DFC Report: "Clear possibility that PS3 could end upthird in market share"

[Laa-Yosh]

Not so sure that all flat panels look better than CRTs. Especially not the case with LCD.

I mean that the TV itself looks better - notice that I've talked about DVD quality later down my post.

 

[RancidLunchmeat]

There's another problem which people here (and on the net in general) don't seem to appreciate and that's the fact that the 360 launched at the same price with the same features as the PS2.

Console, wired controller, no mem card or HDD.

The premium version at $399 is a bundle. It's the same as having to buy the PS2, plus a logitech wireless controller, plus their HDD expansion for FF.

The problem with the PS3 is that it simply isn't scalable. The $499 version can never become the $599 version. Furthermore, it doesn't appear there's anyway for the PS3 to launch with a $299 version.

Why can't the PS3 launch at $299, but include a wired (instead of wireless) controller, and no HDD? Because the system itself.. due to Cell and Blu-Ray, cost too much!

If my numbers are correct, only 8M NA consumers were willing to purchase the PS2 at $299. They had to drop the price less than two years after launch to $199 in order to spur sales to make it more attractive to consumers.

Do you think that's because the PS2 lacked enough games, or enough attractive games, or because there's only 8M consumers in NA that are willing to spend $300 on a toy?

Is Sony going to be able to drop the price of the PS3 33% in less than two years, and even if they do.. will it be enough? That will still put them over the $299 launch price of the PS2, the Xbox and the 360, three years after the 360 launch.

Now.. don't get me wrong. I think the 360 has this same problem which is why sales have slowed. The market for a $299 console or a $399 bundle has already dried up. They are hoping new games (I seriously doubt it), the holiday season (maybe) and the extremely high price of the PS3 (probably) will allow them to keep their product attractive.

But I really think that will only matter to a certain degree. What does it matter if a Ford GT is $250,000? If you can't afford a Mustang, you aren't going to buy one just because it's less expensive than the GT.

You simply won't buy either one until one of them becomes affordable.

Which also means this time next year, the 360 needs to be priced at $199 for it to maintain/take advantage of its earlier release and momentum.

 

[RancidLunchmeat]

BTW

Good read, which go against PS3 price for a real mass market aproache.

I really don't know the point of the survey, or the article, but it does reinforce my position in a different thread about female gamers, the complete misnomer that they are, and how they will somehow been attracted to the wii. (Or any console, or how any console waste its time marketing themselves to that demographic)

Casual game players were found to be predominately female, with women making up 71 percent of those playing. Interestingly, 58 percent of those surveyed were found to have no children under age 18 living in their households.

Puzzle games was found to be the most popular genre of casual games, capturing the attention of 67 percent of those surveyed, followed by card games with 44 percent.

On one hand they are trying to say that casual gamers are important and play more video games then people would imagine, but then they go on to say that what they're actually playing are puzzle games, card games, etc.. Snood, Bejeweled, Solitare, minesweeper! Wow! What a great market for advertisers! They're probably playing them at work as well, just like my secretary who has spent her entire day playing solitare because everybody bugged out early to take a long holiday weekend.

 

[pc999]

What this mean is that there is many more potential gamers than those who buy consoles, but cleary they arent concerned with gfx or like it enought to pay a full console for that.

SO if the others are any serios about getting new market and if they have sucess then Sony will go third.

Even more important is this

while 70 percent have purchased a game after first playing it free of charge on the internet.

People even buy games.

There is a possibility of a new market and if Sony dont chase them it may end in third, losing dev suport etc...

 

[RancidLunchmeat]

What this mean is that there is many more potential gamers than those who buy consoles, but cleary they arent concerned with gfx or like it enought to pay a full console for that.

Oh.. Gotcha on that point. Sure, absolutely, certainly.

SO if the others are any serios about getting new market and if they have sucess then Sony will go third.

Even more important is this <internet downloads>

People even buy games.

There is a possibility of a new market and if Sony dont chase them it may end in third, losing dev suport etc...

I don't think this has any barring on dev support or really consoles at all. Considering I don't think any of this information has anything to do with consoles.

They're simply saying that there's a market (the majority of which are female) that play more hours of gaming than we had previously imagined, but the games they play are simple, cheap, and easily available.

