Bank of America analyst, Michael L. Savner, claims in Business Week magazine that, "Despite growing anticipation that a $100 price cut for the PS3 is imminent this summer or early fall, we do not believe such a move would meaningfully improve stagnant PS3 sales and we are growing more concerned that a share shift away from Sony and Microsoft to Nintendo's Wii platform is incrementally negative of all 3rd-party publishers."
Bank of America is apparently looking for a $200 price-hack but sees it as unlikely due to Sony's costs. Savner states, "While Sony could cut the price by $150 - $200, we view that as less likely given that it is already losing approximately $200 per console at $599, based on our estimates. Offsetting a potential price cut are decreasing production costs, which should improve significantly this year. We estimate that the loss per console could decline to about $50, assuming Sony does not cut its wholesale prices. Bottom line, we don't expect Sony to make up meaningful ground against the Wii this year."
Sony's "stagnant" sales are not just bad for the company, however, combined with what is being seen as Wii dominance they are bad for the industry as a whole and third-party publishers in particular. Savner says, "Independently, the implications over the short run are not necessarily significant. However, viewed at a macro level, the share shift currently taking place where the Wii, and even the PS2, are the share takers, our concern is that if software sales also begin to skew along those lines that publishers will be trading higher wholesale revenue (PS3 and Xbox 360) for lower wholesale revenue (Wii and PS2). Moreover, this is coming at a time when publishers are continuing to increase R&D spending for the more expensive platforms," he explained. "Lastly, while certain 3rd party publishers like Ubisoft, EA and Activision have shown some success on the Wii, Nintendo remains the dominant publisher on its platform."
Long-time industry, Michael Pachter, is yet to comment - although we're sure he will.
We turned to Michael Spilligan (Senior Entertainment analyst at Nomoru Wahrheit Kennis) for comment, "Bank of America has to be listened to going forward. However, extrusion analysis of containment figures for the next significant period indicate that Howard Stringer's (Sony CEO) completist strategising for a more unified Sony Corporation (Sony United) will unobfuscate sales pricing."
And you can't say fairer than that.
Read the full interview here.
Bank of America is apparently looking for a $200 price-hack but sees it as unlikely due to Sony's costs. Savner states, "While Sony could cut the price by $150 - $200, we view that as less likely given that it is already losing approximately $200 per console at $599, based on our estimates. Offsetting a potential price cut are decreasing production costs, which should improve significantly this year. We estimate that the loss per console could decline to about $50, assuming Sony does not cut its wholesale prices. Bottom line, we don't expect Sony to make up meaningful ground against the Wii this year."
Sony's "stagnant" sales are not just bad for the company, however, combined with what is being seen as Wii dominance they are bad for the industry as a whole and third-party publishers in particular. Savner says, "Independently, the implications over the short run are not necessarily significant. However, viewed at a macro level, the share shift currently taking place where the Wii, and even the PS2, are the share takers, our concern is that if software sales also begin to skew along those lines that publishers will be trading higher wholesale revenue (PS3 and Xbox 360) for lower wholesale revenue (Wii and PS2). Moreover, this is coming at a time when publishers are continuing to increase R&D spending for the more expensive platforms," he explained. "Lastly, while certain 3rd party publishers like Ubisoft, EA and Activision have shown some success on the Wii, Nintendo remains the dominant publisher on its platform."
Long-time industry, Michael Pachter, is yet to comment - although we're sure he will.
We turned to Michael Spilligan (Senior Entertainment analyst at Nomoru Wahrheit Kennis) for comment, "Bank of America has to be listened to going forward. However, extrusion analysis of containment figures for the next significant period indicate that Howard Stringer's (Sony CEO) completist strategising for a more unified Sony Corporation (Sony United) will unobfuscate sales pricing."
And you can't say fairer than that.
Read the full interview here.
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Comments
hollywooda 29 May 2007 11:33
1/17
The problem for me is not the price of the PS3 anymore, it's there's nothing worth buying one for?,...yet. (as a gamer).
They really need to focus on getting those killer titles... & keeping them exclusives!
They really need to focus on getting those killer titles... & keeping them exclusives!
Ditto 29 May 2007 11:44
2/17
"Lastly, while certain 3rd party publishers like Ubisoft, EA and Activision have shown some success on the Wii, Nintendo remains the dominant publisher on its platform."
