NPD August 2007

[liolio]

liolio,

fair points. Just to clarify: Sure, many gamers are looking for change now - I'm one of them. Then again, I made my "last gen purchase" nearly 7 years ago and have played everything that's there to play. I was specifically talking about the millions and hundreds of thousands of PS2's that Sony is still selling today. Are those consumers thinking of purchasing now, after they have just bought a PS2? Hardly... they're playing all the cheap games now! And as long as there are still people buying and playing a PS2, not all is lost for PS3 just yet (as per the reasons stated above in reply to Josh). That's the point.

Cheers Phil

Fair point too

But I don't remember how well the ps1 did after the ps2 release, but not all the user base shift at the time I guess.
But at this price people can consider having more than one ps2 within a family (while games could be share between brothers/sisters), old systems replacement, and piracy is an issue.
I dont have a ps2 some time ago I really think about buy one, witch I don't, but I guess some people could (do) come to the system lately and buy a cheap system with free/cheap games (software sales don't match hardware user base)...

But the point is that the most active part of the mainstream market shift toward new systems (Wii ) and the 360 fare well in US.
Sony is already losing gamers, it's not trivial, it's not like all the ps2 owners will all buy the ps3 at the same time in 2008.
Sony can only produce a finite number of ps3 at a time.
there is no reason for the Wii and 360 not to sell in the mean time.
The bigger the user base ==> more games enough good enough AAA games to justify a shift to an ther brand.
If you add the price avantage of both Wii and 360, it's clearer that more and more ps2 owners will leave Sony lair.

By the time the more conservative part of the market will upgrade, the match could be over. (not that the ps3 could go bankrupt but it could end with quiet a tinny market share).

At end 2007 i wouldn't be surprized if
MS has 9millions or slightly more 360 in US market

Nintendo has 7 millions Wii or slightly more (depending on what nintendo can produce they sell well every where) in US market

And Sony lags behind with between 3/3.5 millions ps3 on US market

 

[AlphaWolf]

I'm not convinced there is that many Sony fans waiting around for a cheaper ps3 (10 million+), I think there is just a lot of casual gamers waiting for a lower price point ($150-$199) on a newer console. No one is going to want to tap that market without profitable hardware (I don't know they could afford to do it), and there is not much doubt that Sony will be the last one to $199.

 

[jb]

I think it all boils down to price. Consumer electronics has always shown us that usally the lower the price the more sales you have. So if MS stays ahead of Sony in price (ie $100 buck or so) I just dont see how that would change.

I hate to disagree with the Sony supports here but unless something major changes soon (either positive on the Sony side and/or negative on the MS side) they have lost the NA race. And make no mistake about it, coming in 2nd or 3rd is still losing in many peoples eyes. Epically when you were the 800lb gorilla before...

I would alos disagree with that statment to the effect that all current xbox360 owners are halo fans. I did not play halo until after I bought my 360 as I was hooked on playing the sports games. I hated to play a shooter on a console..now i play them all the time so...not sure what that says...

 

[liuelson]

I guess we would have to qualify "some of the best the 360 had to offer". They were not more highly ranked, and were flawed, but 360 owners bought them. Like they do about everything else. A number of "above average" games according to critics have sold very well on the 360. The other consoles haven't realized (yet) this sort of software adoption, which is impacting "above average" games in a way you would expect "excellent" titles to react.

This is a good point about the disruptive effect of the Wii. Games like Mario Party 8, or future titles like Wii Fit seem to resonate better than traditional forms of video games like Madden or FPS games. Not only does this pose difficulties for 3rd party developers, it also poses difficulties for the gaming media (see discussion in Newsweek Monday Morning Quarterback from July NPD results).

Right now, it's possible that what's considered a good game by traditional gamers and gaming media won't be successful on the Wii; it may in fact require innovation in the gaming experience. But there are a lot of Wii consoles out there, and a lot more being purchased every month. There's certainly a market opportunity there, and the agile publishers that can take advantage of the changing market dynamic will reap the benefits.

