In this month's Divnich Debrief, EEDAR analyst Jesse Divnich has taken a break from his usual column writing to do a Q&A style piece, similar to our Pachter's Podium series. Divnich talks with IndustryGamers about Sony's PS3 eventually overtaking the Xbox 360 in worldwide sales, the Move's slow burn approach to the market, Wii's continued decline and more.
IG: The PS3 continues to do pretty well and it looks like Sony's closing the installed base gap with Xbox 360. Do you believe that PS3 will overtake Xbox 360 (in the U.S. or worldwide) in the next 1-2 years or will Sony be destined to remain in third?
JD: Worldwide, Sony will eventually take the lead from Microsoft, likely by the end of 2012. North America is a tougher challenge, and as we have seen lately Microsoft’s lead is widening.
I don’t know if the PlayStation 3 will ever overtake the Xbox 360 in North America. Maybe 2014? 2016? We do know the PlayStation 3 has incredible long-term value as a Blu-ray player, much like the PlayStation 2 did as a DVD player, but with strong competition coming from the digital front, one has to wonder if the PlayStation 3 will receive long retail legs like its predecessor did.
Unlike previous generations, I don’t foresee third place being a “doom and gloom” scenario. Even with it being in third place now the PlayStation 3 is an incredibly healthy platform.
It all comes down to the active installed base; a company can sell as many consoles as it wishes, but if consumers are not actively buying games, they are not part of the installed base’s economic ecosystem. The PlayStation 3 doesn’t have the same problem the GameCube had with its third place finish last generation.
IG: While it seems unlikely that the PlayStation Move will outsell Kinect this holiday if early indicators are anything, do you think that Sony's more reserved tack will work out in the long run (Pachter predicted 10 million sold for both by end of 2011)?
JD: Both the Move and Kinect are fantastic products, each evolving the way we play video games in their own way. I believe both have met the minimum quality threshold set by consumers. Now, it all comes down to marketing and third-party support, elements we know Microsoft is stronger with, for the moment.
But the Move is in the right place, and just because it doesn’t “sell” as many units as the Kinect doesn’t make it an inferior product.
Long-term, there isn’t any concern about the success of the Move, and much like what we witnessed on the Wii, this will be a slow burner that will eventually realize a large installed base over time.
IG: With NBA Elite 11 now officially cancelled and NBA 2K11 receiving high reviews and good sales, has EA permanently damaged their NBA brand?
JD: It is a long uphill battle for EA to regain market share within the Basketball sub-genre, but it can be done. The loyalty within the sports category is significantly stronger than others, and it often takes two to three high-quality iterations before consumers are willing to migrate, which we have seen within the Football, Soccer, Baseball, and Hockey genres.
Releasing Elite 11 would have damaged their brand beyond repair. Cancelling Elite 11 when it was ready to ship was audacious, but the correct decision.
EA made the best out of a bad situation.
IG: What is your take on the declining Wii sales? How will they do this holiday, and what does Nintendo need to do to prevent further loss of momentum?
JD: The Nintendo Wii and DS have massive installed bases, well over 200 million combined worldwide. The question becomes, how many households out there don’t own a Wii or a DS?
Both platforms are facing a decline in sales. Their problem, however, is the opposite of their competitors; they are running out of households to pitch to.
Personally, I’ve detested the way the Wii and DS have been treated in the market, as of late. We forget that Nintendo rose from a third place finish last generation to dominate both home and handheld markets in this generation, against fierce competition – a truly incredible accomplishment.
I agree Nintendo is to blame for the declines in 2010, but only in the sense that they set the bar so high in 2008 and 2009 that no other company had the ability to carry the torch when consumers’ appetite for the Wii began to thin out.
What is happening on the Wii happens to all consoles; it’s the natural lifecycle of the entertainment industry.
Nintendo’s current strategy is appropriate for where the Nintendo Wii and DS are at. Yes, expect sales to continue to decline and there isn’t much that can be done to stop it—aside from a radical price drop.
But keep in mind, even if Wii sales decline this holiday, their overall performance still puts them well ahead of the pack.
IG: Ubisoft keeps saying the dance category will explode, and the way that Just Dance has done and the hype for Dance Central seems to be proving them right. But will this be a lasting trend, or is it more likely to be a passing fad akin to the guitar games which have declined precipitously?
JD: I recall one analyst saying the same thing several months back in an IndustryGamers article.
Everything in entertainment can be classified as a fad. Super Hero movies, Grunge music, Guitar Hero, the list can go on forever. So yes, dancing games will come and go as quickly as Guitar Hero. I give it two years, with dramatic declines occurring in 2012.
Expect, however, massive sales this holiday season in the Dance category. Dance games will be the must have titles this holiday season and I wouldn’t be surprised to see at least one of them break the top ten in sales for December.
2 Comments
November 9, 2010
For the past three years people have been saying the PS3 was going to surpass the 360 in worldwide sales either at the end of that current year or in the next year. I thought it was going to happen this year because of how much ground Sony was making up. I do agree that eventually it's bound to happen due to the PS3 selling well in all three major markets while the Japanese market continues to not support the 360.
Having said that, I also said two years ago that the PS3 would never catch the 360 in US sales and it looks like Jesse agrees. While both are selling well here(they finally kicked Nintendo to third place last month) the 360 has a big enough lead that the PS3 would not only have to pick up huge sales momentum but the 360 would have to stop selling for several months all together.
It's actually good that all three systems are doing well(despite the Wii's declines) because competition is good for consumers. But in the end the PS3 should definitely overtake the 360 in worldwide sales. But Microsoft will atleast have the moral victory of beating Sony(for the entire generation) in the US.
November 25, 2010
I've heard this same thing for the past 3 years or so and I just don't see it, There's no way it will surpass the xbox in NA and that's where most of the buyers are. I can see the ps3 catching up to it, but it will not surpass it. The exclusives next year should definitely give it a boost but I doubt Microsoft will let Sony take all the glory next year, I'm sure they have something up their sleeves.