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Games Analysts Weighs In On Console War
Gamaustra's latest in its 'Analyze This' series asks the question point blank: Which Console Will 'Win' 2007? The regular series puts weighty questions to business analysts who specialize in the games industry, to get a gestalt opinion on what's really going on. The well-respected Michael Pachter, of Wedbush Morgan Securities, had some of the most interesting comments to review. He says that Nintendo will 'appear' to win in 2007 because of its low price and innovative control scheme, but that Sony will be the winner in the long run. From the article: "My best guess is that Sony emerges as the winner of the movie format war in late 2008, and games start looking noticeably better in 2009. That's when Sony starts looking like the winner of the next generation battle. All of this is pretty far out, and a lot can happen with pricing to change things. For example, if Sony gets down the cost curve for Blu-ray and Cell processors, [the PS3] may be below $300 shortly thereafter. It's hard to say that this will happen before 2009, but it could. That would change everything."
But if Sony still has a couple of years to go before they get enough consoles out there, how will they hold on to developers and in particular exclusive titles? If a publisher can't count on selling half a million copies of an exclusive PS3 title to break even (games are costly to produce these days) by virtue of there not being enough PS3s out there to begin with (and you need far more than half a million PS3s of course), then that publisher will sign deals with Microsoft and Nintendo as well if not instead.
On top of that, with the money Sony is losing per console right now, they will have to sell a lot of games per console sold in order to break even. PS2 might be keeping SCE afloat, but I don't really see PS3 keeping a PS4 afloat at all considering how drastically the course of things would need to change.
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All they have to do is cut the price in half and get more good games out. Lets see, if we use our friend history the PS2 took nearly four years to get to half price. So as we close in on 2011 the PS3 should hit that $300 price point he claims is needed. People just need to realize that this is an expensive piece of electronics and Sony can't cut the price to that point anytime soon. They will need something else to win.
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Source: http://en.wikipedia.org/wiki/PlayStation_2#Price_
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On what criteria do we evaluate a winner? Consoles sold, games sold, profits? It makes a difference, does it not?
I constantly see people mention that the console war is a "Marathon not a Sprint" which, from what I have seen, is completely wrong. The console war is a sprint to the point where developers simply are forced to heavily support your system; if you have enough of a lead at this point you tend to have support at the expense of other systems.
I don't know where the point is, and I don't know when any of the systems will hit it, but it is foolish to assume that the PS3 will have an easy time catching up in 2008/2009 simply because it has better graphics.
With the massive console losses already in place, it might be better to realize who the real competition is - Nintendo's Wii console - and fight them on price. Because, frankly, Sony has a better console at the same price point of the Wii, at least on graphics and speed, even if they don't have a full-fledged motion controller.
The Wii is indeed killing them, and if there was sufficient stock, it would probably be killing the 360 as well. But considering the high-end technology used in the PS3, and the cost to manufacture, Sony quite frankly can't afford to fight the Wii on Price. At most likely we're looking at a minimum of 2 years before Sony can even come close.
By that time, nintendo should be able to drop there's to lets say even 2/3 of what the price is now. So you have $300 vs $175-ish. Without some seriously fun exclusives, Sony still can't compete on price, will be dropping hundreds of dollars still per unit sold, and while graphically superior, will probably not be able to compete with the Wii on the fun-factor.
I'm not saying Sony is doomed, but they're humped the dog on the PS3, and it will take some marketing genius AND developers jumping hard on board to save their ass.
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Are these people all getting paid by Sony, or something? Seriously. IANAGA, but it's not rocket science to be able to know the main driving forces behind the console gaming market. The _only_ customers the PS3 attracts are the techno-whores with lots of disposable income, extreme fans of a small handful of exclusives, and people who want a "cheap" Blu-Ray player while it still seems like it could end up being akin to buying a betamax player. The main factors that drive the console market: 1) Available games. The 360 currently leads the pack, and may continue to do so for some time. It may be passed by the Wii at some point, but is unlikely to be passed by the PS3. 1a) Ease of development. The 360 and Wii are a _hell of a lot_ easier to develop games for than the PS3, and cheaper, too. 2) Total cost of ownership. The 360 and Wii cost less (the Wii a lot less) and the Wii's games cost less. That makes them a lot more attractive to the average consumer thank the PS3. Exclusive titles, though a definite boost to sales, don't even really factor into the big picture. The Gamecube had several exclusives in franchises that had a great many fans, yet that didn't somehow propel them to the top last generation, and the GC was _cheaper_ than its competitors. Seriously, I can analogize this situation pretty easily: PC vs. Mac. Apple was top dog back in the pre-GUI days, and they went on to make the Mac. PCs, however, were cheaper, and had more third party support, and got more software. By the logic of a lot of these analysts, the Mac should have come out on top, which is pretty far from what actually happened. :P
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So what?