 

[liuelson]

I think it all boils down to price. Consumer electronics has always shown us that usally the lower the price the more sales you have.

Not really; a very few companies have been able to charge a premium based on their brand. Apple comes to mind.

That being said, even Apple dropped the price of its iPhone by $200 for the holidays, for the explicit purpose of achieving greater market penetration. Apple, however, was selling the iPhone at a substantial profit when it dropped the price.

Ultimately, the name of the game is profit. Market share is important, but profit is the bottom line.

 

[iceberg187]

People are more loyal to games than they are to platforms.

 

[jb]

Not really; a very few companies have been able to charge a premium based on their brand. Apple comes to mind.

That being said, even Apple dropped the price of its iPhone by $200 for the holidays, for the explicit purpose of achieving greater market penetration. Apple, however, was selling the iPhone at a substantial profit when it dropped the price.

Ultimately, the name of the game is profit. Market share is important, but profit is the bottom line.

Yea but Apple had the advantage of inventing that market as before then portable mp3 players just did not exist. And even with in the apple line, the nano and the shuffle are the two largest sellers (ie the cheapest).

I agree with the end game being about profit. But I also know that many companys will play with that forumla in hopes of becoming the market dominte player then can more or less control that market and thus their profit. We did with our pagers back in the day...

 

[Zaphod]

Pesonally, I would find 1M sales for MP3 dissappointing considering the Wii install base [...] If Gears of War can sell over 4M in less than 6 months I don't see why we shouldn't expect the BEST Wii game to break 2M by the end of 2007.

Nice thesis there Joshua. Long for sure, but your Devil's advocacy bit is wide of the goal.

Considering you're comparing worldwide total numbers of an exceptional case (with a somewhat higher userbase and including lots of bundles) to a subsample containing five days of NA numbers, I really do feel perhaps you should try for a more fair comparison. Say, for example Bioshock, which MP3 coincidently seems to be doing just as well as (MP3 numbers + 50% install base bonus + 50% of 1st week sales in the second week == Bioshock numbers).

You also talked about the MP 'fanbase' in with regards to a comparison with Bioshock sales, but you can't have it both ways. For one part of the argument they're all casuals, and for the next all the hardcore Nintendo fanbase. MP2, while underwhelming, did a bit above a million units worldwide at a time where the GC installed base was significantly higher than Wii is today, so this should do as a 'fanboy' baseline. That's why even Halo is not a fair comparison. It is a core audience follow-up to a highly rated bestseller, hardly the case for MP3.

If MP3 sells well beyond the devotees that should be an indication that there is overlap between the 'expanding market casuals' and 'traditional gamers'. If a game such as MP3 is able to reach 25-30% of the Wii installed base (>1.25 million units in NA) within a couple of months, that should be more than enough evidence to show that 'traditional gamers games' can do well on the platform as long as they're also good games.

Is the number of potential buyers currently as big as for the 360? No, probably not (half?), but the hardcore share of its installed base will be declining if/when it hits mainstream, as did the PS2. I don't think the 'gamers game' share of the Wii market will drop as much as it is already 'diluted', so as the total market grows so will the number of potential buyers for such games at a closer to linear rate.

The market is there to be catered to. Hell, it should be an incentive as that corner of the gaming world is much less crowded than it is on the 360, and by the looks of things the chances of pushing above that number for NA on the PS3 aren't looking too hot anytime soon...

Even with great controls (MP3 or MoH like), do Wii owners really desire a slew of good shooters?

I believe they do, but in addition to being good, I have an additional requirement: They should also be original, or at least different. If releasing on multiple platforms or within franchises established on other platforms, I believe that the Wii edition will have to set itself apart as separate and desirable in some way that the 360 and/or the PS3 versions are not. If the choice is between (a, b, or c); I don't believe the Wii will win out among the hardcore. Make it ((a or b) and/or c) and they might do well still.

