May gaming sales numbers

**Andy** · 07-04-2007, 11:33 PM

it doesnt surprise me that nintendo continues since they decided to take a chance with the motion sensors and it worked for them. the ps3 and xbox 360 just continued to upgrade the software and all that and didnt try anything new, which has seemed to cause problems like zabka had stated. and also like he said the only reason the 360 boomed was for Gears but that was it. i am sure a couple more will go once Halo 3 is released. The reson the ps3 isnt selling is not that it doesnt have a standout game its because its too expensive. i could buy a Nintendo Wii, a 360, and a couple games for both for the same price as a ps3. its also sad when the ps2 sold more than the ps3. so far my next gen system prediction is coming true as a predicted earlieir that the Wii would be first, the 360 second, and the ps3 third.

**Deslock** · 07-05-2007, 08:44 AM

The PS3 will continue to pick up. I will be the first one to admit that Sony dropped the ball on it's online offerings, but they are learning from their mistakes. The games that I do have on the PS3 still amaze me that there is absolutely no lag on anything. Add to that the PS3 is doing better at this point than the 360 was doing at this point at their launch time, folks just need to be patient.

I'm actually amazed that Nintendo managed to pull their hind end out of the fire. they were close to bankruptcy, and once again an ancient title like Pokemon pulled them back up. Pokemon has saved Nintendo once again. And to think once they didn't think a game that had little monsters fighting each other would have any appeal. LOL.

When you compare each system against each other, the Wii should've lost hands down considering the capabilities of the 360 and the PS3, which is indeed a "wake up" call to the industry.

My only complaint on the PS3 is that while it can play PS2 games, it does so without any sound. That is a MAJOR problem that they need to fix.

Sony's president has admited that they're going to have to take a hit on the price of the PS3 to get back in charge of the market, and they need to. It IS an awesome machine, but as Andy said, most folks just look at the price tag. Sony is going to have to get on the ball quick if they want to continue to rule the marketplace. But don't count Sony out quite yet, they will get back on track, if they wish to survive. They don't have any other choice.

Beer, it's not just for breakfast anymore. Thank God! Jesus, can anyone be this tired and still be alive?

*Sighs*

Welcome to my world.

**{KOR}Longhorn** · 07-19-2007, 10:28 AM

Many Wii owners are already complaing about the lack of software, and some have moved past the "wave your controller around". The classic controller is still the preferable method of playing games, but the casual gamers will pick up a Wii b/c of the $250 price tag. Nintendo mgmt has even be quoted in saying that their demographic has very little overlap with the PS3 or 360 demographic. Basically, they are saying you can own a Wii and another system to keep everyone happy.

The PS2 is still outselling all other systems. And the new price drop this month for the PS3 has really worked for Sony. If they are smart, they keep the curent $499 price with a 60 GB HDD. Amazon sold out of PS3s and reported a 2800% increase in sales as soon as the price dropped.

The 360 still has a 12-month lead on the PS3 but the PS3 is selling at the same rate as the 360 when it first premiered. Peter Moore leaving Microsoft for EA Sports might also have a negative impact on MS. Moore may have been the 'scapegoat' for MS having to pay over a billion dollars in repair costs for the Red Ring Of Death. Also, MS has not met their sales projection this year.

-KOR Longhorn

**Zabka** · 07-19-2007, 11:01 AM

The price drop for the 60 gig unit is only for the existing inventory. afterwards, the 60 gig unit will be discontinued and only the 80gig unit will be available. There are rumors that the 80 gig unit could seem some sort of price drop then--but basic marketing warns you not to piss off all ofyour customers in an effort to get new ones. Dropping the price in the 80 gig at the point that the 60 gig inventory runs out would mean only about 3 months of the 80 gig being $100 more. Price drop may come, but it will likely be later (otherwise one of two things happen: everyone waits to buy and 80 gig or everyone who didn't gets really PO'ed as does everyone who just bought a 60 gig).

MSFT is on a calendar fiscal year I believe. Sales for the 360 are clearly back end loaded with the titles launching in the fall. The question is when MSFT chooses to drop their price as well.

