Patcher: PS3 to Win Console War - News
by VGChartz Staff , posted on 07 May 2007 / 1,787 Views
| WMS: PS3 to 'Win' Console War Because of Blu-ray Wedbush Morgan Securities has issued a report on the video game industry for 2007 and beyond. Huge growth is expected, and analyst Michael Pachter believes the PS3 will ultimately win (just barely) thanks to the Blu-ray format, which he expects to defeat HD DVD. |
| In a massive 207-page report on the interactive entertainment industry for 2007, Wedbush Morgan Securities analyst Michael Pachter notes that while "the main driver of console hardware sales is the quality and quantity of the underlying available content," the high definition format war between HD DVD and Blu-ray could be a key factor in determining the console war outcome.
"Notwithstanding the efforts of the three console manufacturers to deliver compelling exclusive content, we expect the ultimate outcome of the console wars to be decided by the motion picture studios. Should the studios embrace Sony's Blu-ray standard for high definition DVDs, we think Sony will gain an insurmountable advantage over Microsoft; should the studios embrace Sony rival Toshiba's HD-DVD format, we think that Microsoft can maintain its first mover advantage and will dominate software sales for years to come," Pachter explained.
The wildcard, he said, will be "hardware manufacturers' ability either to develop content internally or to secure third-party commitments for software designed exclusively for a single platform." The playing field in this area is likely to be even for Microsoft and Sony, he said, while Nintendo will probably have the largest portfolio of exclusives.
So how does Pachter see the console war ultimately playing out? Despite Sony's early struggles with the PS3, he still believes Sony will come out on top.
"We expect the dominant console at the end of the next cycle to be the Sony PlayStation 3 (PS3), primarily due to our assessment that Sony will win the high definition DVD format war," he said. "However, we expect Microsoft's Xbox 360 to enjoy a first mover advantage for the next two years, capturing approximately 44% of U.S. and European combined next generation hardware unit sales by the end of 2007. We forecast the PS3 and Nintendo's Wii to capture approximately 21% and 35%, respectively, of the next generation hardware market in this same period. We forecast the Wii to take the lead in 2008, with 39% market share, and expect the race to even out in 2009, with all three console makers capturing between 30 – 37% of the overall market.
"Ultimately, we see Sony 'winning' the console war with 36% of the market, with Nintendo 'capturing' second place at 34% and Microsoft finishing third at 30%. We believe that this is essentially a dead heat, and each manufacturer will have sufficient market share to generate significant profits. These estimates do not include market shares in Japan, which we expect to be dominated by Nintendo (51% through 2011) and Sony (44%)." ------------------------------------------------------------------------------------------------- Patcher's prediction is quite interesting because of the bold claims it makes at various points. For instance, he expects Nintendo to win Japan throughout the cycle, but does not expect Nintendo to win the US or European market (at the cycle conclusion) despite attaining 39% marketshare in 2008. Patcher also seems to think Xbox 360 can hold 5% of the Japanese market by the end of the cycle (2011-2013?). Considering the Japanese market of last generation consoles was well over 25 million units (roughly 22 million just for PS2!), this seems to imply that Xbox 360 will sell at least 1.4 million units, since the last gen consoles in Japan (PS2, GC, Xbox) will end up selling around 28 million units. Given market expansion and population growth, 5% of a 30-35 million unit market would be 1.5 to 1.75 million units for the 360 in Japan. Considering the sales of the original Xbox, Patcher seems to believe the 360 will sell 2-3 times better in Japan - quite the impressive feat considering 360 had worse launch week numbers than Xbox. Additionally, a (combined) 36-34-30 split of the USA and European markets would be historic. To date, over 120 million consoles (PS2,GC,Xbox) have been sold in those two territores. By the end of the PS3-Wii-360 generation a total of 170 million consoles sold is not unreasonable, giving Sony a worldwide total of 78.7 million PS3's sold (using 35 million for Japan and 170 million for the rest of the world), Nintendo a worldwide total of 75.65 million Wii's sold, while Microsoft's worldwide total would be 52.75 million. As stated in the linked story, Sony would win the console war in this scenario, although it would lose approximately 50 million PS2 customers, despite a market that expanded. Nintendo would have it's most successful console ever - with Wii selling 3x more than Gamecube, while Microsoft would double the number of consoles sold from Xbox to 360.