I'm also weary of the 'internet' download designation because some might take that to mean these people are downloading PC games, and based upon the types of games these people are playing.. I doubt it.

Well, I take that back. Sure, they're downloading bejeweled and Snood. Those without the ability to hunt for illegal registration codes are probably the ones referred to as 'purchasing games'. But I'd bet a large portion of those people 'downloading/purchasing games over the internet' are regarding games they download and purchase for their cell phones in that same category.

I'd say this makes things like Xbox Live Arcade a nice 'perk'. Joe Gamer can justify his 360 by showing Mrs Joe Gamer the nice puzzle games that can be downloaded.

But don't think it really has all that impact on anything. This supposedly 'huge market' of casual gamers that play more games than we originally thought, aren't doing so on consoles. And while they might be willing to pay $15 (or whatever) to register Snood, they aren't going to invest in buying an additional appliance to play these cheap 'treat' games.

 

[Powderkeg]

1. Does anyone have numbers on PS2 units sold and shipped at each price level? I'm curious to see how well it sold at each price point. At least where can you find that kind of information? At what point do sales really take off?

http://journal.pcvsconsole.com/?thread=11067

Sony did price drops in May of 2002 to $199,99, May of 2003 to $179.99 and May of 2004 to $149.99. The most recent price drop was May 2006 when it dropped to $129.99.


The drop to $199.99 increased sales by around 100k units per month for almost a full year after the price drop.

 

[RancidLunchmeat]

The drop to $199.99 increased sales by around 100k units per month for almost a full year after the price drop.

I think (didn't do the math.. just glanced over the figures), the PS2 was selling at a rate of about 350k per month until Apr, when sales dropped significantly. The price reduction bolstered sales to around 500k per month, until the holiday months when sales really took off (and really skew any sort of attempts at averages).

Anyway, my point being that dropping to $199 didn't just raise sales by 100k per month. Because sales had fallen off from their previous rate. The drop to $199 raised sales by 100k per month over what the previous normal rate had been (prior to the drop off).

So, essentially, there was a rather distinct adoption rate that appears to have hit a very hard ceiling at the $299 price point. They kept selling the console at the $299 price point for an additional month, and sales suffered. The May 2003 price reduction doesn't really seem to have had any great impact on sales. Once again, sales were declining prior to the price drop and they didn't really improve afterwards...

Except for the possibility that the price reduction increased holiday sales later that year (obviously impossible to discern). Likewise, the 2004 price drop doesn't seem to have reaped the same sort of returns, either.. more like a 'bandaid' to slow losses in sales that are compensated for by outlying holiday returns.

Essentially, when you look at the chart, the price reductions after the drop to $199 don't seem to increase sales. They seem to only serve as a way to stem the decline of sales.

Additionally, when you look at the figures, you can see the uphill battle the Xbox had to face by coming to market late. Price reductions for the Xbox didn't have nearly the impact that they did for the PS2, and I think it's fair to say this is due to popularity (peer pressure.. Buy a PS2! All your friends have one), and lack of games.. both of which reflect its coming to market later.

Coming to market late, plus arriving at a price point that is so completely foreign to the vast amount of people that will be purchasing consoles is simple... unfathomable. Which is why Sony and the PS3 have received nothing but negative press since the E3 announcement.

 

[McHuj]

http://journal.pcvsconsole.com/?thread=11067

Sony did price drops in May of 2002 to $199,99, May of 2003 to $179.99 and May of 2004 to $149.99. The most recent price drop was May 2006 when it dropped to $129.99.


The drop to $199.99 increased sales by around 100k units per month for almost a full year after the price drop.

Thank you. That's what I was looking for.

Wow. The manufacturing problems really hurt the X360 during the holiday. They probably could have easily sold 2-3x the amount of units. For Sony's sake, they better hope they can deliver as many units as possible, because I don't think MS will have trouble selling their share this holiday season.

