production of chips until the latter part of fiscal year 2004, which is the period from October 2004 to March 2005.

Shipments of the PlayStation 2 are already falling in Japan, down 38 percent on the year, according to Sony's figures. In contrast, shipments in the U.S. and European markets rose 53 percent and 40 percent respectively. PlayStation/PSOne unit shipments rose in Japan and the U.S., by 20 percent and 13 percent respectively, and dropped 30 percent in Europe.

Software Sales

In the software market, Sony said shipments of PlayStation 2 titles jumped 56 percent to reach 190 million in fiscal year 2002 while those of PlayStation titles dropped by about a third to 61 million. For the current year Sony predicts total software shipments will hit 250 million units which represents a decline of 1 million units from fiscal year 2002.

PlayStation 2 software unit shipments rose in all geographic regions, up 25 percent in Japan, up 64 percent in the U.S., and up 70 percent in Europe, and PlayStation/PSOne software unit shipments fell in all regions, down 50 percent in Japan, 14 percent in the U.S., and 42 percent in Europe. A decrease in the number of in-house titles meant that, in monetary terms, Sony saw a decline in revenue from PlayStation 2 shipments despite the unit shipment gains.

Cuts in the price of the console, the result of an ongoing battle with Microsoft's Xbox, hit revenues from sales.

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