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

[RancidLunchmeat]

And now let's briefly mention Halo on the XBox. See a similarity?

Okay, this probably sounded pretty harsh and I'm fully aware that the H word is considered sacred by some. And I'm definitely not saying these games are garbage, I'm just saying they are very overrated, but understandably so, because of their unique positioning (solid game with high replayability in the midst of an endless void). We could agree that those are significant games, but that alone doesn't make them great games.

The assertion that people purchased and played Halo because there were no other options for the Xbox is absurd on its face.

People purchased the Xbox because of Halo. They didn't purchase Halo because they had bought an Xbox and didn't have anything else to play on it.

 

[Rolf N]

The assertion that people purchased and played Halo because there were no other options for the Xbox is absurd on its face.

My assertion was rather that they played it again and again, in MP mode, and hence got much more into it than would have been possible with the competition coming from a fully developed games library. Not that they purchased it because ... whatever.
And I don't find it absurd.

People purchased the Xbox because of Halo.

That's absurd IMO

 

[pc999]

Doesn't this belief run counter to the findings of the study?

I'm not sure if they asked if people were married/unmarried, but they did state that 70% were women, and that they spent most of their gaming time at night (would indicate non-married, non-nookie), and that a large percentage didn't have any children.

So we've got women who play cheap games (both to design and purchase), that are easily available with the hardware they already own, who do the majority of their gaming at night, and who don't have children.

This really doesn't seem like some great untapped market that is going to be relevant in any way to who is the market leader in the next gen console sales.

Why not, specialy if it is more than a console.

Oh.. and my girlfriend works for SBC, in an environment that is 99% female, and about 95% of them are butt ugly/extremely over weight, and couldn't find a man willing to do anything for them for free... even if you count sexual favors as free.

The belief that there's a man for every woman might be true, but that doesn't mean the woman isn't in California and the man isn't in Zimbobwea.

I find that strange, it would probably be very possible here .

I'd say it's more like the people who buy jazz albums off the shelf by the latest/most popular artist of the genre, instead of buying the digitally remastered, live recording by Sheffield recording. They either can't tell the difference, don't have the equipment to be able to tell the difference, or both.

Not really what I mean, pick (eg) Kurt Cobain and Satriani, the second is said to be one of the best guitar players ever and the first just can do some chords (both do good music IMO) put both playing for someone who dont play and most will not be able to tell which one plays better, they will probably chose for the music it is better know or they prefer. That is what happens with a no gamer they just dont see games this way.

Anyway I am just trying to say that the others two (specially Wii IMO) can have a (bigger) chage of get more new gamers and that would put more chances on PS3 losing market share.

 

[BenSkywalker]

You are out of touch with the mainstream consumer.

Five billion plus consumers on the face of Earth. Less then 5% of the population buys a console at all. You need to define what market you are talking about. Gaming is not like food, clothing or shelter, it is an entertainment medium.

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.

There are a few problems with this in relation to the PS3. First off the PS2 was utterly dominant prior to GTA 3 hitting retail. It was already decimating the competition without any help from Rockstar. Furthermore, if we assume that only half of the people who bought one GTA but another, that still means that the franchise reached less then 15% of the entire PS2 user base. GTA can certainly move systems as of now, but it is very far removed from being a deal breaker particularly now that it is cross platform. If we were to assume that the same 50% of those that bought multiple GTAs would also move over to the 360 now solely because it is available on that platform that would give MS an additional 15Million users this generation. That doesn't cover how much they were behind Sony in any single territory this generation.

On the pricing issue you are correct that there are a lot of people that don't place a very high priority on gaming and won't spend that kind of money. There are an awful lot who won't consider spending $299 either. Actually, for the most part people who are willing to drop $500 on a console won't stop if that is upped to $700- nor would they back down if it hits $1K. We have seen this played out now for quite some time in terms of the price the market is paying via ebay. The initial launch buyers will pay a significant premium with little trouble. If you aren't part of that group that is fine- we are here though and there are millions of us.