But I think a lot of Wii owners are looking for something different. [strike]If they wanted FPS with better controls they could get a PC, and the titles being sold on the Wii don't indicate to me a dieing thirst for a hoard of FPS titles.[/strike] The publisher who figures out WHAT Wii owners want will benefit greatly.

100% agreed, except for the strikeout. That, I believe, is more indicative of the (with the exception of RE4) less than stellar (to put it mildly) actioners/shooters available.

 

[Shifty Geezer]

You are kidding, right? Nintendo was once a synonymn for video games...

I meant post PS. PlayStation didn't displace Nintendo overnight, did it? I don't know, I was paying attention back then! Still, my thinking is that Nintendo held the crown and then gradually lost it as they made blunders and Sony had successes, until PlayStation became the generic name for gaming instead of Nintendo. Thus my comment that prior to Wii (and post PS) Nintendo was something of a non-entity.

If you were looking for a gift for a child or a very casual gamer you would certainly get a Wii and not a PS3. The sales information and mindshare reports support this. The Wii has absolutely moved in on PlayStation mindshare.

ish, and that's market mindshare and not brand. I'm making a distinction here. Yes, PS has lost market mindset, though PS2 is still a choice for a present for your kid, presumably. My litmus test has always been playground talk. In the 16bit era awe went to owners of an Amiga. Last gen with the consoles, it was cool to own a PS2 and uncool to own a GC. I don't have any playground talk to go by this gen Anyway, depending on what brand qualities your measuring by, I don't see the PS brand is affected. I can see that perhaps some people are thinking of PS brand as 'the console you buy because everyone else does' and in that regard I'd agree the 'brand' is 'damaged', but that's not what I was thinking on in terms of branding.

Seeing as the Porche (PS3) won't be the price of a Ford (Wii) anytime soon the analogy is broken anyhow.

The unnamed article suggested that the price doesn't have to be comparable - only to move down to where people think it's in reach. Dunno if I agree with that, but I can actually relate to it. If the PS3 launched at £300 I wouldn't have bought it, yet there's a part of me thinking 'when it drops to £300 I can bag one'. The initial price set an unreachable target, but as it moves down there's a sense of 'if I just stretch a bit more I can reach it...' I don't know how extensive that psychological effect is, whether it's a major thing or not, but it's gonna be there for some folk. I also don't know what the mindset is on the consoles. Is PS3 perceived as an unreachable luxury, or a piece of overpriced junk, or just doesn't feature at all in the buyers' psyche? I've no idea.

 

[dobwal]

Ultimately, the name of the game is profit. Market share is important, but profit is the bottom line.

Agreed. However, revenue also plays a part as Nintendo, MS or Sony all would pick 25 million in profits and 90% of the market over 50 million in profits and 10% of the market. Revenue dictates a company's worth which can positively or negatively affect stock prices.

 

[dobwal]

I meant post PS. PlayStation didn't displace Nintendo overnight, did it? I don't know, I was paying attention back then! Still, my thinking is that Nintendo held the crown and then gradually lost it as they made blunders and Sony had successes, until PlayStation became the generic name for gaming instead of Nintendo. Thus my comment that prior to Wii (and post PS) Nintendo was something of a non-entity.

.

It didn't take long for the PS to dominate. Once the advantage of being the successor of the SNES wore off, the PS began to seperate itself from the N64 in monthly sales.

ish, and that's market mindshare and not brand. I'm making a distinction here. Yes, PS has lost market mindset, though PS2 is still a choice for a present for your kid, presumably. My litmus test has always been playground talk. In the 16bit era awe went to owners of an Amiga. Last gen with the consoles, it was cool to own a PS2 and uncool to own a GC. I don't have any playground talk to go by this gen Anyway, depending on what brand qualities your measuring by, I don't see the PS brand is affected. I can see that perhaps some people are thinking of PS brand as 'the console you buy because everyone else does' and in that regard I'd agree the 'brand' is 'damaged', but that's not what I was thinking on in terms of branding.

