IndustryGamers - Informing the Games Industry

Microsoft Building 2 Million Kinects a Month, Will Sell 4 Million This Holiday, says Analyst

Posted August 12, 2010 by James Brightman

The battle of the motion gaming platforms will certainly be an interesting one to watch this holiday, and despite the fact that Microsoft's Kinect costs $149, Lazard Capital's Colin Sebastian has become even more bullish on the camera system lately. Based on channel checks, he today raised his overall unit sales estimate for Kinect. 

"Based on updated channel checks, we believe that production quantities of Microsoft’s Kinect motion sensor could exceed our original expectations — suggesting to us potentially more aggressive launch plans for the device. Specifically, our checks indicate that the Kinect build is on a pace of ~2M units per month, and we now believe that the mix of Xbox 360 shipments for the holidays will be more heavily weighted toward the Kinect bundle. As such, we are increasing our Kinect unit sales expectations for C4Q to 4M worldwide, up from 3M units previously," Sebastian stated. 

He continued, "While launching at $149 as a stand-alone device, we believe the better value is the Xbox 360 bundle for $299. We continue to believe that $99 would be a 'sweet spot' for Kinect, and production quantities suggest that Microsoft may be leaving open the possibility for price promotions on Kinect next year."

The Kinect device is a big bet, and a risky one, for Microsoft. As such, the company needs to support the new camera with a big campaign. Sebastian expects to see very heavy marketing in the fall. "We believe that Microsoft is preparing a significant marketing and advertising campaign for Kinect, coinciding with the device launch," he said. "Games using the Kinect sensor will initially include fitness, dance, sports and kart racing, suggesting that Microsoft is targeting a casual (Wii) audience. While Microsoft may have other applications planned for Kinect beyond games, we assume the bulk of production near-term is planned for the Xbox 360. Over time, we also anticipate that motion sensors will show up in connected TVs, living room PCs, set-top boxes and other consumer devices."

Interestingly, Sebastian believes Sony's PlayStation Move will in some ways be an indicator of how well Kinect can do. "We note that Sony’s Move launches in North America on Sept. 19, and although without as much 'buzz' as Kinect, Move should provide an early indication as to consumer demand for the next generation of motion controllers," he said.

James Brightman has been covering the games industry since 2003 and has been an avid gamer ever since the days of Atari and Intellivision. He was previously the EIC of GameDaily Biz.