I know, they've been involved in all kinds of terrible anti-customer sorts of things lately. The fact is, I've never been unhappy with a Sony product. I think that their product quality is excellent. My portable CD player would be stolen or misplaced before breaking down, while I've lost two competing brands to a mis-aligned laser. They consistently had better battery life in their portable products than their competitors. PS/2 is an amazing platform; it's 4 years old now, and there's still new titles being released for it. There's some excellent titles for PSP. I'm planning to purchase a PS/3 in the next year or so, and I expect I'll be equally happy with it. I also don't expect that I'll have to replace it within 5 years.
Overall, Sony has a good track record. I think that there will be people who boycott them over the blinking PS/3 fiasco or the PSP astroturfing, but overall business will be good and many terrific titles will make their way to PS/3.
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Anyone can do that. Being an analyst means you somehow convinced someone to pay you to do it.
One time I threw a brick at a duck.
Yes, but a couple of years is an eternity in a race to convince developers that your product isn't a flop. This is NOT a marathon, it's a snowball race. There's also a chance that in 2-years, there's about a 50% chance that the HD wars will be lost to HD-DVD, in which case, the blu-ray player is practically useless. Plus, don't hold your breath for the PS3 to fall to $300 in two years. They're already taking a loss far greater than any other console in history, they simply can't afford to drop it down much more. No console has slashed 50% in two years (other than Nintendo, who makes a profit on their consoles to begin with). And Nintendo and Microsoft aren't standing still, by that time, the Wii could be down by 50%, and Microsoft could pull the 360 down to $250. The other companies have more room to pull their prices down than Sony. The percentage gap is only going to widen.
In two years, this is, most likely, how the game is going to look (360 and PS3 projections are of the higher end model):
Nintendo Wii: $150
XBox 360: $250
Sony PS3: $450
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With due respects to these "experts", the race for videogame supremacy will be over before 2008/2009. The next generation of consoles will probably be out in 2009.
I'm really surprised the "experts" have missed the obvious point here...
I think MS released the XBox360 about a year earlier than Sony anticipated. I believe Microsoft did this to force Sony to release a console 9-12 months before they were ready. Sony essentially abandoned the very profitable PS2 way too soon to push the PS3 and compete with the Xbox360. In my opinion, Sony managed in the space of 6 months to throw away a commanding lead in videogames. Now they're in 3rd place for the "new" generation. And it's going to be a tough hole to dig out of.
You can argue that the new PS3 has wonderful technology, you can talk about the wonderful WiFi, BluRay, and all of that is true. But people are going into stores and looking at $250 for a Wii (which is still hard to get), $300 for an Xbox360 (even if that price is deceptive), and then $500/600 for the PS3. I think it's a tough sale.
And again, listening to these experts talk about how the PS3 will come from behind in 2-3 years to take over the lead... it's never been done in consoles, I doubt it will happen now.
I'm really surprised at Sony. They know as well as anyone how easily the lead in videogames can be lost. And despite all that they threw that lead away.
If I was Sony, I'd cut prices by $100-150 across the board, get the cheaper unit into stores, get some games out there and advertise the heck out of the console itself. I think they're in trouble at the moment, and the game is MS's to lose right now.
You were mistaken. Which is odd, since memory shouldn't be a problem for you
You do realize that investment firms use analyst's data to make decisions on stocks and bonds worth tens of millions of dollars. These aren't some fanboys sitting around pulling data out of their ass. Unless what you think can move stock prices, I'm not too interested. They all pretty much said the same thing and their analysis seems to make a lot of sense. But hey, your "friends are all gamers", so obviously know more than guys who spend 10 hours a day studying the industry.
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Perhaps the real question is whether or not there will be a loser in this round. Whereas the previous generation had a real loser in the Dreamcast, will this generation see one of the "Big Three" falling down substantially?
Some people conveniently forget the Dreamcast and call the Gamecube the loser of the previous generation, but as you mentioned, this is a business we're talking about, and the Gamecube didn't lose Nintendo any money.
In this round, I see the possibility for Sony to lose big. Of course PS3's will sell better as the games improve in number and quality. The question is will the the games be enough of a quantum leap over the 360 to justify the cost differential and foster greater adoption?
...because the other consoles are purchased only by loser moron fanboys.
New game styles are great, but they're only new for a little while.
