NPD August 2007

[Scott_Arm]

That was me - thanks for not posting and giving me a chance to

I took the same trend (rare exclusives) and came to the opposite conclusion: diversified consoles. My thought was that the "lesson" of the Wii's disruption of the market is that more publishers will reorganize to become more agile - do more projects with small-to-medium-sized budgets, and stick to proven franchises for their big blockbuster hits. I think EA has tried to reorganize to become more agile; I think companies like UbiSoft and CapCom have been rewarded in the financial markets (stock price performance) because of their agility and ability to capitalize quickly on the Wii.

This is all assuming that the install bases are comparable, with HD consoles v. Wii being within 10-20% of each other's overall market share. (I'm grouping HD consoles together for the sake of this analysis.)

If the Wii becomes a runaway success (>=70% of overall market share at some point), then obviously the "blockbuster" game model may become truly endangered. If the Wii fades very quickly (<=30% of overall market share when its sales slow down dramatically at saturation), then the "Indie" game model may be endangered.

I find myself torn - I am a fan of both blockbuster hits and Indie projects. I would like to see a market where both types of games will thrive.

I just view it as the more money you spend, the more conservative you're going to be. You might see a lot of value added for one console or another, but the core experience for the game is going to be relatively the same. You'll see lots of exclusive bonus content, but not a lot of exclusive games. The Wii is a little different, because the budgets are smaller, so there may be some more risks taken. At the same time, it's getting smaller budgets, so the production values won't be the same.

I think the next gen consoles will probably follow the same trend. If Sony and MS want to continue battling for the big budget console, they won't rock the boat too much and they'll target price and timing of release a little better. Maybe Sony and MS will release 2nd consoles to compete with the Nintendo for the "casual" space, if it looks profitable enough.

 

[assen]

I'll give you a few reasons:

- because many PS supporters (me included) haven't bought one yet

"Supporters", aka hardcore games with a platform affinity, are far and few between, they won't decide the war - or else we'll still be using Amigas and playing on Dreamcast 2.

- because PS2 is still selling in very hot numbers - what will they buy?

Just ask the Madden crowd. They will buy whatever $199 console has the best selection of games they like. I'll leave to you which of the three consoles won't fit that description anytime soon.

they very well go for the next thing they know best: A PlayStation.

The more time passes, the more likely it becomes for them to go for the thing they keep hearing about from their gamer friends (a 360), from TV, from everywhere (a Wii).

- exclusives of well known franchises

This is all it boils down to - FF13 and MGS4. Every single point of argument the Sony side in discussions crumbles, except for this one. I give it to you (I personally am a huge Final Fantasy fan, and don't get MGS at all.)

 

[Rangers]

Virtually discontinued? I doubt that very much. Just hibernating until the base cost of a 360 becomes low enough for the Core to hit a price point where it'll be able to contribute additional sales rather than cannibalize potential higher margin ones.

I agree with you it's not tactically discontinued, but for realistic purposes of this ASP discussion it is.

It's sales were some 8% of the total months ago, I believe that was before the Elite probably knocked it down even more. Further, there have been a lot of rumors that it's discontinued, and it's in stock almost nowhere. Wal Mart.com is one of the last places I've seen it in stock. Gamestop seems to have mostly stopped carrying it recently, for whatever reason. Recently Amazon, one of the few that had Core stock, also went out of stock and now only offers it from resellers. You still see one laying around a brick and mortar now and again, I guess. I saw one at a TRU a while back, but conversly haven't seen one at Wal Mart in a while.

I believe this is probably in prep for some sort of repackaging as the rumored Arcade sku, or something like that, but regardless, right now Core's seem pretty flimsy in presence. Also, I have heard Core does well in the UK, but that doesn't apply to a US discussion.

 

[TheChefO]

...How many of them (ps2 owners) are really that interested in the Xbox software lineup? ...

Interesting question.

I think another interesting question would be: how many are interested in the ps3 lineup?

At this point, I'd say xb360 has a much better lineup in quality, quantity, and diversity. These are attributes one normally associated with the Playstation brand.

Another point I'd make is many of the "exclusive" ps2 owners out there were casual gamers that bought maybe a handful of games. They had their Madden, and their x sport game(s), and maybe a GTA3 and a racer. These titles can now be found elsewhere on the same box their friends are playing on.

