E3 is finally over and analysts have been weighing in on the big three console makers. The consensus seems to be that Nintendo "won" E3 with the 3DS, but Microsoft's Kinect impressed many as well. That said, it was Microsoft's unveiling of a new 360 form factor that could be more important to the company's business, notes Signal Hill analyst Todd Greenwald.
"Kinect seems like a big risk – while no pricing was announced, the rumored $149 price seems expensive. Beyond the price however, we believe it will be a tough marketing challenge – Kinect clearly appeals to the casual gaming crowd, and offers very little for core gamers (who make up the vast majority of the 360 installed base). So the most likely consumer to benefit from Kinect likely doesn’t yet own a 360 (and may already own a Wii), therefore they obviously need to buy Kinect and a 360, which will cost upwards of $400. At this point in the console cycle, the entry price points for new gamers should be coming down, not up," he said.
Greenwald continued, "[The] Xbox 360 Slim introduction [was] underappreciated – could accelerate 360 sales more than Kinect. With all the talk and buzz around Kinect, Move and 3DS, we believe the announcement of the new Xbox 360 Slim may have gotten a bit lost in the shuffle. With a $50 price cut on existing 360 systems (Arcade at $150, Elite at $250), and the new Slim on store shelves next week, we believe 360 sales could accelerate meaningfully, much like the PS3 did last fall following its Slim introduction. Since the launch of the PS3 Slim, unit sales are up 71% YoY in the U.S."
Even with Microsoft and Sony both emphasizing motion controls now as well, Greenwald doesn't see Kinect or Move having a big impact at all in the near-term. "Keep in mind, all these new peripherals will take time to catch on. Even if they are successful, the initial installed bases will be relatively small for quite some time (<5 million), making it hard for publishers to generate any real revenue off them, especially as software prices will be lower than they are for core titles," he said.
4 Comments
June 18, 2010
Ugh :-(
I hate seeing "industry analyst's" with no clue what they're talking about.
Microsoft have already commented that the arcade slim is in production, however they're ditching the names arcade and elite, and opting for GB size names sony style.
They're obviously deciding to hold off for 3 main reasons.
1. If they launched a slim arcade now for $199, clearing out the newley discounted $249 elites would be much much tougher.
2. Kinect lauches nov 4th, releasing a cheaper 360 alongside kinect, with bundles is a path they're most likely going to take.
3. Price cuts, the slim elite and slim arcade are both going to be discounted to $199 and $149 respectivly. It's been 2 years since the arcade got a price cut, doubled with the fact it's now slim, (cheaper what with less materials and the CPU+GPU eDRAM on one chip) means they can afford to drop it $50. Much less radical than Sony's $100 drop last winter.
On the pricing of Kinect, it's all speculation. Placeholder. Microsoft have made comments recently about wanting to price this competitivly, they're aware this needs a good adoption rate.
IMO $99 will be the RRP. NOT $149.
IF it is $99, and Microsoft want to fight hard this holiday, they could very well bundle a $249 arcade slim with a $99 kinect for .... $199. Yeah.
Imagine how that would sell on black friday ....
June 19, 2010
Microsoft may be holding off on the price announcement in order to gauge reaction... they let a $149 price float out there through deniable sources, so if need be they can officially announce $99 and look like heroes. Ultimately, the price point will tell us just how seriously Microsoft takes the Kinect's potential. If they leave it at $149, then they don't think it's worth subsidizing; they don't expect it would help other hardware or software sales. If they price it at $99, then they are saying they believe Kinect will add enough profit through sales of other hardware and software to be worth the subsidy.
I think Microsoft will be taking some time to look at the response, both from the industry and the consumers, before making a final decision.
June 20, 2010
Greenwald forgot to mention that there are only 15 Kinect titles launching; meaning less competition for publishers. Say 5M Kinect owners emerge, with a high intent on purchasing 4 to 5 games, it'll equate to numerous launch titles becoming million sellers. Lots of revenue there.
June 20, 2010
Gamestop already shows an "arcade" bundle incoming with Kinect and a 360 (assuming its a slim) for an entry price of $299.99 for both and it could be cheaper depending on MS's price point announcements.
That's not bad considering. The "Analyst" maybe should find a new job, seeing as most of us do a better job at our research :P