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

If Sony could move 5% of all PS3s at the $600 price point they would be doing cart wheels in the streets- as would their share holders. It comes down to the fact that they are going to sell out this year. If they move 2Million units at a $200 premium that is an additional $400Million in revenue for Sony. A more realistic number is 5Million on a global basis which gives them an additional billion dollars in revenue. Even by MS's standards- when discussing money anything in the billion dollar range is serious money. Charging what they can is simply good business.

Once Sony burns through the hardcore enthusiest early adopters it will be absolutely imparative that they lower the cost of the base unit.

Obviously. A billion dollar cushion will help them in that cause, it will help them quite a bit actually.

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.

And what if Halo slips to '08? You are talking like Sony is the only company that runs the risk of having issues. In realistic terms Sony does not live or die on one or two franchises as MS has had to do for some time now. They thrive because of a boat load of mediocre titles- that has always been their way. Nin has always throttled Sony when it came to exceptional software. But Sony has had tons of shovel ware with a lot of good games and an occasional great one slipping through the cracks. Also- BluRay movies eating into PS3 game sales is relative, Sony gets licensing kick backs one way or the other.

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.

PC game taking the console space by storm..... not going to happen. PC ports have at best performed with very moderate success on the console side of things. Oblivion is likely the strongest performing title to date on a relative basis and that was released in a time when almost the entire user base was of the hardcore variety.

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.

How is that? What exactly have they done that would prevent their long term success? Their initial price point? What else have they done exactly? What mistakes have they made? Not sticking with last gen media? To date, every time that has been done whoever did it lost the long term battle no matter what the initial numbers were(N64 was much stronger out of the gate then the PS1 as an example). What else have they done that puts in jeopardy their long term prospects?

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

MS is emboldened how? What I see right now is hardware languishing on shelves and no software to drive sales. As a current 360 owner I can say that MS has failed in no uncertain terms in taking advantage of their early launch. Their hype is gone, they have nothing to drive sales and they seem to be relying on a shortage of PS3s to help them out this holiday season. This isn't the moves of a bold company. If anything, they seem to be borderline cowering fearing what will happen when Nin and Sony launch. MS is facing two new platforms launching this year- if they fail to outsell them both combined by a sizeable margin then their hyper early launch will be an abject failure by any reasonable standard. Much as you point out the PS3's key point will be the holiday '07 timeframe, MS's is this holiday season and from what we have seen, they aren't looking too strong. IF GoW makes it then they have something to try and build on, but we don't know if it will hit for certain and we also don't know if the market will be interested in it or not. Given the enormous delays that it seems everything coming for the 360 is having I'm not banking on anything MS said in terms of release dates.

 

[pc999]

How is that? What exactly have they done that would prevent their long term success? Their initial price point? What else have they done exactly? What mistakes have they made? Not sticking with last gen media? To date, every time that has been done whoever did it lost the long term battle no matter what the initial numbers were(N64 was much stronger out of the gate then the PS1 as an example). What else have they done that puts in jeopardy their long term prospects?

Dev suport, if at the end of 2007 you have 20M XB360 and only 7M PS3 which console will you suport (assuming will not go multiplatform, or that there is a prymary dev platform)?

Remember that this time dev need to sell as much as they can, more than ever, taking in account the dev costs of the game.

 

[cthellis42]

Bull.

Surveys have shown that over 50% of the people who buy HDTV's aren't even aware that you need special equipment to receive HDTV broadcasts. Most think the simple fact that it's widescreen makes it HDTV.

Ah, but you have to remember, that makes them MORE likely to get snookered by fancy words and hi-tech phrases.

 

[Powderkeg]

You may be able to get a non-gamer to say wow, with graphics. It just won't get them to pick up a controller, content, gameplay will.

