On September 1, 2009, we finally got it: a new PlayStation 3 priced at $299 (€299, £249, ¥29980). Of course, the impact was immediate with PlayStation 3 September sales for the first time beating both the Wii and Xbox 360 in the U.S. However, the big question is now that the price has come down to earth can the PlayStation 3 live up to its true potential in both the holiday 2009 season and going into 2010?
Since its launch in 2006, the PlayStation 3 had been a big, intimidating piece of equipment with a price tag to match. At a launch price of $600, the PlayStation 3 was simply out of the price range of all but the most dedicated video game player. Now at a slimmed down $300, the PlayStation 3 is priced to appeal to the masses. This could be the time for the system to shine.
When Sony announced at the May 2006 E3 that the PlayStation 3 would launch at a price of $599, DFC intelligence was extremely negative on the prospects for the system. In a June 2006 DFC brief entitled “Could Sony Go From First to Worst,” we stated the following:
Of course, the big problem with the PlayStation 3 is price, and in theory that can be easily solved by simply lowering the price. There is always that core group of consumers that will rush out to buy a new PlayStation system no matter what the price. So it would make sense for Sony to gain as much revenue as possible from those consumers before lowering the price. The vast majority of consumers will not be in the market for a new system until holiday 2007 or later.
Our concern is that 1) Sony’s hands may be tied in regard to price cuts and 2) Sony drastically underestimated the competition. The price of the PlayStation 3 does not exist in a vacuum and consumers will clearly look at the competitive alternatives. Right now both the Xbox 360 and Nintendo Wii are looking like much better alternatives than they did a year ago. Core PlayStation franchises like Grand Theft Auto, Final Fantasy, Dragon Quest and others are starting to appear on other systems. In short, we have seen absolutely nothing that would justify a $200 price difference.
Clearly our analysis held true. While Sony’s strategy was to crush Microsoft, and ignore what it considered to be an out-of-the-race Nintendo, consumers had other ideas. The lowest priced system, the Nintendo Wii far outsold the others. In North America, the PlayStation 3 was soundly outsold by the Xbox 360. Even in Europe, a market normally dominated by Sony, the Xbox 360 slightly outsold the PlayStation 3. The past few years, Sony’s very existence in the game business seemed to be in peril.
However, DFC has also argued that the video game console market is a marathon, not a sprint. Keeping a game platform around for the long term is an ongoing and difficult task. The main danger Sony faced was that the Xbox 360 would become embedded as the system of choice. Instead consumers flocked to the Nintendo Wii. The Xbox 360 had solid sales, but they have not been enough to give Microsoft anywhere near a breakout market position. In many respects, Sony was saved by the success of the Wii.
In May 2008, DFC forecasted the PlayStation 3 would become the number one system for software revenue in 2012. Our assumption was based on a price drop for the system to $300 in the fall of 2009 (at the time we also forecasted the Wii price drop to $200 in late 2009). However, the primary reason for our forecast was that sales of the Xbox 360 had not been strong enough.
Throughout 2007, Microsoft had trumpeted the second half 2007 software releases as “The Greatest Holiday Lineup in Video Game History.” Indeed, the Xbox 360 had an extremely impressive software library, plus a major price advantage over the PlayStation 3. With these advantages, the Xbox 360 had the chance to take a commanding lead over the PlayStation 3. In a July 2007, industry brief entitled “Second Half of 2007: Time for the Xbox 360 to Shine” DFC Intelligence wrote:
The pressure is on Microsoft to really drive sales of the Xbox 360 this holiday season. If Halo 3 and other products fail to drive Xbox 360 sales, the system will soon flirt with numerous unsavory scenarios, the worst of which is the danger of becoming a distant third in the video game market share battle.
Unfortunately for Microsoft, the needed sales lift didn’t happen. Sales were solid, but not commanding. Now the playing field has been more than leveled. The Xbox 360 is the most expensive system and it looks like it is the PlayStation 3’s turn for the spotlight. In our May 2008 brief we concluded:
The sales performance of the PlayStation 3 has been less than stellar, but Sony has survived. The Xbox 360 was unable to take advantage of Sony’s struggles to build the type of large lead needed to maintain a long-term advantage. The PS3 survived the onslaught of AAA Xbox 360 titles that hit the market from late 2006 through 2007. Halo 3 had great sales, but it did very little to enhance the Xbox 360’s overall position in the marketplace. The Xbox 360 is the system of choice for fans of high-action first-person shooter (FPS) games. However, for the 80%-plus of game consumers that DO NOT play FPS games, the Xbox 360 is not the system of choice.