Which indicates Nintendo does need to loosen up if it's to be successful in the future, otherwise Wii could well go the way of GC and 64.
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alexh2o 29 May 2007 11:49
3/17
yeh i totally agree! its not the price its the games. it is after all a games console! there just isnt any games worth buying that justify the cost. even then most of the good ones are on 360 as well which on top of that does have exclusives that make that worth buying. sony need to get the games out there!
talking of the 360 though, hasnt this analyst just totally forgotten that the 360 has millions more consoles out there than the wii?? its not like the wii has wiped out the competition just yet... (even if current sales continue i dont think that will happen)
talking of the 360 though, hasnt this analyst just totally forgotten that the 360 has millions more consoles out there than the wii?? its not like the wii has wiped out the competition just yet... (even if current sales continue i dont think that will happen)
hollywooda 29 May 2007 11:52
4/17
This has always been my problem with Nintendo consoles, I like a bit of Mario but I don't want a games library of Mario racing, Mario fighting Mario footie... it just gets f**king boring.
Nintendo have a certain area they are great @ & they stick to it. It's a good job they have innovative developers & Japan on there side or they would of gone the Sega way looooong ago.
Nintendo have a certain area they are great @ & they stick to it. It's a good job they have innovative developers & Japan on there side or they would of gone the Sega way looooong ago.
idontliketheimage 29 May 2007 12:35
5/17
I don't like the image
YenRug 29 May 2007 14:19
6/17
Hold on, so when wasn't it a problem for the PS2 to have the vast majority of the market with an underpowered system? The only thing that third party's have to worry about, with Nintendo having the lion's share of the market, is that shovel-ware doesn't do so well as Nintendo owners have tended to be more discerning in what gets their money; on the other hand, this is likely to change, somewhat, in the broadening of the market penetration of the system, meaning there should be enough buyers of the cheap and quick, but crap, ports to make them viable.
James 29 May 2007 18:44
7/17
"Lastly, while certain 3rd party publishers like Ubisoft, EA and Activision have shown some success on the Wii, Nintendo remains the dominant publisher on its platform."
Simply becuase third party publishers are porting PS2 and 360 games to the Wii with tacked on controls and zero innovation. third party publishers are nearing a joke on all systems, especially the Wii which has handed them something new to work with only for them to squander it. A 10 year old could come up with better ideas than some of the lame game and controller ideas than these guys.
Simply becuase third party publishers are porting PS2 and 360 games to the Wii with tacked on controls and zero innovation. third party publishers are nearing a joke on all systems, especially the Wii which has handed them something new to work with only for them to squander it. A 10 year old could come up with better ideas than some of the lame game and controller ideas than these guys.
Joji 30 May 2007 03:39
8/17
You know what they say, it's a dangerous thing putting all your eggs in one basket. This I feel is the current trend with the majority of developers and publishers as far as Wii is concerned, and it makes them look disgracefully untalented. Its insulting because on the other hand they push out lots of good, sweet games on PS2 after all these years. PS2 is less capable than Wii, but they seem too stuck up to work with Wii (or at least that's what it feels like). The lure of the cutting edge could be to their detriment, like sailors to siren song, if Nintendo come out on top and PS3 (which they are all putting their faith and money it, fails and comes last) tanks.
Strange stuff goes on in this industry, but I'm gonna take a chance and say something. What if Nintendo do win back the market from Sony, after all these years, even under the casual angle? Many said PSP would kick DS and they were wrong (except myself), many said the same of PS3 over Wii and again they were wrong (except myself). With Nintendo cleaning house with Wii and DS, it could easily go this way. Stranger stuff has happened. I know I'll be laughing hard at all those developers and publishers we choose to push crap ports or nothing at all onto Wii, if it does happen this way. Then 360 will swoop in and pick up the rest.
I don't see the PS3 over taking Wii this year or any other, its too expensive and by the time it gets a price cut it will be far too late, just like PSP all over again. Sony never learn.
And yes, I agree Nintendo need more than party games and tried Nintendo IP like Mario. Come on Nintendo. Perhaps that stuff may yet come to Wii, possibly when developers and publishers come back with tale between legs, if PS3 goes under early. It might just happen, you never know.