Ding! Some of them even get annoying after a while. While I love my Wii and think Wii Tennis is one of the most fun party games ever, I DON'T WANT to have to always be swinging that thing around (it got somewhat annoying in Zelda, and VERY annoying in Marvel). I'm doubting many games will be put out that doesn't involve the motion sensing, so I'm pretty much ruling out the Wii as my "just lay on the couch and chill" console.
The reasons so many people are going with consoles instead of computers are:
Multiplayer on one system (thus more directly social)
Larger screen (and increasingly, equal resolution to PC)
Easy setup/compatibility (plug it in, put the disc in, it works)
Simple controls
Easy online play (at least for the Xbox/360.. PS3 is still a question mark)
Consoles are not aimed at "people who can not afford full fledged open hardware", they are aimed at people who want an easy, fun gaming experience. No matter what your personal experience, the PC is the most complicated gaming platform there is. There is still no easy way for a mother who knows nothing about games to walk into a store and know if their computer can play any given PC game. On the other hand, they know that a game for PS2 will always play on PS2.
What you're really talking here is demographics. If you're selling to mothers, the Wii has a great story to tell. Low price, easy setup, and games that won't make her eyes turn really big and make her whack the box with a fireplace poker. Plus, she may even enjoy some of the games herself.
But have we forgotten there actually still exists a market for a certain demographic that has come to be known as the "hardcore gamer"? Yes, I've heard lots of arguments that Wii players are "real" gamers and are "dedicated to gaming." So be it. But they're not the moms. You can't have it both ways. Either moms are driving sales or they're not. I think they are, and by your comments you certainly think they are, too. If "hardcore gamers" were driving sales, they wouldn't care about stuff like how hard it is to setup a damn console.
So we have the other hardcore gamer. Theses are the guys who want cutting edge graphics, very large pixel counts, full anti-aliasing and games they'd refer to as "bad-ass." These are not moms. They are not competing with moms. They will not buy the Wii as anything other than a novelty. It will most certainly NOT replace their main gaming machine.
And what is that machine? Well, it could be a PS3 or Xbox. These have very cool graphics, plus they hook up to the bad-ass HDTV with the bad-ass 60" screen. But the problem with these boxes is that PC games are already starting to beat them in graphics. Crysis is a monster. There are others. Two years from now the cream of the crop are going to be something the PS3 could only dream of.
Consoles are cool. I broke down and bought one and I actually like it. It really is less of a hassle than the PC. But the Wii is never going to be so much less of a hassle that I'd choose it for Far Cry over a PC. I would not play BF2 on a PS2. Though I've gotten to the point where the Dual Shock is usable, it will never beat keyboard and mouse.
Hard core gamers will absolutely compare bad-assedness. Note that I didn't say, "fun-factor", "cost," or "easy of use." When shear thrill is what a "hard-core" gamer is looking for, he's going to look at Gears of War, Crysis and Oblivion. He might play Mario Galaxies and he might even have fun with it, but he won't get a heart thumping thrill like he will when running for his life through the almost perfectly rendered jungle, leaves rustling by him as he moves through the underbrush, bullets whizzing overhead and a frag grenade going off to his right rear on the surround sound as the game goes into slow-mo as he's just about to die, but just makes it behind a rock. That is a thrill. All I've heard about the Wii is that it's "fun."
Will the Wii win. Probably. If you're talking dollars, it'll make a boatload. Not only will your mom buy it for you, but even hard-core gamers like to have a little fun now and then. But hard-core gamers will never be satisfied with the Wii alone, and if they're not married to the idea of a console, they're going to find the realism of some of the new PC games very hard to resist. If they do want a console, both the 360 and the PS3 will give them a big thrill. Nintendo may "win," but there's no way in hell they can crush the rest of the market, because they simply cannot compete with the rest of the market. They chose "fun." That's the best they're going to give you. Many people will want more than that, and they'll keep everything else kicking just fine until gen. 8, including the humble PC. If you doubt this for a second consider that Grand Theft Auto was, I believe, the top selling game on the PS2, which totally dominated the last gaming cycle. Though it's not my cup of tea, many people clearly loved it. They will not forget that they loved it. They are more likely to see live executions on Sesame Street than to see this game show up on the Wii. The mom's wouldn't like it.
Developers move like the wind - the system that makes money attracts them. Right now the Wii looks like it's doing well, and so does the 360. But that's not to say that in 2 years it will be the same. If the install base catches up, a game development business isn't a fanboy and will go along with whatever system makes them the most money, regardless of what their developers think. If the PS2 was so hard to develop for, how did it win the last generation? Because it had the largest install base and guaranteed the largest return.