How are they supposed to know what the content and gameplay are like if they haven't picked up the controller yet? Remember, these are NON-gamers we are talking about here. They don't read gaming sites, they don't follow gaming news, they don't read game reviews, they don't hold gaming conversations with their friends, they don't play games.

So how are they supposed to know what the content and gameplay are like?

They won't, will they?


So no, content and gamplay won't get a NON-gamer to pick up the controller because those factors are unkown to them until after they've picked up the controller and played the game.

So what will get them to pick up the controller? What's left?

 

[Powderkeg]

Why not, specialy if it is more than a console.

Why not? Because of the sentence you ignored:

"that are easily available with the hardware they already own"

If they don't already own the hardware, they aren't going to play games that are made for it. They don't buy hardware to play games on, they play games on hardware that they purchased for other reasons.

 

[Moonblade]

People purchased the Xbox because of Halo. They didn't purchase Halo because they had bought an Xbox and didn't have anything else to play on it.

Hmm yes and no.
I say 'some' people bought an xbox because of halo while 'some' people bought halo because it was one of the best xbox games at that time (until kotor arrived imho) and 'others' just got it for free.
If memory serves me I believe bungie announced 3 million copies of halo where sold when xbox hit the 10 million mark. That's a very high penetration.
I believe there have been xbox - halo bundles for almost 2 years which really pushed copies and popularity. A very good strategy because it also worked for mediocre (don't shoot me, myst fans) games like myst back in the 90's. MS put a lot of effort in promoting the game because they really needed xbox exclusives at that time (going from zero).

And I'm definitely not saying these games are garbage, I'm just saying they are very overrated, but understandably so, because of their unique positioning (solid game with high replayability in the midst of an endless void). We could agree that those are significant games, but that alone doesn't make them great games.

Halo being a significant or great game is a matter of personal preferences but I believe halo was and still is percieved as xbox greatest franchise.
After all, it's not the reality but the perception of reality that counts.

 

[Geo]

If Sony ends up third, I think it will be by not much --pretty much a dead heat. I don't see them just rolling over and dieing. They will fight to defend market share even if costs them, because the cost of not doing so is even higher. And there's every reason to think that PS2 will keep making money for them, so they have that cushion to help.

Tho I could see Nintendo ending up #1, volume-wise, as everybody's #2 console.

 

[Brimstone]

MS is emboldened how? What I see right now is hardware languishing on shelves and no software to drive sales. As a current 360 owner I can say that MS has failed in no uncertain terms in taking advantage of their early launch. Their hype is gone, they have nothing to drive sales and they seem to be relying on a shortage of PS3s to help them out this holiday season. This isn't the moves of a bold company. If anything, they seem to be borderline cowering fearing what will happen when Nin and Sony launch. MS is facing two new platforms launching this year- if they fail to outsell them both combined by a sizeable margin then their hyper early launch will be an abject failure by any reasonable standard. Much as you point out the PS3's key point will be the holiday '07 timeframe, MS's is this holiday season and from what we have seen, they aren't looking too strong. IF GoW makes it then they have something to try and build on, but we don't know if it will hit for certain and we also don't know if the market will be interested in it or not. Given the enormous delays that it seems everything coming for the 360 is having I'm not banking on anything MS said in terms of release dates.

By the time Sony and Nintendo launch their consoles, the 360 should have a few million sellers games already.

XB360 Million Sellers or close to it

CoD 2
Ghost Recon Advanced War Fighter
Oblivion



When the PS3 and Wii launch the 360 will have more titles that should quickly reach the million seller point.


XB360 X-Mas 2006 million sellers

Gears of War
Splinter Cell: Double Agent
Rainbow Six: Vegas
Forza 2




Then in 2007 Microsoft will really put it's foot down on the gas.

Halo 3 will overshadow every game in the North American and European markets.
The 360 will get a price drop.
A handheld will get released. This will amplify the value of LIVE.


*wildcard speculation* MS announces new "Wiimote" style controller that will work with Halo 3. It will have gyro and next-gen rumble technology from Immersion.

