aturday March 24th will mark the PSPs second birthday in North America, and we talked with Sony’s Senior Marketing Manager John Koller about the current state of their handheld, as well as looked to both the past and the future.  What’s happening with UMD movies?  Why is Nintendo beating Sony out? Why haven’t we seen different colors, special editions, accessories, and software other countries have seen? What’s this about a PSP next?  Find out why Koller believes 2007 will be the biggest year for the PSP in our in-depth interview.

Game Informer: Looking back on the last two years, what are your overall thoughts on the PSP?

John Koller: I’m going to set it up by year, because it’ll segue way nicely into what we’re looking at for this upcoming year. We’re very pleased with the PSP business here and it’s really fitting in perfectly with what we have set out with from the beginning. As we’ve talked about many times, the PSP doesn’t directly compete against any product really that’s out in the market right now, just due to its full feature set. So the onus came onto us at SCEA to market that appropriately, and also to place the correct content behind each of those buckets. So that’s really been over the past year our goal, to really focus on the content for not only for last year but also for this upcoming year and in years to come, to make sure there’s enough content efficiently and really perfectly placed behind each of those feature sets.

We have as the end of March there’s going to be 250 plus games available, so the game side of the PSP has been really well-received by developers and publishers. We talk to third parties quite a bit; they’re still very bullish on the PSP. Obviously, on the first party we’ve got a number of great titles coming out this year, as does the third party—including some exclusive titles from the third party for PSP—so the game side I think is very buttoned up. Over the last year, we added TivoToGo, the year prior we had Location Free TV for kind of a TV bucket.

The UMD business has been fairly steady. As many people know, some retailers decided to get out of the business, several have gotten back in the business—actually last holiday. They saw the growth potential, and in fact we have seen some growth there in that category, so there have been a number of more efficiently targeted releases, less of the outside of the target demo type movie content and more of the action and comedy that really resonates well. Music has shot up. Music in our latest research is actually the #2 use for the PSP behind single-player games and it kind of came as a surprise. We knew music was going to be important, but how quickly it shot up the ranks and people using the music functionality when they travel or even at home has been a nice surprise. And then obviously the Internet and some of the other areas that are growth areas for us I think we’re going to look at this year to try and promote. We also are going to try and expand our target audience this year. Since launch, we’ve been focused pretty heavily on the older more travel oriented consumers someone who we’ve called “urban nomads” but they are the ones taking subways to work, commuting, or taxis, planes, whatnot. And we’re going to start trending a little bit younger. We’re seeing a lot of sales coming from the teen group–13-17–in fact that’s our #1 owner group now for the PSP. We’re really going to focus a lot of our marketing efforts on that area this upcoming year.

GI: Do think Sony as a company has accomplished its goals with the PSP so far?

Koller: Yes. There’s a lot of other goals we have for it. We talk about it here as the cultural product that kind of resides between our living room console products–PS2-PS3. The goal from the beginning with the PSP was to always be able to take your entertainment with you. Whether it’s games or other content, we’ve really worked hard on the Remote Play functionality between the PS3 and PSP to allow you to take that other entertainment with you that you may have stored on your PS3. From the overall perspective, we’re very, very pleased. We’ve achieved our goals for where we want to be right now with the PSP. We also realize that there’s a lot of room to grow and there’s a lot of things we’re going to be adding this year.

This year is going to be the best PSP year thus far. There’s just a ton of great things coming. I can’t talk about all of them today, but it’s going to be a fantastic year for the PSP.

GI: What do you think the PSP’s greatest success story has been in the last two years?

Koller: I think really carving out a new market space. When we first launched the PSP, there were a lot of very strong both mobile and portable gaming devices on the market. Some competitors and some indirect competitors had very long lineages as far as their successes. We were really able to break in and grab a new kind of consumer. Someone that didn’t want to necessarily play really the 7-or-8-year-old skewing games, also didn’t want to play games on their cell phones, but who wanted to be able to take their entertainment content with them. Also centering on the fact there were console quality games on the PSP that they could play. I think we have achieved that goal. We’re above the 7 million install base now according to the February TRST numbers, and we’re right on track with where we want to be. And it can only get better as we add both functionality as well as connectivity with our other platforms, because that’s the ultimate goal is to have all of these work very synergistically, and we started that with Remote Play.

GI: You said that you don’t really have any competition, because the PSP is pretty much a hybrid device of a lot of things. Obviously, in the past two years, when the PSP came out it was, “Is the PSP going to kill the iPod” or obviously on the game side for us, it’s always PSP versus DS. You’re obviously still competing for the dollars. You’re competing against Apple for people to use the PSP instead of an iPod for music, movies, and TV, and the PSP over the DS for games. I guess I’m a little confused by that statement.

Koller: I didn’t mean that we didn’t have competition. The PSP absolutely has competition. It’s just in terms of direct competition depending on who’s saying it. They’ll say that the PSP is a direct competitor to the DS or if it’s in the music-industry people, the PSP is a direct competitor to the iPod or the Zune or the Zen. It’s really not true that it’s a direct competitor just because of the feature set. The PSP certainly has a ton of competition, whether it’s mobile phones, the iPod or the DS, it really depends on your vantage point. And all of them have had successes, and I’m not taking anything away from any of them here, I think the one thing we want to emphasize here is the PSP resides in its own sphere in terms of what it offers. None of those other products offer the feature set that the PSP offers, in terms of console quality games, the ability to watch video, access the Internet, etc.

GI: You were talking about who you were initially targeting with the PSP. I’m definitely part of that demographic. Why do you think the teen group is really picking up on the PSP now? It’s not just North America—I’m hearing this is in Japan as well.

Koller: It is, and it is in Europe as well. I think it’s a combination of factors. The first is the games that are launching for it, particularly here. We have games, like we’ve seen with the SOCOM franchises or even with God of War it extends to that late teen group pretty strongly. Another aspect is the usage model, and we’re seeing some commuting and some traveling usage but we’re seeing much more intra-home usage, where people mostly high school/early college users either bringing it either dorm to dorm room or house to house showing friends what they have on their PSP or allowing them to play a game. They’re un-tethered from wires, and so they’re allowed to do that. It’s something we’re seeing a lot of. In fact, the majority of the people that we see in our research, and it’s really been this way since probably about a year to maybe 14-16 months ago. We’re seeing people using it inter-home. They’re using it at friends’ homes and bringing it to dorms rooms, etc.