NPD September 2008

[Cheezdoodles]

Don't forget that the PS3 will be selling for a very long time.

That's why I caution those who say the Wii 'won' this generation to hold back on their declarations, because the PS3 (and the 360) are devices that probably have legs 5 years longer than their Nintendo counterpart.

..just something to keep in mind when declaring 'winners' or when clamoring for 'price cuts' on certain consoles.

Um, what are you basing this on?

Why would the PS3 be selling for a very long time and the X360 and Wii not?

The Wii is making nintendo insane amount of money, the X360 is starting to become profitable and the PS3 is not. No economic theory or rational logic will imply that the PS3 is going to stay longer in the game than the other two.

If anything, the PS3 looks more likely to be replaced first.

Im not saying this will happen, but i think its absolutely ridiculous to make any statement that implies that the PS3 should be on the market longer, there is nothing that would suggest that.

And before some moron tries to say "but the PS2 and PS1 had 10 year lifecycles and KK said PS3 will last 10 years aswell", im going to say the following:

The PS1 and PS2 where extremely profitable. Its only natural for a company to want to keep producing a product that makes you a profit. The PS3 right now is probably not even breaking even, so unless things change dramatically, nobody will have any interest in producing a PS3 in 5 years or whatever.

 

[mrcorbo]

But that's part of the problem, isn't it? There's no 'beating'. There's companies making money or not making money. Sony beat Nintendo last generation; with how much money Nintendo is making now, does it really matter? Besides fanboys, who's keeping score? When does anyone win? The console war doesn't even exist any more than the Cola Wars did; it's just companies competing with each other and taking a dogmatic "I'm taking xxx's side" really doesn't help the consumer, it's just enabling the corporations to behave like idiots when it comes to us. Finally, there's no 'fair'. There's Sony making money off selling an 8-year-old system. That's why keeping track of lifetime sales matters; of course, Sony's not really doing that much to take advantage of the fact that there are 100 million PS2s out there, though Buzz and Singstar are a good 'start'.

Also who cares what 'many' feel? Since when does their opinion matter? If you actually have an opinion about 'winning' a console generation then you've probably already made up your mind about what console to get.

I don't disagree with the fact that the score-keeping mentality when it comes to hardware sales is wholly divorced from reality. None of the hardware vendors think that way and most consumers aren't even aware of how the consoles are selling outside of the mainstream coverage they get (Wii getting most of this).

There is a group that I think is very concerned with these sales and the overall sales trends and that is the 2nd tier and lower publishers who maybe don't have the ability to dedicate multiple teams to doing multiplatform releases, yet can't make enough money on any one platform. If one of these platforms becomes a viable option for these developers to target exclusively it might be enough to create some self-sustaining momentum. And i'm not just talking hardware sales (Wii, at least, is doing fine here), but software support as well in the sense that the platform that has the most games would attract people who want to buy those games which would encourage more games development...you get the idea.

As spectacular as the Wii is doing I'm not convinced it's doing this on the strength of its libray overall, but is instead it's on the strength of a few specific titles. If the overall library were to be filled out with more qualilty and more variety I could see it being this generation's PS2. No matter what type of gamer you were, you couldn't go wrong with the PS2 as there was going to be some game available for the sytem you would enjoy.

 

[Vic]

I think most people feel the war is over when the first next gen system comes out. Because honestly its not really fair to compare numbers if one of them is n longer the main system.

So for example. If the xbox next comes out in 2010 many will feel that if ms was leading sony at that point then they beat sony for hte generation.

The other problem is that after a certian amount of time well we really don't know how many systems are replacements for broken units or units for other rooms in the house. I know many people who bought a ps2 and then a slim ps2 and traded in their old ps2s or they didn't work anymore and threw them out. So how many of those 150m ps2s are actually viable possible sales. the same will go with the wii in 5 years. How many of those original wiis will be viable possible sales

That does make any sense because if that happens, the Wii and PS3 could still be selling well and making their companies significant money.

 

[RancidLunchmeat]

Are you all forgetting that the PS2 is still selling very well and the profit margin for Sony on those sales must be huge?

I expect similar performances from the PS3 and the 360.

The reason I don't expect it from the Wii is because Nintendo will have to release a next gen console when MS and Sony do, and they will either need to compete with them in terms of HD Graphics, or they won't.