 

[Qroach]

DVD drive prices are about as low as they will get, they won't drop much more. Bluray drives and HDMI is grossly overpriced now because they are new technology - remember how much DVD and CD drives cost intitially compared to now. Look at the margin between CD drives and DVD drives now compared to when DVD drives were first released. Look at how much the cost of floppy drive prices have dropped over the last few years - zip!

I don't think your helping your point by saying that. It took 20 + years for CD technology to reach it's current price range. It took DVD technology something like 10 years to reach it's current price range from the time of introduction. How fast do you think it will take bluray drives to reach the same price point of a DVD drive today? Either way it's not going to drop at the same rate as DVD since there's MUCH less of a market that that can beneft from the technology, AND the market will be split with between two formats. Remember it took 6+ years for DVD tech to reach the point where everyone wanted it and DVD players were flying off the shelves. 8 years for the DVD players to become VERY cheap (under 50 bucks). However the difference is, EVERYONE with a tv could benefit form the quality of a DVD movie. Only people with a HDTV can benefit from the high def formats. This imo will slow the adoption rate of these types of drives, thus keeping the prices higher until they reach market saturation. Hardware drops in price quickly when there's competition and continued high demand.

What you say about HDMI being around for years and that HDMI and Bluray won't be produced in large numbers is total nonsense. It is only now that HDTVs are being marketed seriously, up to now they were techno-geek items with no practical use, because the content wasn't there. HDMI and probably Bluray (or HD-DVD in the unlikely event that HD-DVD wins) will be standard on every single TV set and media player. That is mass production on a grand scale, and that will bring prices down to commodity levels.

If your thinking logically it's NOT nonsense. People have to buy these televisions first you know. Nobody had to go buy a new television to enjoy the benefits of DVD tech. Think about it, there' differences in the market place this time compared to last time a new format was introduced.

A. you have two competitiors HD-DVD and Bluray (previously it was ONLY DVD when it came to movies)
B. to get het benefit you need an HDTV (previously any TV could see the benefit of DVD)

$100 price difference between the low end PS3 and the high end Xbox 360 (which are more similarly spec'ed) isn't a lot, particularly since you get a lot more for your money with PS3. Remember most Xbox 360s sold are the higher model - the core model is not unpopular, and buyers seem to want to shell out a little more for the higher spec'ed model.

You were talking about HDMI as one of the things that are important to PS3, yet you're talking about the PS3 model that doesn't include it. The lowend model doesn't come with that feature. Again, I thik you just proved my point. The 360 core versus the PS3 core is a big difference in price ($200 dollars). The only real difference is that the PS3 core comes with a hard drive and the 360 core doesn't. However is a $200 dollar difference between them really worth a 20 gig hard drive? peopel didn't think 100 bucks was worth the 20 gig hard drive for the 360.

By the time PS3 arrives MS will likely have hit thier target of 10+ million units world wide. They are already in countries they never reached previously with XBOX. They could be in a position to drop the price of the 360 if they want. This is why I think MS is in a better postiion lower costs faster than sony is... they don't have the added cost of Bluray, HDMI, wireless, and two different flavors of memory.

You say "you're getting a lot more for your money", but if you compare these what exactly are you getting? the games don't look significantly better. how do you justify the additional price? How do you think consumers will justify the added price?

Why shouldn't they do the same and get a PS3 core model or a PS3 high spec model? The price differential will also drop as the price of the Bluray drive and HDMI - the two most expensive components drops.

Those are TWO of the most expensive parts that I don't expect to dop in price very quickly. Also the processors (CPU, GPU) and ram will be costly intiailly. There's a very good reason Sony dropped HDMI from the core version of PS3. They know how much it added to the overall cost of the machine and that it didn't make sense with a LARGE percentage of HDTV owners could never make use of HDMI.

There are lots of people who won't be able to afford either Xbox 360 or PS3 - they will simply go for a PS2 or Wii.

