Log in

Firm Adjusts Game Forecast

1 Aug, 2007 By: John Gaudiosi

Nintendo is leading in sales for video game systems over Sony and Microsoft.

Nintendo is on good footing for 2007. That's according to DFC Intelligence's new dossier for the second half of 2007.

“The most pressing issue facing the game industry is growing the installed base for new game systems,” said David Cole, a senior analyst for the video game tracking firm.

So far in 2007, Cole said the market has followed what he called the Nintendo Best Case Scenario.

“The Nintendo Wii is on track to meet our Nintendo Best Case Scenario forecasts for 2007,” Cole said. “The Nintendo DS looks like it may exceed our 2007 forecasts by 10%.”

Cole said Sony's PlayStation 3 is on track to match his firm's sales forecasts for 2007 under the Nintendo Best Case Scenario. In terms of installed base, he said it looks like the PS3 will be in third place until at least mid-2008.

“To move more PS3 units in 2008, we think Sony will have to be more aggressive on pricing,” Cole said. “Microsoft's Xbox 360 is running behind where they should be to maintain a strong market position. However, the Xbox 360 lineup is heavily weighted toward the second half of 2007. If the Xbox 360 can have a strong holiday 2007 they may be able to maintain at least a second place position for another year.”

Thanks to Halo 3, which is the closest thing any game company has to a sure thing, Microsoft should drive new console sales on this and other exclusive titles shipping in the latter half of this year.

Cole said that although there has been a great deal of focus put on Sony's PS3 launch woes, so far in 2007 the news from the Xbox 360 front has not been encouraging. In the first six months of calendar 2007, Microsoft shipped slightly more than 1 million units of the Xbox 360, compared to Nintendo shipments of more than 6 million Wii systems and Sony shipments of more than 4 million PS3 systems. The Xbox 360 had a one-year lead, but the competition is catching up fast.

“The bulk of sales for the video game industry come in the second half of the year, and it can be a mistake to extrapolate performance in the first six months to the full year,” Cole said. “For the Xbox 360, Microsoft is putting the focus almost entirely on the second half of 2007. Microsoft has humbly called the upcoming Xbox 360 titles the ‘greatest holiday lineup in video game history.' Whether it is the greatest lineup in video game history is of course subjective.

“However, the fall 2007 Xbox 360 release schedule is clearly a strong group of products with a wide variety of games. We would say that this will probably be the last holiday season that the Xbox 360 will have such a clear software advantage over the competition. If consumers are not lining up to buy an Xbox 360 this holiday, Microsoft clearly has problems.”

Nintendo has closed the gap on Microsoft's one-year head start, and Sony has a solid lineup of games coming for PS3 in 2008. Cole said one concern is that Microsoft seems to be in danger of losing its position as the online game leader. Microsoft has pushed the Xbox Live online game service as the key distinguishing factor for its systems. However, he said the PlayStation Network offers many of the same features as Xbox Live. He added that upcoming offerings such as PlayStation Home and some fairly high-end downloadable games will push the PS3 toward the cutting edge when it comes to online offerings.

“Even the Wii seems to have enough online features to keep the average consumer happy,” Cole said. “The Virtual Channel lets users download classic titles. We have been having fun playing YouTube videos on the Wii, and battling people online with the recently released Pok?mon Battle Revolution works just fine.”

Cole doesn't believe there is anything about Xbox Live that would really stand out for the average consumer. He said the ability to download high-definition video is nifty, but that is not why consumers buy video game systems. The competition actually stands out in several key areas such as Wi-Fi connectivity and, most importantly, being free to use. Xbox Live is the only service that requires a paid subscription to play others online. He said this is a key limiting factor not only for consumers, but also game developers.

When Microsoft talks about Xbox Live having more than 7 million users, they include free Silver members with no online game play capability, old Xbox owners that have not upgraded to the Xbox 360 and Gold members. Only the Gold members can play Xbox Live games online.

“In the grand scheme of things, we don't think online games will be a major determining factor in the purchase of this generation of game console systems,” Cole said. “As always it comes down to the games.”

Add Comment