Recently, IndustryGamers revealed that in just six months Sony managed to shave off another 1.4 million units from Microsoft's global installed base lead with Xbox 360. As it stands now, the gap between PS3 and 360 is around 3 million units, despite the fact that Xbox 360 hit the market a full year before Sony's console. So the question has to be asked: Did Microsoft squander their lead?
We asked a few of the prominent games industry analysts that very question. DFC Intelligence's David Cole noted that Xbox 360 simply lacks diversity - it focuses almost too much on shooters - and Microsoft probably should have targeted the European market a bit more heavily.
"We have been forecasting for the past 3 years that the PS3 would catch up to the 360 by 2011. I think the big issue is that the 360 has been primarily the platform for FPS games and has lacked the diversity to appeal to a broader international market...mainly Japan and Europe where Sony is very strong. The Xbox 360 was just much stronger in North America than it was globally," he said. "The main issue I think is Sony (and also Nintendo) being so strong in Europe and Japan. I think in terms of doing things differently they should probably have focused more on Europe and just given up on Japan. They would have had a better chance in Europe."
Cole doesn't see Kinect necessarily being enough to stave off the Sony attack either. "Going forward I don't know if there is much they can do. They will try with the Kinect but I don't see that working. I think the PS3 will soon pass the 360 for good," he said.
Of the analysts we contacted, Cole was definitely the least optimistic for Microsoft. Other analysts chose to put things in a broader perspective, reminding us that Microsoft is still fairly new to video games compared to Nintendo and Sony and they should be commended for their accomplishments thus far.
"We do not believe Microsoft has in some way squandered a first to market advantage; particularly when you consider how most game pundits back in the day expected Sony to dominate the next generation," said Janco Partners' Mike Hickey, who's clearly a bigger believer in Kinect than Cole. "Perhaps more important is where we go from here, with no meaningful console introduction in the medium term; we believe Microsoft's Kinect system is the most identifiable organic installed base accelerator (aside from continued price cuts and/or aggressive promotional bundling), which will likely extend their global lead over Sony's PS3 console."
EEDAR's Jesse Divnich sees things similarly to Hickey. "Nothing went wrong. The achievements of the Xbox 360 are incredible," he stressed. "It went from fighting for a distant second place last generation to now being considered one of the healthiest platforms to develop for. The PlayStation 2 outsold the Xbox nearly 7 to 1 in Europe and nearly 40 to 1 in Japan. In 2010, PlayStation 3 is outselling the Xbox 360 a tad over 1 to 1 in Europe and only about 10 to 1 in Japan. For a company that entered the video game space late, going up against two competitors with decades of loyal gamers, Microsoft should be proud of their accomplishments. Any faults to point out would simply be nitpicking."
Wedbush Morgan analyst Michael Pachter was essentially in agreement as well, noting - unlike Cole - that Microsoft might even be able to remain in second place.
"What did people expect? They have a huge advantage in Japan, have been roughly equal in Europe and pretty far behind in the U.S. It is only a matter of time before the lead in Japan erodes the lead in the U.S. I would NOT say that anything has gone 'wrong.' At the beginning of the cycle, I thought PS3 would win because of greater loyalty in Europe and a stacked deck in Japan. Nintendo surprised me greatly with their phenomenal sales, and after a year or two, I said that I thought Sony would still finish second due to the Japanese advantage. I now think that with Kinect and a pricing advantage, Microsoft might hold them off, and I certainly don't think that Microsoft has done anything wrong at all," Pachter commented.
What do you think? Should Microsoft have made better use of the Xbox 360's first year? Could things have been done differently so that the lead would be bigger now?
17 Comments
November 12, 2010
stop making apologies for Microsoft, they lost their lead because of their bad moves
with the 50 million dollars they spent on timed exclusive DLC for GTA4 they could've have created a first party studio to make exclusive hardcore games, and even the DLC sold a lot less than expected
the same goes for the untold millions they paid SquareEnix just so PS3 wouldn't have FF13 exclusive, that game is not for the 360 audience, it sold a lot less on 360 than PS3's and all they managed was to have Square scale it down so it would run on the 360
they also lost their lead for dumping their harcore base to focus on children and housewives with an upgraded eyetoy
it's their fault and their fault alone that they will end this generation on the last place and they deserve it
November 12, 2010
In addition, what happens to the numbers if we factor in the consoles given away for spare parts or trashed due to failure (RRoD)?
November 12, 2010
@doa Your argument makes little to no sense. Microsoft lost because they secured exclusive content? No.Microsoft will "lose" because Sony has an advantage in Japan. Even still Microsoft has made an amazing leap this generation. There is no way to knock that even if you don't like their policies.
@Jim Who gives away a console for spare parts? Microsoft admitted there was an issue with RROD and issued a extended warranty. They don't send you a brand new Xbox and then count it as a unit sold.
Micorsoft did A LOT wrong this generation ( Downsizing of First Party and RROD) but they also did a lot right, you can't marginalize their success because you don't agree with their policy.
For the record all 3 consoles are kicking ass this generation. They each have their own niche.
November 13, 2010
Even if Microsoft does not count systems they replaced as sold systems, you cannot discount the amount of replacement systems sold as solutions to the hardware failure. Without the Red Ring, would there have been any real demand for the Arcade system? Speaking as someone in retail since the 360 launch, my personal experiences in three separate markets have shown a large number of people purchasing, or performing defective exchanges from consoles in store. This is something that heavily skews the numbers in favour of Microsoft, and which has always caused me to take their systems sold/shipped number with a grain of salt.