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People still make these predictions
In all honesty, never beleive them. Many were saying Wii would be 3rd, but right now it's ight behind 1st. these are never reliable, and usually ALWAYS forget key factors.
hmm intresting approach scorptile......................to an extent you do bring good point.............i mean maybe there might not be another fase of disc and dvd might be around even 5 to seven years from now..........i dunnoo guess were gonna have to waite and see
i like how alot of ps lovers say that the ps2 sales were not cause of hte dvd player. in fact that is what it is and when it broke they needed to replace it so there was another sale. on average per ps2 sale id say 2/3rds was cause of a broken ps2 from before. dvd players were huge when the ps2 came out and the ps2 was actually cheaper at the time so they sold lots. and as i had said before if the wii would've had a dvd recorder built in it would be even more popular then it is now. blueray and hd-dvd wont be a factor this gen just cause no one cares only people with hdtv's that are anal about their picture quality. and that is only half of the owners of an hdtv. but i think regular dvd's will still be popular for many many many years to come and hddvd will be a fad just like laserdiscs were.
i think PS3 can smoke 360 because of weak overall japanese sale, but i think Wii beat ps3 by a small margin. 360 will be last, but picked some market share.
you know what if ps3 can come up with the great exclusives games and the price-cut in time before its tooooooooo late than i would agree 100% PS3 can smoke 360 and Wii out of the market within a couple of years.........right now it has no "good" games and its worth $700 even with that said it sold close to 3.5 to 4 million console...thats in less than six months............so if those two probems are fixed......imagine how well it can doo.......... and not that i care i mean i love my gears of war on 360 and zelda on Wii but can't waite till sony can come out with its new big hits........laters
[quote]I'm so happy for PS3 owners![/quote]
Thank you! ;-)
IMO it's far too early to diss the PS3 in this race. Think of the PS3 as a big fuel truck, starting slow, but once it gets going next christmas it will be hard to stop and will keep on moving and moving. Well, at least I hope so! :-)
I'm so happy for PS3 owners! Finally somebody who doesn't think the console is going to be The Next Gamecube.
Nintendo is the great winner of this gen. Even if this is gonna be true, nintendo will sell 3x as much as Gamecube and even 15 million units more than the legendary NES.
While Playstation is AT LEAST going to lose approx. 40 million units.
when a console war is decided by what format is chosen (HD DVD or Blueray), it is no longer a console war. If the PS3 wins as a result of Blueray and not through having good games, then I will not label it a console but a Blueray player. Atm, thats how its looking to turn out, everyone i know that wants one really just want it to play Blueray films cos its cheaper than other players, theyre all sorted for consoles already; while i know not everyone will buy a PS3 for the same reason, a lot of people will buy it just for blueray compatibility.
i predicted (on the ONM site....yes i am a nintendo fan and yes i have a wii) that in the end the total hardware sales would be something like this;
PS3: 70-80 million
Wii: 65-70 million
360: 30-40 million
i predicted this in about september or october i think (can't be sure because ONM has deleted most of the topics from then) and i think they look quite similar to Pachters predictions, despite him being an analyst and me guessing months before him.
though from some peoples comments he doesn't seem very accurate, so maybe it's not a good thing my thoughts were similar to his predictons.
Pachter hasn't been right about anything yet. Why now?
Is losing over half your market share from the previous generation a win?
Pachter is always off in his predictions. Why does anyone pay him any mind?
TheSource: Sorry for my out burst, I do agree with you, I think I just get annoyed because I hear many people bring the launch week comparison and assume the 360 will not even sell xbox numbers, which is a false picture. I do think they'll have a window to prove they can compete in Japan after Lost Odyessy is launched, but they have to really push it, and with ps3's lineup kick in stride by then it don't look likely to break out. So I'd project similiar numbers to you actually.