Strange stuff goes on in this industry, but I'm gonna take a chance and say something. What if Nintendo do win back the market from Sony, after all these years, even under the casual angle? Many said PSP would kick DS and they were wrong (except myself), many said the same of PS3 over Wii and again they were wrong (except myself). With Nintendo cleaning house with Wii and DS, it could easily go this way. Stranger stuff has happened. I know I'll be laughing hard at all those developers and publishers we choose to push crap ports or nothing at all onto Wii, if it does happen this way. Then 360 will swoop in and pick up the rest.
I don't see the PS3 over taking Wii this year or any other, its too expensive and by the time it gets a price cut it will be far too late, just like PSP all over again. Sony never learn.
And yes, I agree Nintendo need more than party games and tried Nintendo IP like Mario. Come on Nintendo. Perhaps that stuff may yet come to Wii, possibly when developers and publishers come back with tale between legs, if PS3 goes under early. It might just happen, you never know.
tyrion 30 May 2007 08:16
9/17
Joji wrote:
I don't see the PS3 over taking Wii this year or any other, its too expensive and by the time it gets a price cut it will be far too late, just like PSP all over again. Sony never learn.
The problem with this scenario is that if the Wii doesn't get more and better 3rd party games then interest in it will die. Currently Nintendo is still surfing the wave of people who want to play Wii Sports and haven't been able to find a Wii on sale.
That is what is driving hardware sales, not the promise of more good games in the future. Face it, the people who are excited about Mario Galaxy and Metroid are the ones who were in the queues at midnight on Dec 8th. The people waiting for games are the ones who already have a Wii.
By the time the PS3 has its exclusive or massively anticipated games out, the Wii will be damn close to having fulfilled all of the "lapsed" and "never were" gamers that Nintendo will attract and will get back to existing on those that will buy a lot of games for it.
I think we will see a sea change in the fortunes of the three consoles after Christmas this year. The PS3 will start to catch the other two up, the Wii risks becoming the Breville Toaster of the console world and the 360 will be back to relying on Halo sales to keep its momentum going.
Don't get me wrong, I'm not saying that PS3 will dominate like PS2 did, I've said before that a 40/30/30% split is what I expect, but I see that being PS3/360/Wii. The only way the PS3 will dominate over sales of the 360 and Wii is if Sony manage to live up to their 10-year lifespan claims and the other two go way after 5-6 years on the market, but by that time they will be competing against the 720 and the Wiiiiiii. :-)
Dreadknux 30 May 2007 08:38
10/17
"Lastly, while certain 3rd party publishers like Ubisoft, EA and Activision have shown some success on the Wii, Nintendo remains the dominant publisher on its platform."
I wouldn't exactly call 505 Games (Cooking Mama) a huge third party doppelganger. Nor Hudson with Kororinpa. But they're doing alright. Hell Cooking Mama's been in the top ten for the last few weeks.
Not being funny, but this 'developer saturation' has been the exact same case with pretty much every single other console. XBOX - unless it's got a Microsoft Game Studios logo or part of a popular Western franchise (C&C, Tomb Raider, TMNT) expect your game to sink. Sony consoles aren't so saturated with first party material, but you do have the big third party developers making sure nobody else gets a look in. Rockstar, EA, Ubisoft, Squaresoft... You know, just replace Nintendo first party with Square-Enix and Activision with Rockstar and you have the same scenario.
Domination of a console's software sales to various publishers/developers is nothing new, and not limited to Nintendo consoles (although N64 and Gamecube suffered, but that was through LACK of third party support rather than their first party saturation - what else was there to buy?). The difference is many analysts mistake the N64 and Gamecube life cycles as some sort of 'holier than thou' period of consumers only buying Nintendo products, and as a result mistake Nintendo's quality control history of "if it's shovelware, it's going to bomb" (honestly, I wish the Dreamcast had that kind of policy) as restrictive.
It's restrictive on face value, yes, but considering it is cheaper to make games and take a risk on Wii than it is, say with 360 or PS3, the benefits are quite clearly evident - and that risk-taking element is essentially what's going to stop the games industry from crashing a second time.