 

[quest55720]

I really don't know the point of the survey, or the article, but it does reinforce my position in a different thread about female gamers, the complete misnomer that they are, and how they will somehow been attracted to the wii. (Or any console, or how any console waste its time marketing themselves to that demographic)



On one hand they are trying to say that casual gamers are important and play more video games then people would imagine, but then they go on to say that what they're actually playing are puzzle games, card games, etc.. Snood, Bejeweled, Solitare, minesweeper! Wow! What a great market for advertisers! They're probably playing them at work as well, just like my secretary who has spent her entire day playing solitare because everybody bugged out early to take a long holiday weekend.

Playing uno on 360 live I have played against many women I rarely see women on the other games I play online for the 360.

 

[Powderkeg]

I don't think this has any barring on dev support or really consoles at all. Considering I don't think any of this information has anything to do with consoles.

They're simply saying that there's a market (the majority of which are female) that play more hours of gaming than we had previously imagined, but the games they play are simple, cheap, and easily available.

I have to agree with you on that, and my wife is a perfect example. Yes, she playes the Bejeweled, Mah Jong, etc.. and is even looking forward to Street Fighter 2 on XBL Arcade.

BUT, the only reason she does these things is because I did all of the work for her. I bought and built the PC, I bought the 360, I setup the network, and I showed her where the games were and how to play them. She never would have started playing the little games at MSN Gaming Zone, much less actually bought a console and set it up to go online on her own. Never.

 

[one]

I'm starting to think that this is why X360 sales still haven't really picked up. It is simply too expensive.

...Or they are waiting for other next-gen consoles to show up in demo kiosks.

 

[Powderkeg]

...Or they are waiting for other next-gen consoles to show up in demo kiosks.

Or it's summer, which is always the slowest time for console sales.


And it is selling nearly 100,000 units per month more than the Xbox did for the same months. (Xbox normally only sold around 120-160k units per month between April and June.)

 

[BenSkywalker]

The people who authored this aren't very honest in their assesment it seems; an example-

Right now, the Nintendo DS is having some of its strongest success in Japan, while the PSP holds its own in North America and Europe. However, Japan’s trend conscious consumers are often a harbinger of worldwide success. In the 1990s, Nintendo’s business in Japan started to decline faster than it did in North America. Could the PSP’s performance in Japan be a harbinger of things to come for Sony?

The 360 has been an abject failure their too, using their logic we can certainly say that the 360 will finish in last place by a staggering margin..... right?

The entire article is laughable- Sony is foolish having their price where it is- but they are going to sell out completely until next year- then they need to drop the price- but maybe they can't..... drivel at best. Sony is going to sell out this year at that price point. I don't know what reality they live in- but in the one I have spent my life in if something sells out with ease it isn't priced too high.

Sony could end up in third place this generation- but it won't have anything in the least to do with their launch price. The PS1 launched at $299 while the N64 launched @ $199- the PS2 also launched @ $299 while the NGC was @ $199. In total the system with the launch price that was 50% higher ended up with some four to five times higher sales. They created a model in their head that completely ignores what has happened for the last couple generations. Lower price point for the last ten years has been a better indicator that a system is going to finish last overall then anything else. This may not make much sense using some sort of logical breakdown- but neither does their insinuation that the initial price point has anything at all to do with long term success. The only thing history has shown us is that higher tends to equal better long term performance(may be due to the perception of value that people get from buying an item that was much more expensive not that long ago).

 

[liolio]

399$ is still very expensive...
For japenese persons the xbox brand is not a strong one.
At this point they still don't have consider buying a 360.
It's "wait and see".

BenSkywalker 299$ is affordable, but is a lot for gaming only.
I will probably buy a 360 ans I have to buy a new PC (a poor one but new), for me 399$ is to hight... I'll wait for a price drop.
And I hope game price will go down as the 360 market share grows if not "not for me MS"...
I'm not alone. Go figure.
On the ps3 despite the system's quality, you can think by your self what is my feeling.
The article is laughable? Everybody I know is laughing when they hear the ps3 price.
What mean even if they have interest, they will wait...
And they will wait a long before price become affordable.
What will be the market share at this time? What will be the editors choice in this regard?

It's a very open situation, the article isn't laughable, I describe how sony can loose a lot af market share, they're not saying it will happen.
If you can see this POSSIBLY happen well....

 

[BenSkywalker]

BenSkywalker 299$ is affordable, but is a lot for gaming only.