I think that the PS3 has a good chance of winning the console war, but I don't think that it is going to be SOLELY because of the blu-ray capabilities.
Sony is also going to have to work on the manufacturing price, PSN, HOME, keep putting out good games, and so forth. It's the whole thing, not just one...
Well… In accordance with these analysts to times behind… portable PSP was today it well to be leading the market… Had to its superior hardware to the DS Lite… However, it is not what it is happening… DS Lite absolute leader… For me, the film is if repeating… these analysts they are saying the same things on Wii/PS3/Xbox 360 that they said regarding the PSP/DS Lite.
From http://www.gamasutra.com/php-bin/news_index.php?story=13814
{Patcher says:} We believe that the Xbox 360 and the PS3 are far more similar than their predecessors were," says Pachter, "and believe that the economics of game development will serve as a disincentive to third party publishers to offer exclusive content for either console."
"In a perverse way," he continues, "the similarity between the two platforms will likely serve to lower the costs of porting software from one platform to the other, and we anticipate that virtually every third-party title produced for one will be produced for the other."
That lack of differentiation, Pachter concludes, will give the Wii an initial competitive advantage, as by nature of its control mechanisms, publishers are far more inclined to create separate SKUs. Scoring that content exclusivity is the "wildcard" in next generation console sales, and Nintendo's particular advantage, he says, is its "deep library of internally developed games/brands," concluding, "we think that Nintendo’s Wii will gain the greatest share of the hardware market in 2007."
However, while the analyst says Sony may struggle to secure third party exclusivity, he does expect that a combination of blockbuster internally-produced games, the growing installed base for the PSP and continued robust PS2 software sales will make up for the third party shortfall.:
We believe that the Xbox 360 and the PS3 are far more similar than their predecessors were," says Pachter, "and believe that the economics of game development will serve as a disincentive to third party publishers to offer exclusive content for either console."
You know, Danman makes a good point. If all three consoles do well and "win" the war, then imagine what it will do for gaming? How many gamers will be able to bask in something great? Not to mention it'll set a far less predictable console war in the future (although, I don't think anyone predicted the Wii was going to be as popular as it was). Then developers may be willing to share the diversity instead of going for what looks to be the obvious choice. What I mean, developers expected the PS3 to do the best, so they started developing for that system. What happened? The Wii came out on top and now they're behind in development. If all three consoles do well, they may be willing to focus on all the consoles in the next race rather than just going with one.
On the hardware side, I agree that Blu-Ray is what can really make or break the PS3. If Blu-Ray doesn't turn out to win over HD-DVD, then the people who bought a Playstation 3 for the Blu-Ray player will be disappointed. It'll make the $600 price tag more difficult to swallow too (because I still don't think the price will drop any time soon) if the Blu-Ray player is useless. If Blu-Ray doesn't win the new format war it won't mean the end of the PS3, it'll just mean less support. Developers are already having a hard time developing for the Blu-Ray because its new. That's where many people think Sony made a mistake. When they decided PS2 games were going to be on DVD's, the DVD had established itself in the market and we knew that's where the future lied. With Blu-Ray it's different. It's completely new, developers don't know much about developing on it so it costs more money to do so. With the PS3 not selling so well right now, it's not a surprise they're losing exclusives. Devil May Cry 4, for example. So much money. CAPCOM wants to make that money back, but are they going to do it by keeping it a PS3 exclusive? They probably don't want to go multiplatform, but they will if it means they sell enough copies and make enough money to develop another game afterwards.
But this report doesn't look at the software line up. Come on, it wasn't the hardware that carried the PS2 to victory. Sure, there were people who bought it for a DVD player at first, but by all accounts if that was true, sales should have started being sluggish by now (and besides, how many people DON'T have some kind of DVD player now?). You can't tell me that the games didn't make the PS2. In the end, gamers want games. You can have all the technology in the world in your gaming system but it won't matter if the games that come out on that system suck, or if the good games are too few and far between (as far as I'm concerned, that was part of the Gamecube's problem). After all, the DS is outselling the PSP. And why? Because the DS has good games that people want. The biggest complaint I hear about the PSP is that there "aren't enough good games".