I also don't get why this analyst reckons the Wii's popularity is bad for third parties beyond his "Nintendo is dominant" theory:
"However, viewed at a macro level, the share shift currently taking place where the Wii, and even the PS2, are the share takers, our concern is that if software sales also begin to skew along those lines that publishers will be trading higher wholesale revenue (PS3 and Xbox 360) for lower wholesale revenue (Wii and PS2). Moreover, this is coming at a time when publishers are continuing to increase R&D spending for the more expensive platforms"
...o_O? My head hurts. What exactly is he saying here? That developers are at risk of getting less money back if developing for the Wii or PS2? Even though it costs more money to make a next-gen game? Someone help me out here.
Joji 30 May 2007 10:37
11/17
I agree the third party support for Wii isn't as great as it should be, and true to Nintendo laying down the Wii gaunlet, it looks like many developers are sxxt scared of it, or lack imagination to impliment it to good use. They easily forget that Wii controls are an option, not a necessity for Wii games (that's right, you can use normal controls too). While Wii games might not be like Crysis visually, we all know if pushed the quality of God of War 2 or LoZ:TP can be squeezed out. And yes even I get tired of so much Nintendo product.
This is the reason 360 will get so many games. 360 is a great test bed for new product. A place where a concept demo game, can become a full release game. That's good and the games look superb. 360 will still be second because of Live and its large choice of games.
As for the third parties, the likes of SquarEnix are starting to see PS3s sloppy sales in japan and pulling their teeth, and yes made that move to 360 we never thought would ever come. Desperation, we could yet see more of.
One things sure, and that's the PS3 apathy in japan will take a lot of doing to turn around, and if they can't win there, they'll have little hope elsewhere but in the U.S. It's possible one bad year of PS3 might be enough to slowly kill it (games on 360 seem very strong for xmas). I think it might actually play out this way, a price cut might change things though.
Monster Hunter 3 on PS3, that might get rid of jap apathy. Lol.
Tick tock clock, Sony.
This is the reason 360 will get so many games. 360 is a great test bed for new product. A place where a concept demo game, can become a full release game. That's good and the games look superb. 360 will still be second because of Live and its large choice of games.
As for the third parties, the likes of SquarEnix are starting to see PS3s sloppy sales in japan and pulling their teeth, and yes made that move to 360 we never thought would ever come. Desperation, we could yet see more of.
One things sure, and that's the PS3 apathy in japan will take a lot of doing to turn around, and if they can't win there, they'll have little hope elsewhere but in the U.S. It's possible one bad year of PS3 might be enough to slowly kill it (games on 360 seem very strong for xmas). I think it might actually play out this way, a price cut might change things though.
Monster Hunter 3 on PS3, that might get rid of jap apathy. Lol.
Tick tock clock, Sony.
PreciousRoi 30 May 2007 11:01
12/17
I think the PS3 still has a bit to prove before I'll sign off on it getting a 40% share, leaving aside the fact that multi-console ownership means the percentages will end up equalling >100%. Sure, there are no doubt triple A exclusives coming down the pipe, but wether these games will live up to their promise has yet to be seen. I also think that
the 360 will be back to relying on Halo sales to keep its momentum going.
is pretty unlikely. This isn't the old Xbox, strugging along after launch, pre-LIVE!, theres plenty of 3rd party games out there, and from what I hear, there will continue to be.
MS looks poised to fulfill the victory conditions I set out on this very forum, indeed with tyrion conceding them a 30% share, they will probably exceed them. Nintendo certainly looks good moving forward, cementing their grip on the handheld market, and selling the Wii as fast as they can get them into the shops. To be fair, Sony had nowhere to go but virtual hegemony, or down. I forget, are they planning on making a PS4, or is the PS3 the last Sony console? Will Nintendo come out with an HD console in a timely manner? In 10 years will the term game console have any relevance or will it be an anachronistic term, used by retro gamers and academics, to refer to museum pieces?
Even if BluRay wins the current format war, if Sony can't come up with something better to drive PS3 sales before Xmas, I think a significant number of people (outside of Japan) will have 3 set-top boxes...a Wii, a 360, and a standalone BluRay player.
tyrion wrote:
the 360 will be back to relying on Halo sales to keep its momentum going.
is pretty unlikely. This isn't the old Xbox, strugging along after launch, pre-LIVE!, theres plenty of 3rd party games out there, and from what I hear, there will continue to be.