For you maybe it is, not for me. I spent roughly $600 for my 360, I spend more then $300 on graphics cards, I have already spent another $600 on games for my 360. $600 isn't expensive at all for me, and I certainly am not 'rich'. If there are 10 million users who will pay $600 for a PS3 then that is a very good price point for Sony to have.

I'm not alone. Go figure.

Over five billion people did not buy a console last generation. People who don't game at all are the majority- so what is your point?

The article is laughable? Everybody I know is laughing when they hear the ps3 price.

As opposed to those that spend ~$1K on SLI setups? I don't know who you know, I know that I know several people going to camp with me with their ~$800 in hand on the PS3's launch day. If Sony launched at a price that everyone liked they would be morons. It really is that simple. The article is laughable as it states that Sony WILL SELL OUT at their price point and it is TOO HIGH. That is assinine being as kind as possible. There is nothing to indicate that Sony won't drop its' price after the launch window when supply exceeds demand by a reasonable margin- something that they have ALWAYS done.

It's a very open situation, the article isn't laughable, I describe how sony can loose a lot af market share, they're not saying it will happen.

The article is laughable. If you had an article that wrote the Earth isn't flat because the sun appears to have a circular shape that would be laughable. It matters not that your thought is correct in terms of the Earth being flat- if the logic used to come to that conclusion is flawed, and their logic is by the words in their own article- it discredits the piece.

Sony could end up coming in third place this generation- but as of now there is nothing to indicate that that is the likely outcome and what's more their is mounting evidence that Sony made the RIGHT CHOICE in their launch price point. MS did not launch too high- the fact that they could not keep up with demand is clear evidence of that. If they should be looking to drop their price now or not is another question, but no matter what you are selling if you can't build them fast enough to keep up with demand then you did not price it too high.

 

[SPM]

One thing you have to remember about the PS3 price is that the bits that increase the price over the Xbox 360 excepet the HDD (BR drive, HDMI etc) will drop in price very rapidly, while the corresponding bits in Xbox 360 won't. Therefore the slight price advantage that Xbox 360 enjoys on launch will erode very rapidly. The HDD's cost might not be justified on an ultra low cost console like the $129 PS2, but on a $400 console the extra isn't as much of an issue especially since it had worthwhile benefits and saves the cost of a memory card.

Hence I think that the PS3 and Xbox 360 are both in the same boat on price, but the PS3 has features that will allow it to be sold as a PC and media player as well which may allow Sony to justify the PS3 price more easily.

 

[Qroach]

One thing you have to remember about the PS3 price is that the bits that increase the price over the Xbox 360 excepet the HDD (BR drive, HDMI etc) will drop in price very rapidly, while the corresponding bits in Xbox 360 won't. Therefore the slight price advantage that Xbox 360 enjoys on launch will erode very rapidly. The HDD's cost might not be justified on an ultra low cost console like the $129 PS2, but on a $400 console the extra isn't as much of an issue especially since it had worthwhile benefits and saves the cost of a memory card.

I really don't see how you think the component prices in the PS3 are going to drop at a rate faster than the 360. The PS3 contains more components with many being at a higher price. The only thing in both of these systems that won't drop in price is the hard drive. That much I agree with, but your assesment for other components like the BR drive, and HDMI. Those components won't drop in price rapidly as there won't have been enough of them manufacturered to facilitate that. HDMI is expensive and has been around for a number of years already. BR drives haven't been released yet as we all know. unlike the PS2 where it was the processors and RAM that were the costly part in the begining, DVD drives were on the market for years prior to it's release. I don't see how it's going to come down in price rapidly.

basically your making it look like the PS3 will catch up in price to the less expensive 360 fairly quickly. I don't see how that is possible unless there's MORE components in the 360 that will drop in price at a rate slower than compaonents in thr PS3. I don't know what you think those components are, but I think you have it wrong. Of course this is providing that both consoles have brisk sales and there aren't any more component shortages.

Hence I think that the PS3 and Xbox 360 are both in the same boat on price, but the PS3 has features that will allow it to be sold as a PC and media player as well which may allow Sony to justify the PS3 price more easily.

They are not in the same boat on price. I think that's been established by many people for a long time.

