As part of an absolutely massive 210-page report from Wedbush Morgan Securities on the future of the video game industry, analyst Michael Pachter has predicted that Japan will be the Achilles heel for Microsoft, enabling Sony's PS3 to overtake Xbox 360 on the global market. Wii, however, will maintain its leadership role until the end (with a little help from a new "Wii HD").
"We expect the dominant console at the end of the this cycle to be the Wii, as we think that the console’s low price point, innovative control mechanism, and compatibility with standard definition televisions will provide it with a competitive advantage over the next two years. We expect Nintendo to sustain this competitive advantage by introducing a high definition version of the Wii, perhaps as early as the end of 2010, in order to convert its large installed base into true 'next generation' households," Pachter said.
"We think that the PS3 will capture significant market share, primarily due to Sony’s victory in the high definition DVD format war, and will end up in second place by 2015. Although Microsoft’s Xbox 360 enjoyed a first mover advantage, we think that its market position will fade to third place due to lack of penetration in Japan. We expect the Wii to capture 49% share of the U.S. and European market by the end of 2009, followed by the Xbox 360 at 29% and the PS3 at 22%. By the end of 2011 (the extent of our current forecast), we see Nintendo 'winning' the console war by maintaining its share, with 48% of this market. We expect Sony to pull even with Microsoft, each with 26% market share. Notwithstanding the projected finish, we truly believe that all three manufacturers should be considered 'winners', with Microsoft selling twice as many Xbox 360s as Xboxes and building a robust Xbox Live business, and with the other two companies generating significant profits from their respective shares. These estimates do not include console sales in Japan, which we expect to be dominated by Nintendo with over 65% market share through 2011."
Overall, Pachter is expecting current generation hardware shipments through the end of 2009 to reach 100 million units in the U.S. and Europe; that would be up from the last generation consoles in the same regions, which totaled only 88.5 million units during the analogous 2000 – 2004 period. "This clearly indicates that the current cycle is far more robust than the last cycle, especially given the relatively high price points for the three major consoles," said Pachter. He also expects penetration of handheld hardware to rise considerably. Cumulative DS, DSi and PSP sales in the U.S. and Europe should total 101 million units by year-end, compared to GBA and GBA SP sell through of only 43 million units in the analogous 2000 – 2004 period.
17 Comments
June 29, 2009
Ok you guys. I am not an analyst. I began following the developments in the video game industry in january of 2009 due to my intention to buy a PS3 (when the price is decent). In the beginning I was intrigued by the rumors and speculations about the up coming PS3 price cut, but along the way I caught myself mesmerized by the developments in the gaming industry and have become fascinated with the developments in the filed. I understand that that makes me hardly an analyst, but there are some thing Pachter said that I find outrageous. For example, "Michael Pachter has predicted that Japan will be the Achilles heel for Microsoft, enabling Sony's PS3 to overtake Xbox 360 on the global market". First of all, Microsoft is not doing that bad in Japan. In fact, late reports state that the 360 is doing exceptionally well in Japan, with sales fluctuating only 4,000- 6,000 units behind the PS3 this last year. How can such a minor difference between the 360 and the PS3 can lead to the presumed PS3's global domination? last time I checked a globe, Japan was covering only a small section, and from what I know, Japan's market is not as big as the United States' market or the European market or many other gaming markets. In addition, Project Natal looks like it is going to revolutionize interactive gaming the way the wiimote did it three years ago. Considering the Wii, Pachter states "the console’s low price point, innovative control mechanism, and compatibility with standard definition televisions will provide it with a competitive advantage over the next two years". I agree with the low price point (in case you didn't notice yet, the number one variable that, hands down, affects sales is price, not the overall value of the machine as Sony tries to persuade people to think), and the innovative control mechanism, but the argument about the compatibility with standard definition televisions is extremely weak. All three consoles can be connected to standard definition TV's. In fact, the PS3 comes with an AV cable that is used to connect the PS3 to a standard definition TV. Why standard connectivity is somehow an advantage for the Wii? Also, the argument about blu ray lacks support. "We think that the PS3 will capture significant market share, primarily due to Sony’s victory in the high definition DVD format war, and will end up in second place by 2015". Does anyone actually gives a poop about blu ray? How many people out there actually buy blu ray movies. Blu ray movies are unreasonably expensive and currently are enjoyed by a very small part of our population. I agree that blu ray produces a spectacular result but how many of us are willing to pay $25 to watch a movie, especially in this economy? Or, to ask this differently, those people who can actually afford to buy blu ray movies, how many movies are they willing to buy? The blu ray argument is not a strong one, although Sony executives use it on a daily basis, and the disappointing sales of blu ray movies prove that. As for the argument that PS3 is the only gaming console that supports blu ray and therefore, can accommodate large games, Xbox Live is already prepared to deal with that by promoting aggressively video game downloads. Recent reports support that, as they state that the Elite model (120 GB) is going to replace the Pro (40 GB), and therefore accommodate games as large as MGS4. In my humble opinion, Wedbush Morgan Securities' report contains some predictions that are questionable at best. I do think that Project Natal is going to have a huge impact on the gaming community and will influence to a great degree the way video games are being designed and played, and to a greater extent, it is going to have a big impact on the sales of units. One thing is for sure: the developments in the gaming industry are remarkable and promising. Stay tuned!