.

Mindshare affects "brand". The PS brand is as well known as it is today as it was 5 years ago. However, as mindshare errodes so does your brand recognition. 20 years ago the brand "Nintendo" was synomous with gaming while today its "playstation" thats synomous with gaming but thats due to the success of the Sony consoles, which is a reflection of mindshare.

 

[TheChefO]

My litmus test has always been playground talk.

Playground litmus test is based on having unbelievably cool games that the other kids don't/can't have.

Genesis & TG16 v NES
NeoGeo v Genesis, SNES & TG16
3d0 v NeoGeo, Genesis, SNES & TG16
PS v 3d0 & Saturn
etc.

The "IT" consoles had the muscle to "outdo" the competition, and showed it in games.

Some would say ps3 has the muscle, but it doesn't show up in the real world.

The only thing premium about ps3 at this time, is it's price.



In my own "playground" here at work, xb360 rules the roost. A couple have Wii's, the rest have 360's, and that's it. There isn't this general idea that ps3 is an uber console that they just couldn't afford, it isn't desireable at this time based on games available.

Next year when KZ2 drops, it may change, but who knows what MS will have up their sleeve.

 

[Shifty Geezer]

That's a different definition to what I'm using. For me the Nintendo brand is no different. Nintendo is quality games (often with plumbers) that tend to do new things with controls and generally be interesting. Nintendo was all about first party, and still is. The brand hasn't changed. What changed was what people wanted to buy. Given a choice between Nintendo and their limited games that their brand was renowned for, and PS with a huge array of titles and choice, people chose the latter. Now in this gen, given a choice between a much cheaper system that still calls on Nintendo's brand identity as quality first parties that do interesting things, or the PS brand which is so darned expensive at the mo', they choose Nintendo.

Brand naming appeared as a measure of quality. Prior to brands you had local products that could have any degree of quality. Chocolate was produced with any old additives. Then Cadbury's came along and you knew you were getting a quality product. The name became a hallmark of quality, and people preferred to buy the product they new and trusted over the unnamed local concoctions. That's what brands are about. Cadbury's is synonymous with a quality of chocolate, with a pint and a half of full-fat milk in every pound. It'd popularity might well wain as people become more health conscious, but it still remains a product that you expect to maintain a high level of quality. If Cadbury's had been hit by a series of problems, like salmonella being repeatedly found in lots of bars, finger nails and hair in chocolate, mouse droppings and dissected alien cadavers in the factories, then the brand would be damaged. Cadbury's would no longer mean a chocolate bar you can trust. Then when Nestle wave around their brand that you've learnt over the years is just as free from shoe polish and wax as Cadbury's, you'll decide to pick the brand you trust over the one you once believed in but which has now gone to pot.

Nintendo means now what it did 15 years ago. PS means what it did when PS became successful. Neither hasn't managed to lost that. Well, I guess they've taken some knocks. Nintendo's image became 'kids console' and PS by way of Sony spokespersons spouting rubbish is tarred a bit with their perceived arrogance. But then all brands have to cope with such challenges. XB360 has to fend of an image of unreliability. None has really lost it's core value though, that I can see. There all names you'd trust to provide games. Unlike Gizmondo, which wasn't a brand anyone had any faith in and which got nowhere.

 

[Shifty Geezer]

Playground litmus test is based on having unbelievably cool games that the other kids don't/can't have.

Not so. The playground test is just a measure of what's cool, which doesn't need to be cool games. And I'm talking real playgrounds here with juniors/minors/little people Get talking with the kids and they ask 'have you got a console?' and you reply 'I've a PS2', they reply, 'Cool. I've got one too. What do you play.' Say instead 'I've got a GameCube' and you don't get the same impressed response. You even get hostility to some makes. Kids get ribbed over owning a GC. In the 8 bit era, owning and liking a Spectrum netted you a bit flack, whereas a C64 was the machine to have. Owning an ST was okay, but an Amiga was really where its at, and an Archimedes would just get quizzical looks.