15 Comments
November 1, 2009
Do Sony pays well for this kind of "article"? Or the author just love the brand and do it for free?
November 1, 2009
mojiba, if you actually were paying attention you'd see that it's written by a market research firm called DFC Intelligence. They know their stuff.
November 2, 2009
For now, I think DFC are right. I wonder what their take is on the Wii moving forward?
November 2, 2009
So let me get this straight, DFC Int feels that the sales bump that every other analyst is seeing as a one time thing will instead propel Sony past the current momentum of the 360 and maybe past the Wii? And that the current lineup of PS3 games will do this? So 3rd party ports of games that run on the PS3 at 720p with reduced framerate and occasionally mandatory HDD installs will compete with higher framerate 360 native versions that run at 1080p? Third parties have shifted away from Sony as the primary development platform.
And Sony's first party lineup of: a sequel to an Uncharted where the original didn't break a million copies, a God of War PS2 Best Of, and a Game of the Year edition of LBP which likewise sold moderately. These are the blockbusters? Especially when the 360 is starting to reach and surpass sales parity on traditional PC focused titles (upcoming examples include L4D2, Dragon Age, etc). Well I guess Sony has Gran Turismo. Oh wait, that's only out on PSP, meanwhile the 360 has Forza 3. Quite the stellar holiday lineup for Sony...
Sony's PS2 audience has been split by the Wii and the 360. It's gone. And I find it doubtful that Blu-Ray is going to save the PS3 in the age of the download. Blu-ray will never have the market that the DVD had. And it may very well be the last disc medium.
Sony needs to work less on Home and more on repairing relations with 3rd parties and developing a real, unified online platform for digital delivery and community building that can stand against Live. But to do that they need to focus less on hardware and more on software.
November 2, 2009
This place was on my bookmarks as it looked mature impartial jounalism, but, seeing all the positive news about Sony products and none or negative news about Nintendo and Microsoft, it is like any other disguised Sony propaganda site, but, your right, after all it's just "yours business". I'll look elsewhere a place where I can find news and not merchandise.
November 2, 2009
mojiba, you're seeing positive news lately because the news HAS been positive for Sony. We don't shy away from positive or negative news on any of the companies, but you clearly can't make that distinction. And again, this article is not even written by us.
November 2, 2009
I love my 360
November 2, 2009
James, don't worry about mojiba. He's obviously illiterate and lacks any sort of common sense. As for the article, it makes some interesting points but so does digital leaf. The PS3 SHOULD have outsold the competition in September due to their price drop. However, you'll notice that not even a price drop could get them to outsell the competiion 2-1 or 3-1, something that both the Wii and 360 have done to the PS3 several times over the last three years.
This holiday season will prove to be the most important for Sony. Now that all the console prices are in the same ballpark, it will come down to games. Bluray may be nice but it won't be a major deciding factor for the majority of people buying a video game console. I like the added wireless networking. That should be a major selling point but Sony needs to remind people about it.
And then we have the games. All three have some good exclusives coming this holiday season so reagrdless of which system you own you will have some fun times. Modern Warfare 2 will be the biggest holiday seller and will of course move the most units on 360. And that brings up another good point: even though the PS3 outsold the competition last month, third parties still made more money on 360 versions of their games. I have a feeling that this won't change thru out this entire console generation, meaning Microsoft will always have that ace up their sleeve. But it's still a good time for Sony with this momentum they have going. The question is: how long will it last?
November 2, 2009
@ THE 1 2 P: I agree with all of your points! Overall, I think Sony, particularly the PS3, is doing much better, but it still has a lot of ground to cover in order to "catch up" with 360. Also, I think Microsoft has another "ace up their sleeve" as you put it. That ace is called "Natal". Recent reports stated that Natal will be available to consumers in spring 2010 and it might be bundled with a regular 360 for only $50 more. Than combined with a slight 360 price drop (Microsoft is definitely capable of that) will make 360 an incredibly attractive product. That would be a PS3 killer, don't you think? Of course, Sony has its own version of interactive control system, but reports say that it is going to be a while until we will see that product on the market. As you might have noticed, I haven't even mentioned Nintendo, which has proven that is capable of designing a product that can take over the market overnight! Either way Sony has some serious adversaries to battle with. All of the sudden, that article James wrote 3 -4 months ago (should Sony abandon the gaming console business?) makes a lot of sense :)
November 3, 2009
By end of April next year, I think we will have a good idea of the PS3’s overall performance in this generation. It seems to me that by April 2010, Sony will have shown most of their cards for the PS3. I say April 2010, because FF XIII, God Of War III, and Gran Turismo 5 will all be out by then (MAG, Heavy Rain, and The Last Guardian may all be out by then too). These titles should enable Sony to capture a lot of the PS2 users back to their side. Knowing that the PS2 sold over 138 million units as of August 18, 2009, the potential to sell more PS3s is huge.