June 29, 2009
nickos get out from under microsofts arse u dirty little fan boy, if u cant afford a bluray now u r poor man i can go to a shop and pick up a new release for 13 pound, not 25 and bluray sold more than hddvd so obviously it is doing ok and as for natal r u tellingme that u want to play with milo? im reporting u u sick sick person, playing with little boys is wrong michael will tell u that. and another thing the whole game downloads thing is gonna be crap. noone in europe has a fast enough connection to download game size files without it taking half the day, by the time u download a game i will have been to the shops bought the game and compleated half of it by the time u get to play, and u can download full games off psn already, also i can use facebook and twitter on my ps3, dont u have to download all that for xbox? how much will that cost. and b4 u call me a fan boy my gamertag 4 360 is IRetro UK I HAVE ALMOST 60.000 GAMERSCORE, my playstation id is xTSxRetro i dnt have many tropheys yet. my point is that u r biased to the core, sony have said sorry for there mistakes and are making the service thay offer a hell of a lot better than it woz where as i am sick of being done from behind by microsoft, iv just had my thired xbox break on me, and being the idiot that i am i bought a red one yes the red elite, i own one and you know what? it sounds just the same as the crappy white ones. anyway back to topic the man Pachter is a ahole he chats crap most of tome but his coment about asia is that history shows that whoever seels the most in that region wins the war.
June 29, 2009
As much as I don't like agreeing with Pachter, he is right about one thing: Japan has been and always will be the 360's weakest selling market. But it's certainly not for a lack of killer games, affordable hardware or the infamous Xbox excuse("it's too big to fit into tiny Japanese apartments"). Some people will tell you that Japanese gaming taste are fickle and as an avid importer of Japanese games, I completely agree. Our crazy Japanese brethren like some weird ass stuff. Doesn't make them bad, it's just different from our own taste. That being said, I also suspect that they aren't too fond of American made hardware/software. I've had this discussion so many different times with various friends and aquaintances, but right now bluray is the ONLY thing the PS3 has over the 360. And yet I still couldn't see an entire region(in this case Japan) buying the PS3 just for that. They both have all(more or less) the same third party games, the 360 has a better online service(although Sony's is free) and the 360 has plenty of rpgs(a genre that the Japanse prefer over all others and something that the original Xbox severely lacked). So you guys tell me why the 360 doesn't sell in Japan. And before you try to bring up the rrod, just remember the infamous disc read error the PS2 had. That never stopped that system from selling. But seriously, I just don't get why they won't support the 360 the way that the other two regions do(US and Europe) and the way that all three regions support both the PS3 and Wii. It definitely makes you think.
June 30, 2009
If the Bluray didn't help sales at the launch of the PS3, I don't see it making much difference now that there are many stand-alone models on the market. X360 Arcade is at 160 euros now making it the cheapest option around (and if one wants to they can get an external HD later). Piracy is easy both on X360 and Wii (no need for hardware, just look around the net and do it yourself) limiting the total cost of games, while both Wii and X360 have tons of games as opposed to PS3's really narrow (and expensive) range. Why would anyone go for PS3 now is a mystery more than ever.
June 30, 2009
Now, I'm not going to go read the massive 210-page report from Wedbush Morgan Securities, and I don't expect anyone here to do so either.
With that in mind, I'm failing to understand two important things here. Firstly, Japan currently holds only 14% of PS3's world sales and 15% of Wii's world sales. These are not very good percentages for a console's home country. To put this into retrospect, America holds 38% of PS3's world sales and 46% of Wii's world sales.
Feel free to do the math for the rest of the world... But I think I've made my point. In this current world economy, I don't think the "Must Penetrate Japan" card in this console war can be played. And unless Michael Pachter is capable of forcasting the end of this economic crisis, I'm not understanding the validity of his predictions.
Secondly, won't Sony be revealing the PS4 by or before 2015? How does the launch of the PS4 factor into attaining 2nd place for the PS3? Nintendo and MS will probably also have new consoles out by then (not just upgrades of current ones). When you put all of that into the equation, one begs to know where the validity in Pachter's statement comes from.
By the way, Japan is a small country. In fact California is 10% larger than Japan.
