IndustryGamers - Informing the Games Industry

Xbox 360 'Clearly on Downside of Lifecycle,' PS3 Facing 'Consumer Confusion,' says Analyst

Posted June 30, 2010 by James Brightman

E3 was hugely exciting if you like seeing new hardware. The 3DS arguably stole the show, while Microsoft and Sony put emphasis on their respective motion platforms. DFC Intelligence has noted that Nintendo had the "strongest showing" and the market research firm outlined the big challenges that both Microsoft and Sony will face. 

Xbox 360 in particular has always appealed to the hardcore base, and Kinect is an attempt to diversify with a broader audience. DFC doesn't see it happening, however, and the firm noted that "Xbox 360 has some good years left, but the platform is clearly on the downside of its lifecycle."

DFC continued, "Kinect is definitely an interesting product. We think it is more compelling than Microsoft’s Xbox Music Mixer product released in late 2003 (for those that don’t remember, Music Mixer was a music application with a microphone designed to turn the Xbox into a karaoke machine). At the end of the day, we see Kinect has having some appeal to a well-heeled fitness audience. In terms of changing the overall video game hardware platform market share we see it having a negligible impact."

"The Xbox 360 clearly needs to diversify beyond the core first-person shooter audience. At E3 it was clear that Kinect is not designed for the hard-core game consumer. Microsoft is putting almost all its eggs into the Kinect as a way to appeal to the 'casual' consumer and expand its user base. Of course, Microsoft has been trying to do this for some time and in that regards the Kinect can be seen as the latest in a long line of products intended to make Microsoft a mass market entertainment company. Unfortunately, based on what we have seen, DFC continues to feel that Microsoft is going to struggle to expand beyond its core audience."

As for Sony, DFC feels that 3D is likely to be a gimmick, and when you combine 3D with Move and other peripherals, it will lead to consumer confusion. 

"In terms of the overall vision for 3D in gaming, DFC remains skeptical. The reliance on glasses in all but the 3DS is something we see as a possible impediment to widespread consumer adoption. We still think 3D may remain more of a gimmick than something consumers want to do on a regular basis. Nevertheless, it could work as a selling point for a system like the PlayStation," DFC commented. "Consumers may not actually use any of the 3D features, but just the fact that they are there could encourage them to buy a PlayStation 3 over a competing system. In other words, 3D could be a great showroom feature. It is definitely a selling point for someone purchasing a 3D TV, but even if a consumer does not yet plan to buy a 3D TV they may want the PlayStation 3 “just in case.” As for actual day-to-day practical use, we don’t see it yet.

"In our view, much of what Sony is doing is trying to say their system has something for everybody. Of course, the big risk is consumer confusion. We have to admit we are still coming to grips with all the different gadgets available for the PlayStation 3 and what games require what devices. Explaining that to consumers will be a major challenge for Sony and it will be interesting to see their approach this fall."

DFC does acknowledge, however, that having lots of peripherals isn't necessarily a bad thing. It might even help, judging by previous hardware examples. "For Sony, the PlayStation 2 became the best-selling system ever because of its diverse product line. In Europe, the Eyetoy camera and Singstar microphone were extremely popular add-ons that helped drive hardware sales," DFC noted. "Those gadgets had much less of an impact in North America. Meanwhile, the Wii has all kinds of add-ons: the Nunchuk, the Zapper, the MotionPlus, the Wii Fit Balance Board, and the Wii Wheel being some of the official ones from Nintendo. It is clear that far from confusing consumers, these accessories have helped the system appeal to a larger audience."

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.