The Sony hardcore will always exist, same as the Nintendo Hardcore I'm sure. But I don't think that each ps2 owner was a dedicated, hardcore "Sony only" fan. In fact, I'd say that was/is a slim minority, just like on any other platform.



Games library is key though, you're right on that. Hopefully Sony (and MS) continue to not only broaden the diversity, but increase the quality of what's available on their platforms.

 

[scooby_dooby]

Well I'd have to say that I think the idea of PS3's failure is being overblow here.

Based on how well 360 did at $400, and the massive PS install base, I think PS3 sales will see a HUGE surge once they hit the $400 pricepoint. And once they hit $300 the sales will go through the roof.

Now, 360 looks like it's sitting pretty right now, but their lineup seems rather front-loaded, with not much coming in 2008 or 2009, certainly nothing that can compete with GT5 or FF13 on a global sales level.

So, my secanrio for Sony staying in the game is this:
a) $400 pricepoint before Nov 07
b) $300 pricepoint suring spring/summer 08
c) Some AAA exclusives that actually pan out (Drake, R&C, LBP whatever)

I think you'll see 360 sales stagnate a little, and PS3 keep gaining steam.

Now, I realize 360 will be at $199 if Sony drops price, and they may very well get some insane sales from that pricepoint. But, I wouldn't rule out the strength of Sony's brand at the more casual pricepoint, as well as the BluRay draw which will gain appeal over 08/09 and become a more important selling feature.

At the end of the day, MS has only a 3 or 4 million console lead in the US, that's not that big when you're talking a company who had 40million or so last generation.

This is far from over folks, especially if MS continues it's confusing and disorganized management of the division.

 

[djskribbles]

^ totally agree.

 

[nelg]

I predict that we will see much cheaper PS3s soon that will not play Blu - Ray movies. Yes they will have the drive, but movie playback will be disabled. It provides an easy excuse to lower the price and saves face. This would also amerliorate those who purchased a the more expensive but capable versions.

 

[scooby_dooby]

Dissapointing Blue Dragon sales, but wasn't it for only a few days??

Blue Dragon is an excellent title, and it seems MS lost a great opportunity to really showcase they have some variety other than Viva Pinata, but instead decided to hang it out to dry with very little advertising.

The negative reviews didn't help either, but it had it's fair share of 8's and 9's as well...

 

[Rangers]

Statements like this and hurt my brain. Firstly we're not even a year in on some very expensive hardware that hasn't even had a proper price drop yet. And secondly, people talk, as always, as if there's only Winner and everyone else dies in a ditch somewhere.

Okay, maybe a lot of folk interested who's selling the most put £100 quid on at William Hill in 2003 for PS3 to come third at 20:1 odds. Maybe there's really a vested interest. But on the whole, if the console sells sufficient numbers and makes the company lots of money, it's a 'success'. You don't have to win. You don't have to come second. PS2 outsold XB some 3:1 on average in the US, or something like that. 5:1 worldwide. Did that mean XB was a dead platform with no titles? No! XB lacked the masses of PS2 exclusives (most of which none of us have ever even heard of so they're hardly lamented), but many of the major titles were cross platform and it had it's fair share of quality exclusives. If XB360 outsells PS3 2:1 for the rest of this generation, does that mean developers will drop PS3? No! Especially when there's more use of cross-platform middlewares. Thus even if PS3 maintains 3rd place, it'll still be a good, viable gaming platform, with a mix of major franchises and 1st party exclusives, as well as all it's other functions. This ain't no Gizmondo! It's not dead, nor dying, nor even anywhere close. Neither does it have to catch up with the competition. It only needs to sell enough to maintain a userbase that buys games. I don't know what 'enough' is - that'll be decided on a per developer/publisher basis. XB did all right though.

Shifty, I always though XB stayed viable because it had so much raw power. The Halo series for example, just looked graphically ace compared to other console games.

The flip side of that was the GC, which lacked XB's technical cutting edge for the most part, and became fairly shunned by 3rd parties.

Of course, I suppose one could claim PS3 has a similar technology cutting edge as Xbox did, though.

XB was a success in terms of mindshare, but of course a big failure in terms of financials. GC was pretty much the opposite. Wonder which road PS3 will take? Or a mix of both? So far it seems at least financially to be aping the XB with big losses. Especially with these 399 rumors.

OTOH, PS3 can sell in Japan, which XB never could.

 

[Rangers]

I predict that we will see much cheaper PS3s soon that will not play Blu - Ray movies. Yes they will have the drive, but movie playback will be disabled. It provides an easy excuse to lower the price and saves face. This would also amerliorate those who purchased a the more expensive but capable versions.