June 30, 2009
One more thing, Japan had 18% of the PS2's world sale and America had 40% of the PS2's world sales. With that in mind, I'm really failing to understand why Japan is so important! Regardless of it being the home of Sony Co.
June 30, 2009
i dont think he ment just japan, but asia as a whole. if you think about it asia has the biggest populance of people and its growing everyday, i think that if you count out the likes of japan, china and such you are making a mistake, and dont forget that most of the game development companies are from the asian area capcom, namco bandai, square enix, techmo, i could go on, my point is this, if you are one of those companies and a console isnt doing too well in you region u dont suport that console, now im not saying that microsoft isnt supported by these companies but even techmo is shifting to ps3 development, so it does have an effect, you just have to look at the bigger picture.
June 30, 2009
1 more thing hes forgotting as well..
Games and content.. sorry but Sony has nothing that really blows anyones skirt up.. 360 has had triple the amount of higher rated AAA titles and even more on the way.
The Cell Platform is a game developers nightmare and its showing in the quality of the software.
Even games that are ported on all 3 are being buggier and lower rated than PS3 same titles.
And then you add LIVE into the equation. Live is much more popular than PSN and it just works.
Sorry these Wall Street bean counters can analyze all they want. but they aren't gamers..
gamers know what we want and we show it by supporting the system with the best software.
and right now that's MS and the 360.
June 30, 2009
Hello Fellow Gamers. Well...well... and to think, it has nothing to do with prices. We all know the X360 as well as the PS3 are going to have a price drop. Did they take into consideration that the X360 entry unit may be between $100 - $150 USD by the fall season? Do these people even realize how many units will move by that price point alone? You can calculate and analyze all you want, but nothing can compensate for the human factor.
Again the Blu-Ray scenario keeps coming up. Please stop it. You can stream Blu-ray videos to just about any device (including the X360). Pirating also needs to be a factor in that 210 page report. Everyday, movies (Big Screen, DVD, & Blu-Ray) are being uploaded to the internet 24/7 and people are downloading them 24/7 from all over the world. Some people that can't afford to buy the movies are doing what? They downloading them for FREE.
Games are also Pirated (Wii, X360). Last I checked the most pirated systems will sell better than non pirated systems (PS3). Don't feel left out Sony, It's just a matter of time and your system too will be hacked and raped like no other. Then you too can enjoy stellar sales from that point on. But Until then, the X360 & Wii will always dominate.
June 30, 2009
Good post about piracy. I also think sony will never reach the maximum penetration they can get without it.
The ps3 has better exclusive AAA titles in graphics and gameplay Jason Pope. 360 has gears of war and halo, which are games that have been on PC in some form or another so they really are not exclusive to the 360. Granted there is room for opinion in deciding which has better titles.
June 30, 2009
Just as another point of view... from a hardcore PC gamer...
I own a Wii which I only play when family members come over, or my kids want to play Wii sports. The graphics just suck too much, and the games don't do it for me. I also own a PS3, partly out of curiousity originally, but mostly for the Blu-Ray. I am the type of person who will never go back from Blu-Ray for movies. The audio and visual quality are just too important to me. The game I play the most by far is PixelJunk Monsters, and that's maybe once a month for an hour. Yet, the PS3 is turned on every single day for several hours, and that's for streaming music from my network. It's also quite good for picture slideshows. There ARE people out there who do more than play AAA games with their consoles. I realize it's not the main driver for hardware sales, but people like me do exist. If my PS3 died today I'd have a new one by the weekend, and it has nothing to do with the games.
June 30, 2009
Good point about the Japanese market not solely being Japan. NSTC-J includes Hong Kong, Taiwan, South Korea, Phillipeans, and Singapore. But it doesn't include China which is PAL. Nonetheless, I have a feeling that the European market will outdo the Japanese market in overall sales on all consoles. So, still I don't think the Japanese market is as necessary as it used to be. I still have a question about my second point: Won't Sony be revealing the PS4 by or before 2015? How does the launch of the PS4 factor into attaining 2nd place for the PS3? Nintendo and MS will probably also have new consoles out by then (not just upgrades of current ones). When you put all of that into the equation, one begs to know where the validity in Pachter's statement comes from.
July 1, 2009
The all purpose Patcher article reply comment:
Patcher is right on the money/talking out of his arse on this one. MS slipping to third place by 2015 is assured/not going to happen because of MS superior/inferior library of games/build quality. MS have shown great/poor innovation with their online services/control methods and this will pay dividends/cost them dearly in the years ahead.
I'm sorry/happy to say that Patcher rulez/sux.
Delete as applicable.
July 2, 2009
The above post is the best I've read in a while.
July 7, 2009
when the new console comming
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