If they do, it makes the Wii look silly. If they don't, then they still eat away at their own sales.

The bottom line is that MS and Sony are following the tried and true console model, both the PS3 and 360 have the power to be relevant into the next generation. The Wii doesn't. Clearly, the Wii has other advantages. But what happens when Nintendo releases its successor to the Wii? That's the main issue. Either the Wii will be satisfactory for their base and the Wii2 will fail, or the Wii2 will drastically cut into their sales.

Point blank, this was a great strategy by Nintendo, but it simply isn't one that they can repeat.

As far as the comments about the 'war' being over when the next generation consoles are released, that's absurd. It's End of Life totals that matter, particularly when profits increase at a rate that is directly proportional to life span.

The PS2 is still selling today. How's the Xbox and Gamecube doing?

 

[Cheezdoodles]

particularly when profits increase at a rate that is directly proportional to life span.

Um, this is not true.

The profit from selling the console increases with every cost reduction.

However. The main source of $$$$ for console manufacturers is the software side, not hardware.Game licences make the big bucks, the console not so much. Software sales for the PS2 tanked after the next generation arrived (obviously, developers are shifting focus, much less new titles etc)..

The profits do not increase proportionally to life span, not even close.

The highest profits for the console divisions are registered the years with the highest software sales. highest software sales tend to happend in the last 2-3 years before a new console launches. When the new consoles come, software sales start sinking, and sinking and sinking. And profits go down.

Lifespan is not even a factor that matter in this case, cost reductions (hardware revisions, die shrinks) is the factor that drives hardware side of the profits.

Saying that profits increase directly proportional to lifespan quite simply wrong. The PS2 profits where higher in 2003-2005 than they where in 2006-2008.

 

[Vic]

Thats definately true, but I think the point is that significant profit can still be yielded long after a console's successor has been released.

To be fair to Nintendo, the Wii is making them so much money that they can probably afford to just offer a revised version of the Wii as suggested by some on this thread. Some of Ninty's more hardcore current Wii owners will probably even buy it, much in the same way that some DS owners upgraded to the DS lite.

Personally, I think PS3 is the machine that will likely sell for the longest time going forward, if only because of its Blu-ray drive.

 

[ninzel]

The bottom line is that MS and Sony are following the tried and true console model, both the PS3 and 360 have the power to be relevant into the next generation. The Wii doesn't.

Relevant to who though? Be many gamers standards the Wii is already completely irrelevant and yet many other gamers are still buying it by the boat load.
If Wii owners move on and deem the it irrelevant it will have little to do with the typical life cycle of consoles. Wii owners have already proven to be atypical,so how can any easy conclusions be made by comparing traditional trends?

 

[-tkf-]

Don't forget that the PS3 will be selling for a very long time.

That's why I caution those who say the Wii 'won' this generation to hold back on their declarations, because the PS3 (and the 360) are devices that probably have legs 5 years longer than their Nintendo counterpart.

..just something to keep in mind when declaring 'winners' or when clamoring for 'price cuts' on certain consoles.

Nintendo just doesnt give a ... they release WII HD, a Wii like we know it, slightly better, able to play old games that it "rescales using Nintendo Power" and of course new amazing looking games that may look a bit old compared to PS3/360 but they dont care.

Or in other words, age doesnt matter if you can provide new options all the time.

 

[Vic]

Nintendo just doesnt give a ... they release WII HD, a Wii like we know it, slightly better, able to play old games that it "rescales using Nintendo Power" and of course new amazing looking games that may look a bit old compared to PS3/360 but they dont care.

Or in other words, age doesnt matter if you can provide new options all the time.

Yep, that'll sell well in Japan, and lets be honest, many of the Wii owners in US and Europe probably arent too worried about graphics.

 

[Readykilowatt]

This is the reason why I dont bother to post much on forums anymore.

http://www.youtube.com/watch?v=y6S7PMsyQdw

http://www.youtube.com/watch?v=txCq0Lwwq7o&feature=related

When you understand the psychology of the irrational due to "investor bias" or "the fear of being wrong" it becomes a waste of time to argue or put forward facts. Many forum moderators, journalists, analysts, CEOs, etc. who were wrong on the Wii (saying that it will not sell well) have now become irrational (like saying the Wii-HD will come in 2011). There is no point with arguing with an irrational mind.