I dont see this because one of the biggest points of the PS3 is to establish Blu ray as the next gen video standard. Sony would be giving that up, while not saving any money. Wont happen.

At the end of the day, MS has only a 3 or 4 million console lead in the US, that's not that big when you're talking a company who had 40million or so last generation.

Actually it's currently about 4.5 million. And couldn't we see that stretching to 5-6 million shortly?

 

[TheChefO]

This is far from over folks, especially if MS continues it's confusing and disorganized management of the division.

Good post.

I used to see things roughly the same, but there are a few factors steering me away from the viewpoint currently:

Timing
Software quantity/quality/sales
Competition

Naturally, one would look at xbox360 sales at a price, see the sales response, and expect something similar (if not better) for ps3. But at the time xb360 was having such sales at $400, there was no competition, and it was the new "thing" on the block and the first console with HD graphics. I was expecting a warmer reception for some of Sony's big AAA hits, but they haven't (collectively) hit the marks I was expecting, nor have they found the sales I was expecting. Come to think of it, I wonder, how many have bought the ps3 to be something other than a games player? This could be holding back software sales (which prevents strong 3rd party support), or it could be that ps3 gamers are still waiting for a "super experience" which goes above and beyond the competition as promised, thus they sit on their hands (wallets) waiting for it. Or, it could be that the price has artificially drained their would be games budget.

Many possibilities to explain the lackluster software sales, but one thing is for certain, it isn't selling as much software (or hardware) as expected.

In a bubble, one would expect a sales ramp similar to xb360 at the same price points, but better because of the PS brand and added value of the BR player, one would expect higher sales. Problem is, they aren't in a bubble, and each passing month, the ps brand is losing value and their competition is filling the void. (see sales of other $200 consoles vs ps2 @$200)

 

[liuelson]

I think the next gen consoles will probably follow the same trend. If Sony and MS want to continue battling for the big budget console, they won't rock the boat too much and they'll target price and timing of release a little better.

I think that was the strategy for Sony and MS this generation - going for the home entertainment center, bundling Blue Ray v. HD-DVD, seeking blockbuster franchise hits, etc. However, I think both Sony and MS were counting on a console generation where they (individually) would be the 100 million-selling winner.

I think Nintendo realized it couldn't survive in that kind of market, it's not a huge corporate conglomerate with large financial resources from other divisions to subsidize it's gaming division. With the Wii, Nintendo effectively disrupted the market at least to the point where they can prevent any one of the other consoles from becoming a runaway winner. Now, the market is such where the smaller, more agile publishers can thrive.

The irony, of course, is that the Wii has been SO successful that it may actually skew the market in the other direction - harming the bigger companies like EA and MS and Sony, and rewarding the smaller ones like Nintendo, UbiSoft, CapCom, etc.

Maybe Sony and MS will release 2nd consoles to compete with the Nintendo for the "casual" space, if it looks profitable enough.

If anything, Sony is trying to position the PS2 as a competitor for this holiday season (white ps2 with bundled Singstar), and Microsoft is also aiming at the so-called casual market with its Viva series, new Scene-It game, etc. But their consoles were not designed or positioned for this kind of market - they were designed to gain dominant market share first, and then dictate terms to the game publishing market second.

Again, the question really is: what happens if the Wii actually becomes that dominant 100 million-seller console? What happens to the market for game publishers then?

 

[Scott_Arm]

Again, the question really is: what happens if the Wii actually becomes that dominant 100 million-seller console? What happens to the market for game publishers then?

I don't think it really matters. The market for big budget titles will always be there. Whether there are 100 million consoles or 30 million consoles, that's still a lot of revenue for big budget titles. I wouldn't be worried about titles like FF, MG, Halo etc losing their funding because of the Wii. Those titles will continue to be a success, no matter how well the Wii does.

 

[fearsomepirate]

Just remember, again, that Sony' doing about as well as Gamecube and Xbox were at this time at more than double the price. Cutting prices increases sales, period. It's the law of supply and demand. We've got plenty of reason to think that the PS3 could be significantly more successful than Cube or Xbox were. That may not mean beating 360, but it certainly doesn't mean "failure."