Having said that, I do think they squandered a large lead. Even with everything they have done right, there have been a couple key elements of focus that have set them back, such as trying to bleed support from Sony, rather than make IP's and software that makes people want to switch, or even diversifying their software library, and relying on more than just sports and shooters.
November 13, 2010
I think for two companies with vastly smaller marketing budgets (Nintendo and especially Sony), I commend them for blowing past Microsoft even after a year's lead (Nintendo) and despite having a more expensive machine at launch and to date, eating away at Microsoft's lead (Sony).
These smaller Japanese companies are still kicking and fighting after decades, and that is plus in my books. Both innovate and both have unique games in their catalog.
November 13, 2010
"What did people expect? They have a huge advantage in Japan, have been roughly equal in Europe and pretty far behind in the U.S."
Who ever thought Patcher would be the voice of reason. Several people(myslef included) have touched on the fact that as long as the 360 doesn't sell in Japan then it would be pretty difficult for them to hold a second place finish over Sony. All one has to do is take away all of the Japanese sales figures, compare only the US and Europe figures and then see how close Sony is to catching up to Microsoft. It's a slightly different story then, mainly because both the PS3 and 360 sell very well in the US and Europe, while only the PS3 sells well(not counting the Wii) in Japan.
Having said that, Microsoft has certainly made some mistakes this gen(rrod, games on demand that cost more than they would new in stores, raising the cost of XBL while trying to justify it with the addition of content you can get for free on the internet[facebook, twitter, espn], overpriced peripherals, etc). But regardless of those mistakes they have also done a lot right this gen and I'm sure they have learned from their mistakes.
The big question for them is: will they continue to support Japan despite the fact that Japan refuses to support them? I suppose it's a double edge sword for Microsoft. Stop making systems and games in Japan and a good number(if not all) of Japanese developers will no longer make games for the 360. It would also mean that they would automatically be in last place from the get-go since they would be a two region selling system competing with two 3 region selling systems(not that thats any different from now). But continue to support Japan and waste marketing money that won't make a lick of difference to Japanese consumers and also risk having tons of stock over in Japan(that none of them want) while back in the US and Europe the system is sold out during the holidays. I don't envy the 360's global marketing director.
November 13, 2010
Man the sony Defense force is here!
How you sony guys FORGET that many buy ps3's for blu-ray ONLY! Explain please... in detail.... how it is that the 360 nearly doubles the ps3 in software sales if the gap is so close? I'll tell you why... I'd argue and wager real money i'm right, a full 1/3rd of ps3's are sold almost exclusively as blu-ray players that "happen to play games"...
The 360 is not just a shooter machine, and to say so is ignorant. Lets see on ps3 what they offer in terms of big games shall we? Yes there is god of war, but honestly.. it was not a block buster. Then we have COD (shooter , both platforms) , killzone 2 and soon 3 (oops! shooters!) Resistance 1 and 2 (and soon 3.... wooops! more shooters!) Uncharted 1 and 2(I can argue a shooter!)
What the ps3 has going for it.... is that the Japanese market is biased toward japanese products. The ps3 was outselling the 360 when it was twice as much and had no games. Nuff said....
This whole discussion really is pointless. Lets discuss software sales and that will tell who's really playing where shall we?
November 13, 2010
If you compare the last generation to this one Sony is the only loser.
November 13, 2010
The Playstation brand has always been the most popular name of video game console in the planet. It's about time that gamers should go home altogether to the Playstation world and tell the others that this is the console that plays all types of games.
November 14, 2010
Realistically, looking at unit sales is not helpful on it's own. You have to look at game sales.
While XBox defect rates have required that many users make multiple unit purchases, the game sales are much higher per unit than PS3.
Conversely, it appears, in light of the game sales figures, that a vast number of PS3 units are sold simply as a blue-ray player. In other words, people are buying a blue ray player and getting a once-in-a-while game system at a significant discount.
November 15, 2010
Xbox is expected to make $1 billion this year... Sony's game division is expected to barely break even. Who cares about market share - I would rather be Microsoft and $1 billion richer.
November 15, 2010
Why is everyone looking at this in terms of winners and losers? The ps3 and 360 have each sold enough in their own rights to be classed as a success, when you factor in the longer cycle for the consoles this generation has been a major success for all involved.
There's a lot of looking back at the ps2 and how that console routed all comers but that was a blip, ps2 was the first truly universal games console. Before then games consoles were thought of as toys.
What we've seen this generation is the evolution of games consoles to a mass market entertainment device, the wii is great example of how there are different consumers within the market.
November 16, 2010
People feel they have a stake in the "console war" and want to feel like their side is "winning" That Lad. They want to believe its like a sports competition where, no matter how many points are scored, there is a definite winner and loser. While everyone does compete for space in the market, the truth is that companies run their own race - they can sell a lot and still lose depending on their other expenses.
It'd be nice if people could just enjoy what's on their console and respect what might not be, but I suppose that's asking too much.
November 16, 2010
@ David - exactly. Wars (console and otherwise) make money.
The blu-ray argument seems pretty apt. But at this point in the lifecycle the RRoD is irrelevent to Microsoft's success.
Why didn't the RRoD problem cause a mass exodus of hardcore gamers to the PS3? Every 360 owner I know had hardware problems but noone defected - probably because they'd already invested so much in the experience. i.e. Not only do I want to avoid replacing my games, I also don't want to lose my friends list, achievements and my Plants Vs Zombees save game.
November 16, 2010
I think you've struck on the larger reason that people sick with the Xbox 360 Shannon - they've invested too much between time and money to pull out. I'd say the other large reason is that Microsoft has tried to be accommodating with all of the hardware failures, extended the warranty, etc. If people had to replace their Xbox 360 every year and a half with money out of their own pocket, there would be an exodus I'm sure.
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