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Researchers at Screen Digest have taken a look into the crystal ball to survey the console landscape. Xbox 360 is ahead, but in Europe the firm said that sales look like they've hit a wall. The Wii market also could "dry up" and many game companies still believe the PS3 may win the race. More within...
U.K.-based Research firm Screen Digest recently issued a new report examining the console race in its early stages and the longer term prospects for the big three.
"The industry is witnessing short term performance indicators of next gen console sales but doubt still remains as to their scalability in the mid to longer term. Some platforms are waiting for stronger software launches to drive hardware volumes while software publishers are waiting for installed base growth – one comes with the other but without one the other cannot thrive – a real chicken and egg situation," wrote Screen Digest analysts.
Screen Digest has some concern regarding Microsoft's ability to expand beyond the hardcore market. In Europe in particular, the firm noted that 360 hardware sales "seem to have hit a wall."
"The target market is still too focused on adult males and the brand does not enjoy the same cachet in non-Anglo Saxon markets as it does in the US and, to a lesser extent, the UK. The FPS / shooter genre is well served on the Xbox 360 with numerous high quality titles, so satisfying the adult male demographic is not a concern, but failing to break out of a small number of genres and thereby appealing to groups outside of hardcore gamers is," Screen Digest cautioned. "A scratching of heads has started over questions concerning the long term viability of the platform in some territories. With the UK underpinning European performance and without year on year sales improving across the rest of the region, the platform could be in jeopardy on a global basis. Despite this, some of the most eagerly awaited titles for Q4 cited by consumers are on the 360 (eg, Halo 3, Bioshock)."
The firm pointed out that Xbox Live and its 6 million members is a "beacon of hope" because publishers are attracted to the business model that allows them to create smaller downloadable games for less money, and it's a model that enables them to take as much as 70 percent of sales. Even so, Screen Digest added some skepticism here as well: "The question remains... how long can the XBLA catalogue grow while maintaining high or even worthwhile levels of profitability for publishers?"
As for the Wii, things may be rosy now, but Screen Digest isn't 100 percent convinced the success will be sustained. "While some commentators have bet their farms on the outright winner of the next gen war being Nintendo's Wii, others are more cautious, with some suggesting the current market of casual gamers could dry up," the analysts said. "Hence the Wii's target market could be saturated more quickly than its competitors as the technology looks increasingly tired by comparison."
While some companies are investing heavily in Wii, others would rather let Nintendo drive their own platform, as they typically do. Screen Digest explained, "Publishers in the past have been loath to invest in Nintendo consoles to the same degree as Nintendo 1st party, so 3rd party titles have often not been as competitive. This time round, on one hand some publishers are investing much less saying they will leave the platform drivers to Nintendo and ride their coat tails by spending very little on mediocre quality titles but ones which will give some return. 'We're running a business, not to win awards but to make money – if we make breakeven plus on Wii then we are happy,' said one of the largest Japanese publishers."
Finally, regarding the PS3, Screen Digest said that a price drop before the end of the year is "inevitable." Given Sony CEO Howard Stringer's recent comments, we would tend to agree. That said, Screen Digest feels that Sony has to do a better job at marketing the PS3 as well.
"The education of consumers as to what is in the box and what its benefits are has not been forthcoming from Sony," the report continued. "Marketing material has tended towards the esoteric and abstract and has seemingly failed to resonate with the consumer. Senior marketing execs at SCEE have said that it was decided to build a brand rather than inform consumers as to the technical benefits and value of the PS3 platform."
And although the PS3 is currently lagging behind Xbox 360 and Wii, Screen Digest said that most European management teams still feel Sony's console will come out on top, "especially in Europe where the brand still appears to be impregnable."
"Brand PlayStation has always commanded respect from a broad parish to come up with what is required to prevail in the marketplace. Some commentators point out that it took Gran Turismo 3 to drive a slow launch of the PS2 after 7 to 8 months on the market. There is no doubt that currently there is a lack of distinctive content to drive hardware sales but Q4 2007 and Q1 2008 could reveal some unrivalled games which are exclusive to PS3, not least because competing platforms would be technically incapable of offering them," Screen Digest added. "SCEE is promising a bombshell in order to provide a fillip to the PS3's fortunes before the end of the year, this is likely to be in the form of a price drop and the arrival of the new PSNetwork virtual world in the autumn."
http://biz.gamedaily.com/industry/feature/?id=16564
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