 

[TheChefO]

I don't think it really matters. The market for big budget titles will always be there. Whether there are 100 million consoles or 30 million consoles, that's still a lot of revenue for big budget titles. I wouldn't be worried about titles like FF, MG, Halo etc losing their funding because of the Wii. Those titles will continue to be a success, no matter how well the Wii does.

Not to mention, if software sales on Wii continue to lag, devs/pubs will likely continue to take a cautious outlook and not invest too much in Wii titles and so the software circle of life will continue until someone takes a chance and makes a proper AAA 3rd party game and the result is a multimillion unit mover. That should help break the chain. Easiest way I can figure for these devs to accomplish the experiment would be to port (scale back) a few heavy hitters from the xb360/ps3 and see how they sell (obviously they would have to tweak the controls properly).

I still see Wii as a secondary/casual console though, so gamers that want such an epic AAA experience will likely not be looking for it on Wii. If they are looking for/expecting the big hitters, they will likely own a ps3 or xb360.

IMO anyway.

 

[liuelson]

I don't think it really matters. The market for big budget titles will always be there. Whether there are 100 million consoles or 30 million consoles, that's still a lot of revenue for big budget titles. I wouldn't be worried about titles like FF, MG, Halo etc losing their funding because of the Wii. Those titles will continue to be a success, no matter how well the Wii does.

As I thought about my last post, I also realized that companies like UbiSoft are using profit from their Wii projects to subsidize their risks on bigger projects for the HD consoles

And EA's reorganization could be seen as an attempt to do the same thing.

At the same time, a large Wii install base has to be tempting for publishers to try big budget blockbusters. After all, it's not like the movie "Titanic" became a runaway hit because of traditional, hard-core boys who like big, special-effects-laden movies. It was all those girls who kept going to see it over and over and over...

 

[scooby_dooby]

Naturally, one would look at xbox360 sales at a price, see the sales response, and expect something similar (if not better) for ps3. But at the time xb360 was having such sales at $400, there was no competition, and it was the new "thing" on the block and the first console with HD graphics.

This is one argument I've never bought. There's absolutely no historical evidence to suggest that 'having no competition' contributes to higher sales, in fact it could just as easily be a detriment in some cases, as consumers take a wait and see approach. It was always raised in arguments as a reason why Sony would overtake MS when PS3 launched, I never bought it then and I still don't.

Half of 360's lifespan it has been facing pretty stiff competition and sales have continued trucking along at 40k-50k/week.

I would bet that PS3 would sell more than 360 at comparable pricepoints, not only due to the brand name, but the BR players as well.

So that's how you might see the gap narrow, PS3 sells more at $400 than 360 did, and then sells more at $300 than 360 did, etc etc. 360 would maintain the lead until the pricepoints become closer together ($50 apart) and then Sony would begin to outsell them overall.

That's just one scenario I can see happen.

But I agree with you that time is running out, there's only so long you can go without gaining momentum until you do permanent damage. Which is why my pricing plan for what Sony should do is extremely aggressive, they need the kick in the ass within the next year or else...

 

[DuckThor Evil]

Now, 360 looks like it's sitting pretty right now, but their lineup seems rather front-loaded, with not much coming in 2008 or 2009, certainly nothing that can compete with GT5 or FF13 on a global sales level.

Great post Scoopy, however I wouldn't dismiss MS's lineup for the upcoming years. Granted not much have been announced, although games like Alan Wake and Fable 2 are probably going to be quite big hitters, not in a league as those two you mentioned but big anyways. Ninja Gaiden 2 is going to be big. and everybody knows Gears of War 2 is coming and in my book it's as big as anything, it's not announced, but it's coming. This year MS will have amazing lineup and I believe it can be repeated in the future, why wouldn't it?

 

[TheChefO]

it certainly doesn't mean "failure."

Of course.

Failure is a subjective term and everyone will view the results differently based on their own expectations.

Who knows what Sony's real expectations were for ps3, but judging from what they've stated publicly, I'd say they think it's a failure currently.


Personally, I've been of the opinion that they wanted to use ps3 and the "Playstation" brand to strong arm BR into the market. If they fail at taking out HD-DVD (seems likely that HD-DVD will be sticking around for a bit with the Chinese HW and recent exclusives), I'd call it a failure, as BR inclusion cost them this console gen.


Doesn't mean it won't offer an excellent gaming experience though!
I know I'll be picking one up next year @$300 with a few titles (KZ2 ... drool)

 

[liolio]

Does DOA serie sell a lot?
Because we 're likely to see DOA5 next year, (along with soulcalibur).