It's NOT that simple. What about the millions that already own a PS2 or Xbox? For those PS2 and Xbox owners that are looking to upgrade to something that can display a big improvement visually over their current consoles, the Xbox core version could be VERY attractive, even more so if there's a price drop. people keep forgettign the hard drive included with the original XBOX was a mistake. Not everyone wants to go online or can afford to.

 

[Dave Baumann]

It strikes me that sometime we all think along the lines of "hardware costs equate to hardware prices". We should remember that software sales will also have an effect on hardware prices in that the more profit that is made from the software the more leeway there is in offsetting hardware costs.

 

[Rolf N]

Dev suport, if at the end of 2007 you have 20M XB360 and only 7M PS3 which console will you suport (assuming will not go multiplatform, or that there is a prymary dev platform)?

Get real.

Remember that this time dev need to sell as much as they can, more than ever, taking in account the dev costs of the game.

What does this have to do with the question?
("How is that? What exactly have they [Sony] done that would prevent their long term success?")

Multiplatform shmultiplatform. Those are still games though, and I don't see how it is Sony's fault, or to Sony's distinct disadvantage.

 

[Dave Baumann]

pc999's point isn't one that deserves a "get real" response. The point of it is that if the price of the console retards the sales (in relation to other consoles) then developers/publishers are going to have to go more multiplatorm or those that pick just one are likely to side more with the largest install base such they have a bigger opportunity to recoup the dev costs.

The logic stems from the fact that Sony's choices have produced a platform that is initially more expensive than competing platforms (and, based on current evidence, isn't disancing itself in terms of game impressions) and could (in my opinion, likely to) end up at a price premium for the duration of its lifespan.

 

[Qroach]

pc999's point isn't one that deserves a "get real" response. The point of it is that if the price of the console retards the sales (in relation to other consoles) then developers/publishers are going to have to go more multiplatorm or those that pick just one are likely to side more with the largest install base such they have a bigger opportunity to recoup the dev costs.

The logic stems from the fact that Sony's choices have produced a platform that is initially more expensive than competing platforms (and, based on current evidence, isn't disancing itself in terms of game impressions) and could (in my opinion, likely to) end up at a price premium for the duration of its lifespan.

Good point dave. I agree with the point on software sales offseting the cost of the console. For those people that only by 5 or less games over the span of a console life cycle, they are the people that tend to go for the cheapest console with the most games that appeal to them.

 

[Rolf N]

You were talking about HDMI as one of the things that are important to PS3, yet you're talking about the PS3 model that doesn't include it. The lowend model doesn't come with that feature. Again, I thik you just proved my point. The 360 core versus the PS3 core is a big difference in price ($200 dollars). The only real difference is that the PS3 core comes with a hard drive and the 360 core doesn't. However is a $200 dollar difference between them really worth a 20 gig hard drive? peopel didn't think 100 bucks was worth the 20 gig hard drive for the 360.

I don't know where to begin ... every single sentence raises several eyebrows.

The HDMI-equipped bigger PS3 SKU is overkill to make a comparison to the 360. The 360 doesn't have HDMI in any version. The big XBox360 SKU has a harddrive the same size as the small PS3 SKU. It's a totally adequate comparison point, unless you believe a headset is worth real money (I don't).

The HDMI-equipped bigger PS3 SKU costs 100$ more and offers more value than the smaller SKU. The whole HDMI issue is about whether or not you think that spending an extra 100$ to have basically just HDMI and more HDD space is justified. It has nothing to do with any 360 comparison, because once you start talking about HDMI you can no longer be talking about the 360.

The difference between any PS3 and any 360 is predominantly that one is a PS3, designed by Sony, with well-known hardware specifications, and the other is a 360, designed by Microsoft, with well-known hardware specifications. Ignoring this and pretending that there's no further difference is just crazy-talk.

And picking the 360 Core to go up against the PS3 makes it only crazier.