It's got zip all to do with the games! Champions of Norrath and Kingdom Hearts aren't really titles laden with street cred! It's the platform that has managed to gain for itself a sense of identity that makes it 'cool' to people who haven't looked up the pros and cons of competing platforms and decided which is the best fit for their purposes. Expense is a factor. If you can show off your $150 trainers, you win the respect of [strike]the sheep[/strike] your mates, and a mugging. If you can state 'I own a Wii' what wil the response be? My guess it 'cool' and 'is it good?' and 'I'm thinking of getting one of those.' What's the response to owning a PS3? At the moment I'd guess 'Wow!' because it's pricey and perceived as powerful, perhaps as much because of the price as anything. I haven't any test cases for this though, and I don't know what the masses are thinking. TBH I think most aren't thinking anything. Of the hundreds of millions of past console owners, the majority at the moment are happy with what they've got and aren't fussing over getting a new machine any time soon.

 

[Scott_Arm]

Nintendo's brand image is definitely weakened. They made about Super Mario 3 and the power glove ... a theatrical release commercial, basically. That brand image was much stronger than the image they hold today.

 

[Arwin]

I meant post PS. PlayStation didn't displace Nintendo overnight, did it? I don't know, I was paying attention back then! Still, my thinking is that Nintendo held the crown and then gradually lost it as they made blunders and Sony had successes, until PlayStation became the generic name for gaming instead of Nintendo. Thus my comment that prior to Wii (and post PS) Nintendo was something of a non-entity.

You are right (although you probably meant 'wasn't paying attention'). And important to realise that it has been unique features that have typically determined the new leader as much as anything else. This is too often overlooked, even if it stares us in the face today with the Wii and the DS. Here lies, imho, the 360 biggest weakness. It has no motion control (cf Wii / PS3), no Bluray (cf PS3). It does have Live, but it's not free and it's not always better even than PSN (cf big online games with 32-40 players like Resistance and Warhawk). (No Browser either, though at this stage probably not that important.) No HDD as default either. These things aren't going to hurt in the beginning, but they will start hurting more and more.

ish, and that's market mindshare and not brand. I'm making a distinction here. Yes, PS has lost market mindset, though PS2 is still a choice for a present for your kid, presumably.

From what I can tell, most households that have PS2s aren't in a hurry to replace their PS2, but when they do, are definitely looking at a PS3 first. The upgrade, again from what I have seen, usually is paired with the upgrade to HDtv. 360 owners are typically also early HD tv adopters.

My litmus test has always been playground talk. In the 16bit era awe went to owners of an Amiga. Last gen with the consoles, it was cool to own a PS2 and uncool to own a GC. I don't have any playground talk to go by this gen Anyway, depending on what brand qualities your measuring by, I don't see the PS brand is affected. I can see that perhaps some people are thinking of PS brand as 'the console you buy because everyone else does' and in that regard I'd agree the 'brand' is 'damaged', but that's not what I was thinking on in terms of branding.

The thing that hurts the PS3 right now is that the 360 appears cheaper (lower entry price at any rate, let's not discuss value for money), 360 games currently still look better and/or have better framerates in multiplayer, and the 360 has more games out. Similarly, the Wii is cool to like, because a lot of kids can afford it. But that PS3 is still suspected of being better, and once the price drops, it will be Amiga vs the Atari ST all over again.

I'm just kidding - but it was interesting to see that the Amiga overtook the Atari ST fairly late in its cycle (was it the 4th year?), but then kept on going for several years still. It's just one example of why I strongly disagree with Joshua. A console can do very well initially, but then it can just stop selling. Then it can be completely rekindled again. There's just no telling. Would anyone be surprised if there's an explosion of PSP sales if FFVII turns out to be good? Along with God of War? Coinciding with the new form-factor, it's just so hard to predict what will happen, but that it can happen is I think clear.