In the end most gamers are really just that: gamers. They could care less about whether or not their system can play DVD's CD's. Because in the end a gaming should be that: About the games. This means that even Blu-Ray doesn't work out, the PS3 could still be a hit if good developers stick around. But looking at the sales of the PS3 software... Sony still has a ways to go.
I still think it's a little too early to tell how things will turn out though. I'm sure predictions will change. I don't have one yet, I want to wait until holiday season and early 2008 before I start making predictions.
End of the cycle? 2011? Huh? Perhaps we will see new consoles then or in 2012, but PS3 will still have plenty of steam left in it if its first two consoles are any indication.
Patcher is right.. it will be a close race.. between Nintendo and Sony!.. No way in hell is 360 going to keep 30 percent once PS3 and Wii sales EXPLODE in 2008.... Price drops..games..new features... After Halo3 what's left? GOW2?.. Another 4 hour FPS? Quality games are coming but not on 360.. Microsoft should pull out of the console industry now and just become a software company.. Something in the end I beleive NINTENDO - 46 PCT SONY - 38 PCT
MS - 16 PCT..
Foo I have no doubt 360 will pass Xbox numbers in Japan - I think it is a given. But I have serious doubts that it will get close to 2 million users. I think a bit more than double Xbox numbers would be reasonable..1,300,000ish. It may seem picky to argue over a few hundred thousand units, but looking at is as a percentage of the 360 base, I think Patcher is way off here. Personally, I think the PS3 and Wii numbers are off as well, although I agree with his 1 to 3 ranking...
Everybody gets the Xbox/x360 in Japan sales wrong. don't be fooled by the original X-box's launch week figures. The thing was released late last generation and quickly fizzled out. While the X360 was released early yes with lackluster launch figures but it's life will pass beyond the original. And most importantly with the launch of Blue Dragon it has experienced a slight turn around. If you compare last week, week 73 for the X360 it sold 3,299 units while in week 73 of the xbox sold 967 units. On average week to week it's selling triple the originals rate. And at this point it only has about 100,000 units to go to catch up with it. at the 3,000 unit a week rate that's 33 weeks, and with Trusty Bell and Lost odyessy coming this year you can bet it'll be far beyond that by the end of the year. Blue Dragon help sell over 35,000 units in one week expect Lost Odyessy to at least sell 50,000 units. with those numbers the 360 can easily double the original's figures within two years. And if it catches on, it will drastically expand from there. And with Blue Dragon 2, Cry On and other titles coming there is no reason that it won't happen.
Yeah, I agree with Danman. Next console war should be more creative. Mistakes made this time around can be fixed, and both Sony and Microsoft can learn to reach out even more to the casual audience; assuming Wii does become the best Nintendo console. Microsoft will have grown larger in the industry. Sony... could learn that the average joe doesnt have 600+ dollars to invest on a console, and that a casual gamer isnt going to shell out that much just for PSHome. Its a great addition, but its not going to move consoles by itself.
WTFs wrong with you psmcx? You might want to try and add something usefull.
This is a great thing, if all 3 make huge profit it means gaming will so high that no body can predict. Wii have taken a huge chance this round and with carzy innovation and against the odds it payed off. Sony and microsoft will gave to get very creative with the next console. If this war has 3 winners then in the next round gamers will win new ways of playing with powerfull hardware. Simply put, gamers and consols have a very bright future.
Well, as a Wii owner myself, I think does sales are reasonable. I agree that the only thing that will drive SONY to win is if they win the format war. If they dont, Wii will still sell just as many consoles, but PS3 numbers will be less and Xbox360 will be more.
In summary, HD-DVD > Bluray then Wii will win.
Nice, just wish they go into detail ho launches of software like Halo of Gran Turismo affect the console war.
In aout 2 seconds Wii owners are going to explode on how this didnt mean anything nd how the strong sales of the wii and low price means it is going to win. Man they are soedgy this time around.