The motion controllers will enable the PS3 and Xbox360 to target casual gamers that have not been typical AAA game consumers. Unless Sony and MS come up with some very cool games to attract that target audience, the motion controllers will not be the silver bullet that people are talking about. However, looking at Sony's and MS's efforts, both have prepared a mix of 1st and 3rd party titles to align with the release of their motion control hardware so I would not place any bets based on the motion controllers alone.
Talking about catching up, the numbers speak best. The Xbox360 launched a year earlier than the PS3 and their total sales so far is 32.78Million units. Also according to VGChartz, Sony has sold 25.74Million PS3 units so far. As you can see Sony is not terribly far behind (not orders of magnitude at least) considering that they entered the game a year later.
November 3, 2009
I remember back in 2004/2005 before the 360 launched, fellow developers were saying that the PS3 was going to crush the 360 even worse than the PS2 vs Xbox. Some analysts said much the same. Then when both the 360 and then the Wii established themselves as market leaders of parallel markets, the attention shifted to when would Sony move back into 1st. Now its become when will Sony catch up to the 360. Outside of Japan, Sony cannot, and inside of japan its an irrelevant question. In Japan the issue is can the PSP catch up to the DS. If you remove the Japanese numbers from the PS3 and 360 installed bases, the PS3 looks even bleaker. And Japan is ceasing to be a relevant indicator of console trends, Japan as a market indicator is all about handhelds now.
I think its time for everyone to realize that Sony has jumped the shark. For me the PSPGo's rollout was the final cap on top of the PS3 debacle. Sony's great and all, and they've had their spin twice now. Nintendo had it with the NES and SNES. Sony had it with the PS1 and PS2. The trend has been that after 2 generations, the leading console company gets monumentally arrogant, screws the pooch, and drops to the bottom of the pack to learn a lesson. Its market correction for corporate idiocy,
Don't apologize for it. And don't worry about when will Sony come back. Nintendo had to go through the N64 and the Gamecube before they could re-envision themselves. Sony has some long soul searching ahead of itself. If nothing else the PSPGo is proof that Sony is still arrogant and can take a great idea and mangle the execution.
Until Sony drops its "we know the consumers better than they know themselves attitude", Sony will continue to be in 3rd. Their attitude to developer is much the same. Likely Sony needs to stay behind this generation. They need to see Nintendo, Microsoft and Apple erode their profits and their user base before they "get it" again.
November 4, 2009
mojiba
digital leaf
YOURE BOTH BUFU'ing EACHOTHER RIGHT NOW AS YOU COMMENT
youre comments are retarded and biased.
open your eyes and see that the ps3 is a formidable opponent
your fanboyish (crappy btw) trash talking wont get you anywhere
November 10, 2009
@digital leaf: "we know the consumers better than they know themselves attitude" - well said.some how people(journeys,gamers) still love-worship sony for what they have done with ps1 and ps2 - but sony is also like a nintendo,microsoft - always takes pride on themselves once they got continuous success and for what makes a successful video game console. Look at ps1,ps2- they were not most powerfull-featurerich-all-in-one kind of gadget during their times - but they have an awesome library of games -released ON TIME..sony go back to your third party developers and make some friendly development kit in your next iteration
November 14, 2009
Um, digital leaf...uncharted did break 1 million sales, and uncharted 2 sold 1 million copies in it's first week. I think that constitutes a blockbuster.
And DO NOT say that God of War 3 won't be a blockbuster.
November 15, 2009
I personally think the Xbox is so much better than the Ps3. Just try different games and you'll see that the Xbox is far better in terms of graphics. For those who share my opinion, i recommend as well a place where you can get the Xbox for a price far less cheaper than any retailers out there. Just check out bit.ly/1kez2C and try the Xbox experience.