MS looks poised to fulfill the victory conditions I set out on this very forum, indeed with tyrion conceding them a 30% share, they will probably exceed them. Nintendo certainly looks good moving forward, cementing their grip on the handheld market, and selling the Wii as fast as they can get them into the shops. To be fair, Sony had nowhere to go but virtual hegemony, or down. I forget, are they planning on making a PS4, or is the PS3 the last Sony console? Will Nintendo come out with an HD console in a timely manner? In 10 years will the term game console have any relevance or will it be an anachronistic term, used by retro gamers and academics, to refer to museum pieces?
Even if BluRay wins the current format war, if Sony can't come up with something better to drive PS3 sales before Xmas, I think a significant number of people (outside of Japan) will have 3 set-top boxes...a Wii, a 360, and a standalone BluRay player.
tyrion 30 May 2007 12:14
13/17
PreciousRoi wrote:
multi-console ownership means the percentages will end up equalling >100%.
You can never have a set of market shares that add up to more than 100% of the market, no matter how many people buy multiple consoles. That is the very definition of a market share percentage. The closest I can get to your thinking is a percentage of games console owning households that own a particular console, which is not a statistic that is ever quoted by anybody.
PreciousRoi 30 May 2007 14:10
14/17
tyrion wrote:
PreciousRoi wrote:
multi-console ownership means the percentages will end up equalling >100%.
You can never have a set of market shares that add up to more than 100% of the market, no matter how many people buy multiple consoles. That is the very definition of a market share percentage. The closest I can get to your thinking is a percentage of games console owning households that own a particular console, which is not a statistic that is ever quoted by anybody.
meh, so its a percentage of total consoles sold as opposed to percentage of console owners...
Ditto 30 May 2007 18:45
15/17
Joji wrote:
I agree the third party support for Wii isn't as great as it should be, and true to Nintendo laying down the Wii gaunlet, it looks like many developers are sxxt scared of it, or lack imagination to impliment it to good use.
I would personally include Nintendo in this still; there still aren't any really innvoative new games due on Wii that weren't already being developed for Gamecube. And there aren't a huge quantity of games either.
IMO Nintendo still hasn't used the DS to full advantage either, especially considering the possibility of online multiplayer games.
I really do think Wii demand will trail off shortly and they will be in hot water (as they were with N64) unless they can turn things around...
Joji 30 May 2007 22:32
16/17
I agree we should see more new Nintendo games, but that's up to them to sort out. Hopefully their acquisition of Monolith will help them in this area too. I'm sure there's a lot going on that we don't know of as Nintendo always have aces up sleeves.
I'm sure perhaps that hardcore gamers are more likely to tail off Wii, if they don't see what they want from Wii. But saying that I do think Nintendo and others will deliver. Casual gamers who are knew to Wii aren't like you or me, they won't feel the need to buy every good game on the way. I'm sure some that have Wii, will probably play their Wii Sports for ages, before they purchase more games.
No More Heroes, Nights 2, etc are cool, but I get the impression some third parties don't want to go into Nintendo's camp again, they'd rather opt for 360 or PS3. If Nintendo invite them to the Wii party and only so many turn up with games for Wii, what can you do about that? This same attitude is similar on DS too.
I'm sure perhaps that hardcore gamers are more likely to tail off Wii, if they don't see what they want from Wii. But saying that I do think Nintendo and others will deliver. Casual gamers who are knew to Wii aren't like you or me, they won't feel the need to buy every good game on the way. I'm sure some that have Wii, will probably play their Wii Sports for ages, before they purchase more games.
No More Heroes, Nights 2, etc are cool, but I get the impression some third parties don't want to go into Nintendo's camp again, they'd rather opt for 360 or PS3. If Nintendo invite them to the Wii party and only so many turn up with games for Wii, what can you do about that? This same attitude is similar on DS too.
Karsten Krogh 25 Jun 2007 10:12
17/17
I bought the Xbox 360 when it first released. That means that i can for the PS3 price drop. I would like to get a PS3, but the longer it takes for them to offer it at a reasonable price. The less likely im am to buy one. While im waiting for a pricedrop, im buing xbox360 games. At somepoint ill just wait for the PS4 ( If they have but a desent price on that) I like games like Testdrive, GTA, Call of Duty, MOH, Forza.....
So even with a pricedrop i really need a good reason to a PS3. Right now i think there is only 2 or 3 games i would like available for the PS3.
So even with a pricedrop i really need a good reason to a PS3. Right now i think there is only 2 or 3 games i would like available for the PS3.