The unnamed article suggested that the price doesn't have to be comparable - only to move down to where people think it's in reach. Dunno if I agree with that, but I can actually relate to it. If the PS3 launched at £300 I wouldn't have bought it, yet there's a part of me thinking 'when it drops to £300 I can bag one'. The initial price set an unreachable target, but as it moves down there's a sense of 'if I just stretch a bit more I can reach it...' I don't know how extensive that psychological effect is, whether it's a major thing or not, but it's gonna be there for some folk. I also don't know what the mindset is on the consoles. Is PS3 perceived as an unreachable luxury, or a piece of overpriced junk, or just doesn't feature at all in the buyers' psyche? I've no idea.

Many people have a certain mental price cap, simply because there's a certain amount of money they can afford or mentally accept spending on this kind of thing. What that cap is depends on personal circumstances, financial, practical, or sheer devotion to gaming. The early birds that bought 360s buy a lot of games, indicating that they are rich enough to also enjoy HD tvs. These people will just as easily buy any of the other consoles if they feel one or two games are worth it.

The PS3 has a lot of things going for it, not in the least compatibility with all the previous Playstations, compatibility with all kinds of movie format, Browser, Motion Control, BluRay, HDD by default, and some awesome games coming up spanning a vast range of different genres and many with very established names.

These consoles are on different timelines. And I'll be so bold as to say that the closer the consoles get to each other in price, the better things will look for the PS3. Under the current circumstances, time is on the PS3's side. The 360 needs to distance itself a lot further from the PS3 right now, because once both consoles get under 299, price will no longer be relevant among them.

The big question for me is will the Wii be around long enough to take away market share from the 360 or PS3, or will it perhaps only slightly delay the next generation? It's hard to tell, but I do believe all of them will grow the market, and I even see potential for all three to reach 100.000.000 over the next 10 years. Bold prediction, I know, but it's not impossible at all. I'm thinking that eventually we could see 1 console on every 2 TVs, but even if it is just 1 console on every 4 TVs, how many consoles is that?

 

[Arwin]

It's got zip all to do with the games!

You're running away with yourselves. That's going too far. Although the demo scene had a bit of influence on it, far better music in games and games like Team 17's awesome stuff were paramount to the success of the Amiga. I know, having owned both the Atari ST and Amiga (though the latter, often played at friends, owned by myself only near the end of its cycle, the cute little Amiga 600HD).

 

[nelg]

My litmus test has always been playground talk.

Which is what that Brandtel report was that you so easily dismissed was trying to gauge. In my 'play ground" every one in the demographic at a recent reunion either has or wants a 360.

 

[nelg]

The PS3 has a lot of things going for it, not in the least compatibility with all the previous Playstations, compatibility with all kinds of movie format, Browser, Motion Control, BluRay, HDD by default, and some awesome games coming up spanning a vast range of different genres and many with very established names.

If Blue-Ray does not succeed, having it may be just as useful as if the PS1 had a Betamax player.

 

[TheChefO]

And I'll be so bold as to say that the closer the consoles get to each other in price, the better things will look for the PS3.

Indeed. But in the meantime, the market is changing along with the games selection.


By the time they hit mainstream pricing, the foot hold xb360 and Wii have on the market will be well established.


Having said that, one (or two) game(s) can come along and catch on like wildfire, but you'd have to look back pretty far in the past to see evidence of such an occurance. Recent history suggests early establishment equates to dominant sales and marketshare. Wii is bucking that trend, but some would say it isn't overlapping and competing with the same demographic as xb360.

Ps3 would have had to give some signs of life at an early going to give hope for future successes.

Good thing for them is it seems MS is happy to hang around in their passive price cut stance. Had MS gone for the throat (like Sony did) and slashed xb360 core to $200 last spring (6 months after their competition launched), things would have been a bit different.