**{KOR}Longhorn** · 07-19-2007, 12:30 PM

Originally posted by Zabka

The price drop for the 60 gig unit is only for the existing inventory. afterwards, the 60 gig unit will be discontinued and only the 80gig unit will be available. There are rumors that the 80 gig unit could seem some sort of price drop then--but basic marketing warns you not to piss off all ofyour customers in an effort to get new ones. Dropping the price in the 80 gig at the point that the 60 gig inventory runs out would mean only about 3 months of the 80 gig being $100 more. Price drop may come, but it will likely be later (otherwise one of two things happen: everyone waits to buy and 80 gig or everyone who didn't gets really PO'ed as does everyone who just bought a 60 gig).

MSFT is on a calendar fiscal year I believe. Sales for the 360 are clearly back end loaded with the titles launching in the fall. The question is when MSFT chooses to drop their price as well.

Microsoft originally predicted they woudl sell 13-15 million consoles by August. They have changed that to 12 million recently. And the $1.5 billion dollar warranty extension was a big blow to their creditbility since they wouldn't admit there was a problem for the past 20+ months since its release. According to recetn article about Moore, Microsoft has yet to turn a profit on the Xbox dating back to the original.

Sony should find ways to keep the price at $499 since it has been a big seller. The cost of the BluRay drive has dropped significally in the past year, so this should help Sony lower their costs.

in the meantime, Sony announced a new version of the PS2 Slim at E3. The latest version will be a silver-grey color. And as the May sales showed, PS2 games are outselling 360 games. Wii owners are starving for anything, so Mario games selling is not a surprise.

**Zabka** · 07-19-2007, 01:58 PM

Very true Longhorn. But providing guidance on sales figures often proves to be a tricky proposition and reducing guidance can hurt a stock, but not for a product that is still not a meaningful contributor to MSFT's top or bottom line. More often than not, a mature company like MSFT (as opposed to a growth company) will stop providing such granular guidance. The job of management is to increase shareholder value--and the means to do that are multiple.

The $1.5B charge actually does nothing to credibility. If anything, it would enhance it since they are standing by the product via a 3 year warranty. The existence of the problem had been acknowledged for some time, but the rate of failures being more in the 25-33% range instead of the 5% range as originally thought was something that they just now recognized. As an analyst, you would rather have them take the charge and get it out of the way. As a consumer, you would rather they not have this failure rate, but since they do, the warranty addresses the issue. Dont forget the brouhaha over the lack of rumble in the PS3 controller. Sony claimed that six-axis was incompatible with rumble when in reality they simply didn't want to pay the license fee. I haven't seen this lie tarnish their credibility since at the end of the day, a rumble six axis controller will be out, which will please most consumers. If MSFT hadn't done a warranty extension, then the credibility would be an issue. But most consumers just care that the problem gets fixed (rumble or red lights of death), and so long as it does, they are quick to forget.

What people don't realize here is that hardware sales are not important to microsoft financially other than as a means to generate software, license and royalty revenues. So the first years will always the "sunk costs" of a system--witness Sony losing money on every console. Microsoft just started making money on console sales--and I would imagine the warranty charge will take them out of that. This is why the big consoles are coming from massive companies like Sony and Microsoft who can absorb these losses. As we see more efforts to link the PC and the gaming console via games and media, the investment that Microsft is making is for a vision much broader than gaming consoles--much like Sony has done to extend its playstation beyond simple gaming. Convergence is the goal. Sony would like everybody to have a PS3 as a part of their home entertainment system that includes a Sony HDTV and Sony Home Theater. Microsoft is looking for ways to extend its dominance in the PC market and make the PC a central part of the home entertainment experience. Neither company will likely get there based on the current consoles in my view.

The PS2 continuing to sell has been a godsend to Sony that has helped them through a relatively slow launch. The question for both companies is how well consoles will sell after the initial launch. the PS2 needed Grand Theft Auto to really propel console sales. The 360 had Gears for its launch and is now looking to Halo3 to give it the next leg (last stats I saw had 50% of xbox owners still not having bought a 360, so Halo 3 could be worth a few million in sales, but I am skeptical). I am not sure what the breakout game for Sony will be, but they have a number of interesting titles that could get it going.