By the time PS3 arrives MS will likely have hit thier target of 10+ million units world wide.

You mean, like, selling seven million units over the next four months?

You say "you're getting a lot more for your money", but if you compare these what exactly are you getting? the games don't look significantly better. how do you justify the additional price? How do you think consumers will justify the added price?

You're getting a console designed by Sony, a company that has a certain track record with console designs, over a console designed by Microsoft, a company that I'd rather not get more descriptive on at this time.

Those are TWO of the most expensive parts that I don't expect to dop in price very quickly. Also the processors (CPU, GPU) and ram will be costly intiailly.

Care to compare die sizes to the 360 chips? Care to evaluate the PCB and mechanical construction, the external PSU, the detachable HDD enclosure?
And do you actually believe a blue laser diode, when ordered and manufactured in the millions, costs 100$ a pop?

There's a very good reason Sony dropped HDMI from the core version of PS3. They know how much it added to the overall cost of the machine and that it didn't make sense with a LARGE percentage of HDTV owners could never make use of HDMI.

No.

It's NOT that simple. What about the millions that already own a PS2 or Xbox? For those PS2 and Xbox owners that are looking to upgrade to something that can display a big improvement visually over their current consoles, the Xbox core version could be VERY attractive, even more so if there's a price drop. people keep forgettign the hard drive included with the original XBOX was a mistake. Not everyone wants to go online or can afford to.

No.

And the HDD wasn't a mistake. It was the vehicle to get PC-centric developers up and running easily on the platform. Perhaps you don't realize how useful virtual memory can be.

And in fact everyone does want to go online these days.

 

[Titanio]

I don't think it's just possible that PS3 will always be at a premium, but more than probable. However, the absolute gap in pricing between it and its nearest competitor will shrink over time.

In general, in the past, pricing has also played a secondary role when it comes to choosing one system over another.

The point about games sales being used to discount hardware etc. is a good one, but should be generalised to all content sold off the platform, or indeed in the business as a whole. I think from this POV, Sony has probably more to gain than the others (virtually all Sony content now is deliverable via PS3, via physical media, and potentially over the network). But I guess we'll see. In the end, price cutting and the aggressiveness of those cuts, relative to the competition, will be dependent on the demand.

 

[Geo]

I don't know where to begin ... every single sentence raises several eyebrows.

I'm afraid to ask where eyebrows 3, 4, 5 are. . .

 

[Rolf N]

pc999's point isn't one that deserves a "get real" response. The point of it is that if the price of the console retards the sales (in relation to other consoles) then developers/publishers are going to have to go more multiplatorm or those that pick just one are likely to side more with the largest install base such they have a bigger opportunity to recoup the dev costs.

Even if the PS3 would never actually be released, suggesting that the 360 will hit 20 million units sold sometime next year is at best one of Peter Moore's lucid dreams.

I see no point in seriously continuing off a speculation as rampant as this. That's like me demanding a proper discussion about Vista's irrelevance.
It's not a secret that I disrespect Microsoft from the bottom of my heart but at least I still pretend to restrain myself.

The logic stems from the fact that Sony's choices have produced a platform that is initially more expensive than competing platforms (and, based on current evidence, isn't disancing itself in terms of game impressions) and could (in my opinion, likely to) end up at a price premium for the duration of its lifespan.

The logic always conveniently ignores strong points of the PS3, such as the standard HDD (which very well can influence development costs btw), more storage, more CPU performance, both in scalar/GP "naive code" as in MT/"worker thread" scenarios, higher texturing performance, higher GPU ALU throughput, proper backwards compatibility and the ability to play an HD movie format at all. Did I forget something? Wanna go down that list and tell me that I just made it up?

I don't want to sound like a jerk here, but there is clearly and easily enough added value in the machine's hardware alone to justify the 100$ extra. 200$ may be stretching it but I can still see it. You two are saying the console won't sell because it's too expensive, and as your opinion that's just fine, it's just that I don't believe it.