DFC Intelligence prepares a report that details certain scenarios of market opportunities for next-generation gaming consoles. Despite the fact that Microsoft is aiming for the top spot, the firm believes the PS3 will maintain its dominance due to its strong position in all global markets.
In the wake of increased interest in the pending release of a report by gaming research firm DFC, which a press release touted as projecting Sony's PlayStation 3 (PS3) market share at 50 percent, the firm's founder downplayed the importance of market share as a factor in determining dominance in the game console industry - but said that various research models currently showed little potential for the Xbox 360 to dethrone the PS3.
"Our best case scenario has the PS3 outselling the PS2," DFC founder and president David Cole told Tom's Hardware Guide today via e-mail, "but the [Microsoft Xbox] 360 and [Nintendo] Revolution are still able to carve out solid positions in the market." DFC's May 31 press release also predicted a future best-case market share for the Xbox 360 at up to 40 percent, with Nintendo's new Revolution console capturing up to 35 percent. However - perhaps to keep its clients in suspense - DFC has not stated a year for these market share figures. Responding to a request for comment for clarification of DFC's market share projections, Cole told us, "Market share is simply not that important a figure. It is all about installed base and being able to make money on a platform even if it is not number one."
Interest in DFC's May 31 press release was renewed this morning after the online publication GamesIndustry.biz characterized it as indicating a 20 percent drop in market share for Sony PlayStation. In fact, a report published in mid-May by Jupiter Research, prior to the last E3 convention, projects current Sony PlayStation 2 market share at 43 percent, with Xbox market share at 19 percent. The DFC report did not characterize its projections as either a drop or a rise for Sony or Microsoft.
While Cole's comment today, on its face, would appear to indicate good news for Microsoft - whose market base is reportedly growing, although Xbox remains the number 2 platform in market share- the press release actually made a positive case for Sony. The main challenge facing platform manufacturers, the release stated, "is not to give consumers a reason to shift to a new system. This is where Sony has been very successful. Sony has worked very hard at building a stable consumer base. The PlayStation platforms have consistently appealed to the largest fan base. Nintendo and Microsoft may have had some bigger hits, but Sony has been consistent and that makes for repeat consumers."
If "it" is truly all about installed base, as Cole argued today, this argument would give Sony a clear advantage. But a number of other variables introduced by the press release seem to cast the chances for a solid conclusion to the wind. "Video game consumers are, in mass, very fickle," the release stated, "and will shift platforms in a heartbeat if something better comes along. Consumers (especially those that buy lots of games) are learning that it is not a major investment to buy multiple systems."
Cole stated DFC produces its forecasts based on an analysis of more than 30 consumer behavior types. Based on that analysis, he told us, "There is a certain group of consumers that will buy the first new system to come out, the [Xbox] 360." But many of those same consumers - especially those who wait until just after Xbox launches - are more likely to purchase more than one console, he explained. As a result, Cole's market share projections actually overlap, with 25 percent of his projected consumer base owning more than one console.
While profitability is always a goal manufacturers aim for, there is a certain prestige factor that helps the company with the leading console. There has been rarely an occasion when Sony or Microsoft settled for second place in any market. "The better platform is definitely the best play," added Cole, "but right now we don't see any major difference between the platforms, except for release date. Therefore other factors like keeping the existing installed base happy for awhile are important considerations."
Microsoft is likely to disagree with Cole's position. Shortly after the unveiling of its Xbox 360, several Microsoft executives, including chairman Bill Gates, made it clear that Microsoft was vying for market leadership. A Jupiter Research report published in May gives Microsoft an advantage due to its earlier projected release date, giving Xbox 360 a 38 percent share of the installed console base by 2010, with PlayStation 3 capturing 32 percent, and Revolution 21 percent. Commenting on his company's report, Jupiter analyst Jay Horwitz advised us not to take these numbers too literally "because this is a dynamic market [that] is difficult to forecast."
So far, Sony has not discussed possibly launch dates of its PS3. However, several retailers indicate a May 2006 launch of the PS3, with Web sites such as PS3land.com currently guessing March of 2006. Nintendo's Revolution device will follow shortly thereafter in Summer 2006.