While the cost may have been prohibitive for PS3 sales and the lowering of the cost will help, $500 for a system is still a lot of money for most people. Appealing titles will be needed to really fuel the growth as the price points for both are probably above the range that a casual gamer would consider given the dearth of titles that would appeal to them. The Wii has captured the casual gamer market at this point with spillover to the PS2. But MSFT still has too many games that appeal to hardcore gamers with their casual offerings not being enough of a catalyst for casual gamers---SceneIt will not spur a consumer to buy a $500 system. The PS3 simply doesn't have very many games out there now at the moment with most people I know still playing PS2 games (other than RFOM, Oblivion and now some into RB6). But with new games coming, who knows how it will shake out?

At this point it appears that, fanboys aside, that most people see gaming capabilities as roughly equivalent. The PS3 may have more potential, but there hasn't been a game made or expected yet that has the same level of innovation that Gears had. I imagine that more of that potential will be tapped, but I also wonder how much of a difference it will really make in people's gaming decisions. LIVE is a superior online, multiplayer experience, but the reality is that roughly half of 360 owners even bother to get a LIVE account--so while it appeals to a gamer like me, it doesn't seem to be the hook that many would expect (as many non-gamers still think the concept of online gaming as a bit creepy/nerdish). The PS3 has the BluRay player which is a nice feature, but it seems more and more that DVD formats are not going to really matter a ton going forward as higher connection speeds become available for more downloading of movies. There are pros and cons to each system, and the costs for both are high no matter how one views it.

I'll be interested to see what spurs that next leg of growth for these guys.

**{KOR}Longhorn** · 07-19-2007, 04:19 PM

Originally posted by Zabka

The question for both companies is how well consoles will sell after the initial launch. the PS2 needed Grand Theft Auto to really propel console sales. The 360 had Gears for its launch and is now looking to Halo3 to give it the next leg (last stats I saw had 50% of xbox owners still not having bought a 360, so Halo 3 could be worth a few million in sales, but I am skeptical). I am not sure what the breakout game for Sony will be, but they have a number of interesting titles that could get it going.

Good discussion, ZABKA. Enjoying it...

The one game I am really looking forward to is HEAVENLY SWORD. The trailer is very cool-looking and the playable demo shown at E3 was sweeeet! The video of the demo is on YouTube somewhere.

Although it is a PS3 exclusive (according to Wikipedia, Microsoft turned it down?), the engine for SWORD supposedly showcases the famed cell processors Sony talked up prior to launch. Based on Sony's E3 presentation, the amount of enemies and AI will be something never before seen on any console to date, or currently available in the market. HEAVENLY SWORD could be that big game everybody wants for the PS3.

I am looking forward to it for another reason too. If the AI and number of AI proves true, SW Battlefront 3 for the PS3 should be much better in terms of on-screen players than the 360 version. Imagine actually re-creating the Battle of Genosis as seen in AOTC?!

As for the PS2, GTA III might have sparked more PS2 sales, but when that system launched, it was impossible to find a unit well into the Spring of 2001. I didn't get mine until then. At that time, there was no real competition from other consoles. Nintendo had disappointed a lot of consumers with their stubborness with the N64 and later Gamecube, Sega was on it's last leg of hope with the Sega Dreamcast, and Microsoft wasn't a player in the home console industry yet. The PS2 dominated and was the primer brand, especially considering their success with the first PlayStation. That is primarily the reason I bought a PS3 was my overall satisfaction with the PS1 and PS2. I was a late adopter of the PS1, but my original PS2 still works to this day. I am rearely motivated to buy a console b/c of one lone game. However, I may do just that with the new SW Battlefront game on the PSP.

And based on sales figures, the PS3 has outsold the PS2 during the same time period. Not bad considering the the success of the Wii and the 1-year headstart of the 360.

-KOR Longhorn

**Zabka** · 07-19-2007, 05:32 PM

Originally posted by {KOR}Longhorn

And based on sales figures, the PS3 has outsold the PS2 during the same time period. Not bad considering the the success of the Wii and the 1-year headstart of the 360.