 

[aselto]

Certainly there is no reason for Nintendo to rush their next console to the market. They sell by far the most consoles and while it is graphically outdated, it's also proven that the graphics difference doesn't matter to the average consumer and there is no reason to believe that it will matter in the next 2 or 3 years. Meanwhile Microsoft and Sony need to be more innovative in the area of software if they want to be more revelant - price cuts will make the machines a bit more mainstream, but it's an area that is already being captured by Wii at really fast rate and if MS and Sony want to compete they need something more than just better graphics.

 

[Acert93]

aselto, just a knitpick but the PS3/360 are over 50% of the market and have very little difference in library of available games, so the "average" consumer does care to one degree or another about graphics. Maybe not the "casual" consumer, but I think it is also worth noting, "That a large number of consumers don't care much about graphics at a certain pricepoint."

 

[aselto]

It's only a speculation, but if it wasn't for supply being far from meeting demand in 2007 Wii could have possibly over 50% marketshare by now. It has outsold PS3 and 360 in USA year-to-date. Wii itself isn't all that cheap, either - $250 is more the Gamecube's launch pricepoint and on top of that there is a cheaper HD alternative. I think it's quite clear that more people are interested in playing games with motion controls rather than with HD graphics and robust online service. PS3/360 market is still big and important, but looking at trends and numbers, I would say that MS and Sony need to chase after Nintendo's "casual" market than the other way around, because there is much more room to growth ("traditional" video games market grows, too, of course, but at much slower pace).

 

[Arwin]

That said, I don't know a single person who had a console last generation and has a Wii this generation. Actually for most of the console owners I know in the casual space their current console (Wii or otherwise) is actually their first. My sister and a coworker has a Wii, my sister got one as a gift, didn't buy it herself. I'm the only one with a 360. Of the 8 Playstation 3 owners, I think two had a PS2 last gen. I still believe that the consoles are looking to greatly expand their marketshare and the market in general this generation. Definitely, the Wii is taking up a big part of that pie. But at least in Europe, I also still strongly believe that it's new pie.

 

[obonicus]

Certainly there is no reason for Nintendo to rush their next console to the market.

2011 isn't rushing, though. It's 5 years of Wii. As soon as the Wii reaches saturation (it might've in Japan) Nintendo will have a new version, and it may be HD. A new console means that they have an excuse for a new Mario Kart, a new Smash Brothers, a new Zelda, a new Mario as well as, probably, a new Wii Fit, a new Wii Sports etc. etc.

 

[Arwin]

Note that John Davison stressed 'by 2011' (also during a podcast) ... He thinks it's quite likely it happens before 2011.

 

[Cheezdoodles]

2011 isn't rushing, though. It's 5 years of Wii. As soon as the Wii reaches saturation (it might've in Japan) Nintendo will have a new version, and it may be HD. A new console means that they have an excuse for a new Mario Kart, a new Smash Brothers, a new Zelda, a new Mario as well as, probably, a new Wii Fit, a new Wii Sports etc. etc.

I think its rather obvious that the next Wii wil be HD. Hardware that is as fast as the PS3\X360 (and then some) in 2011-12 will cost about the same to produce as nintendo's manufacturing costs for Wii at launch.

Considering that a very large majority of the TV's in the relevant markets will be HD by then, there is no reason not to make a HD-capable console. Aspecially when the costs doesn't have to be high at all.

 

[Teasy]

Good PS3 and 360 numbers.

WTF!!! at Wii numbers. Ridiculous. Absolutely ridiculous. F U! soccer moms.

How can you be angry at a console selling well?, for god sake get out of the house before its too late!

 

[Teasy]

Um, this is not true.

The profit from selling the console increases with every cost reduction.

However. The main source of $$$$ for console manufacturers is the software side, not hardware.Game licences make the big bucks, the console not so much.

In the case of Microsoft and Sony yes. But imagine the amount of cash Nintendo have made, and will continue to make, out of selling the Wii console.

 

[eastmen]

In the case of Microsoft and Sony yes. But imagine the amount of cash Nintendo have made, and will continue to make, out of selling the Wii console.

Is it the wii console or the software. I'd wager they are making alot more on the software than the hardware. Also both ms and sony have spread out and their consoles bring in moeny other than games and hardware.