 

[Shifty Geezer]

I really don't see how you think the component prices in the PS3 are going to drop at a rate faster than the 360. The PS3 contains more components with many being at a higher price.

I understand the reasoning to be that the higher the starting price, the faster the drop. eg. XB360's DVD drive may drop $25 a year, during which time the BRD drive would drop maybe $75 because it starts out so expensive. Thus in one year, if the XB360 can shed $100 off it's price, it might be the PS3 manages to shed $150-$200 (pie in the sky figure off course) so you go from $500 PS3 vs $300 XB360 to $300 PS3 vs $200 XB360. I don't think anyone is suggesting PS3 will ever catch up in BOM price to XB360, and if the price narrows to being very similar, it's likely Sony would be taking a larger loss/cut in profits than MS.

 

[Acert93]

For you maybe it is, not for me. I spent roughly $600 for my 360, I spend more then $300 on graphics cards, I have already spent another $600 on games for my 360. $600 isn't expensive at all for me, and I certainly am not 'rich'.

You are out of touch with the mainstream consumer. There are clear price segmentation in the console market. Further, every generation has a balance that factors in many factors like pricing, availability, marketing, software library, etc. If people can get the core games they want (stuff like GTA and Madden) on a platform that costs a couple hundred cheaper they will consider it.

As opposed to those that spend ~$1K on SLI setups?

Top end GPUs make up less than 5% of the market. The majority of PC gamers (emphasis on GAMERS) have pretty crappy hardware. Why?

Because it is cheap.

But it plays the games they want to play.

I have been pretty bullish on my Sony prediction. Obviously the groundswell of Wii interest and the PS3 pricing make things more interesting, but Sony will continue to be the market leader. But that doesn't mean that $600 becomes a great price or even appealing to 95% of consumers. Once Sony burns through the hardcore enthusiest early adopters it will be absolutely imparative that they lower the cost of the base unit.

But I do have a worse case scenario that could severely impact my prediction. Fall 2007 is going to be an important year and if Sony is not carefull the stars could align not so favorably for them. e.g. Sony: MGS4 or other big 2007 titles see delays; Sony does not pull away from MS in quality of software; Blu Ray movies, like PSP UMD movies, start displacing game sales initially as the PS3 will be a cheap BluRay player; they are unable to hit $299 with their base SKU by fall 2007; hardware shortages. MS: Halo the movie is a smashing success, Halo 3 is a blockbuster game and the GTA4 continues being the industry leading franchise; MS is able to offer a stream of successful PC exclusives on the 360 and gets good back for buck out of their new IPs; The 360 has a large 'cheap' backlibrary of bargin bin software; Wii: the games are innovative and resonante with gamers, Wii takes market leadership in Japan.

I don't see all that happening, but this is what gets me: This should have never been even remotely possible. Sony has had a stranglehold on the #1 position. I don't see them losing that position, but they have definately created a market situation where they probably wont outsell MS and Nintendo a combined 5-to-2. Last gen 6 out of every 10 consoles were a PS2. Due to the price sensativity of the mainstream and MS's ability to secure a host of crossplatform titles and Nintendo's branching out gaming into a new segment of tastes I don't see Sony maintaining that momentum. Which raises the question: Why would Sony make such risks when there were clear paths that could have maintained market dominance. To take it one step further, if the PS3 shipped in 2005 with CELL and RSX on DVD (HDD optional) I think they could have made MS bleed heavy enough to seriously consider if the Xbox 3 was worth persueing.

As it is now it seems MS is now emboldened and Nintendo has been given a new life.

Good for consumers, but not sure about the strategy.

 

[Titanio]

I don't see all that happening, but this is what gets me: This should have never been even remotely possible.

Everything and anything is possible, particularly in this industry. We can paint all the scenarios in the world, but in the end it doesn't matter, it's almost a waste of time unless one finds enjoyment in it. I mean, to show you how much at odds analysts are even with one another, another analyst has come out saying he sees things staying much the same as they are now in terms of ordering of the competitors. (Somehow I doubt that will generate as many sensationalist threads or news reports, btw ). Nobody knows what's going to happen, and I guess in fairness to DFC they're not claiming they do, nor do I believe this is even their own prediction - just one of many possible scenarios as they put it themselves.