I don't think Sony is necessarily pleased with its sales numbers. The head of the division got canned and they dropped the price less than a year after launch. The cost of manufacturing the PS3 is obviously a huge encumberance and has led to stymied sales, I believe in addition to the lack of titles currently.

The PS2 did have a strong launch as it was the only "next gen" console at the time and the PS had just opened people's eyes to the potential of console gaming beyond the N64 and Genesis. The Dreamcast was fun, but multiple problems abounded in Sega's strategy to launch.

I plan on getting a PS3 if there are enough compelling titles, or if I start to see a separation in quality of games....or maybe not. I had an xbox and a PS2, but I never played the xbox despite the fact that xbox was a much better console than the PS2. I wonder if the same thinking will pervade if the PS3 shows a separation in quality. The thing is---I don't believe that multi-platform games are where differences in quality will be apparent...so SWBF3 will not be a differentiating factor as it will likely be multi-platform (or if current rumors are to be believed, a 360 exclusive). Multi-platform games are usually ported and then tweaked, but rarely completely rebuilt (other than some titles on the wii). So the exclusives will be where they can separate...and so far there hasn't been anything to show differences. If anything, at E3, most of the demos of multiplatform games were shown on the 360, indicating that developers who are most trying to show off their games are not seeing the PS3 as advantageous for those types of games. Differences between games are likely to be relatively minor--ie GTA4 will have exclusive downloadable episodic and playable content that the PS3 won't have available to it. Is that a big deal? I guess if you LOVE the game it is. The xbox has a much better SWBF2 than the PS2 with downloadable content that is awesome, but that didn't make me not want to play swbf2 on the ps2. (although if I was a jedi player, I would get bored with tatooine as the only map when the xbox has other jedi maps).

My thing is, I don't care for RPGs or most fantasy/action games. They tend to not lend themselves to multiplayer games which is why I game. MMORPGs are different of course, but I am not sure if the RPG side of that will make me not be interested in those games. Lair looks nice as does heavenly sword, but they don't look like games that will excite me (personal preference). Warhawk and socom do look like they could. I think if Sony gets its online interface in games more uniform and up to standard, I would be interested in a PS3.

RB6 is my favorite game on the 360, and while I heard that the PS3 game is identical, I hear that there are massive deficiencies in the online interface to create and join games with friends--especially if they are in a different game. Those types of things are just unnecessary and Sony should rectify that.

By the way, Microsoft reported after the close today and took a 1.05B charge ($0.08 per share) for the warranty issue, yet they still beat street estimates due to strong sales from Vista, 360s (must be including the royalties of game sales as Guitar Hero 2 was a big seller) and other items they said.

I think at this point, the console war has been rendered inconsequential. MSFT and Nintendo are above critical mass for successful gaming divisions and Sony is approaching that with the price cut, but also propped up by PS2 sales. Basically, I believe that while one machine might sell more than others, to a gamer, it won't matter. Developers will have incentives to make games for all or any of the consoles to make sales. And as a gamer, that is all I care about.

I imagine I will wait for after the 80 gig drops in price to consider a PS3. I have too many games on the 360 that I don't play enough currently, and see a nice list of games coming forth that could suck up my time.

**Zabka** · 07-19-2007, 06:43 PM

I don't cover tech, so I didn't realize that MSFT is on a June fiscal year. So the recently reported quarter was their 4th. On the earnings call, they just offered 10-19% revenue guidance for their entertainment and devices division (that's a wide range) and 14-15% rev growth in the next quarter. This is interesting because Halo doesn't come out until the end of September. I am guessing that last summer must have just been really weak for them and they expect sales in advance of Halo? I don't think Zune is driving the division.

On a side note, I read today that it is rumored that Halo3 coop may not be available online because they are finding it difficult to make it work. If that is the case, my interest in the game plummets. I haven't ever played Halo2 online, but really liked the story mode and always prefer coop.

**CHRIST** · 07-19-2007, 09:12 PM

I thought the silver slim PS2 has been out for a few months now.

May gaming sales numbers

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