An analyst said it so it must be true: PS3 will outsell Wii

[Xantar]

The first paragraph is the important part.

The prediction is based on the PS3 remaining a commercial platform for five years after the Wii has been replaced. Report author David Mercer predicts a 127 million unit lifetime title for the PS3, compared to 103 million for the Wii.

The global totals for the three consoles currently stand at approximately 68 million for the Wii, 38 million for the 360 and 32.5 million for the PS3.

The report also predicts that worldwide home console sales will drop by 9 per cent in 2010, to a total of 47.5 million; 17.5 million for the Wii, 14.0 million for the PS3, 10.5 million for the 360 and 5.5 for the PlayStation 2.

Source: GamesIndustry.biz (membership required)

So he's saying that the PS3 will outlast the Wii by five years and as a result will have a greater install base by the end. In the meantime, the PS3 has sold an average of 9 million units worldwide per year. To sell 14 million in 2010, it would have to see a sales surge of over 50% in its fourth year of life. I know the PS3 is cheaper and has some good games coming out, but I still don't see where this huge boost is coming from. And why exactly is the Xbox 360 going to experience such a huge drop?

You may be wondering: "Who are these guys anyway?" Well, I kind of have a hobby following analysts, and I have some predictions by the same firm back in 2005 (when the Wii was called Nintendo Revolution).

The report predicts that Sony will sell 121.8 million PS3s worldwide through 2012. Sales of Xbox 360s are expected to reach 58.8 million and of Nintendo's Revolution nearly 18 million. Cumulative retail revenues for all consoles over this period will exceed $47bn.

Source

I'm apparently in the wrong line of business. These people are getting paid to come up with numbers like this. And apparently their only method is to look at the past and predict that the same thing will happen in the future. "The PS3's sales grew last year. It will grow again this year and grow even more next year." I really want to know who buys these reports and actually makes investment decisions based on them. But mostly I just want to know how I can get a job like this.

[Bond]

I don't have a membership, but there is honestly no factual evidence, or at least a rational argument made to support the predictions? That just seems absurd. I can't imagine any serious investor would pay for a report that fails to even attempt to justify its predictions.

[TheGame]

That prediction is simply a gamble. If Ps3 manages to outsell Wii, then this guy is set for life for his amazing predicting ability... If Ps3 loses, then we'll likely forget aout this.

[Xantar]

Originally Posted by Bond

I don't have a membership, but there is honestly no factual evidence, or at least a rational argument made to support the predictions? That just seems absurd. I can't imagine any serious investor would pay for a report that fails to even attempt to justify its predictions.

I'm sure there is some kind of attempt made to justify the prediction. All I know is that the full article (the one you can read with a membership) says that they use some combination of a math formula, market research and secret sauce. And there's a link for anybody interested in purchasing the full report (if you want to try it, be my guest).

But the point is I don't know of any conceivable justification for the PS3 seeing its sales shoot up half again over while the Wii and Xbox 360 drop precipitously. And as I demonstrated with a quote from a previous prediction, these people have been wildly wrong.

The thing is these people are not atypical. A few years ago, a different analyst firm came up with some other hilariously bad numbers which you can read about here (full disclosure: this is my blog, but I'm honestly not trolling for hits). These particular people predicted that by the end of 2009, the PS3 would have sold 38.7 million units, the Xbox 360 26.8 million and the Wii would have 41.9 million. And this prediction was made in 2007 when the Wii had already experienced the biggest first year of any videogame console ever.

So I guess my question is how do you guys think analysts keep getting away with this stuff?

[Angrist]

Informed people don't pay attention to these people, but the uninformed do. It makes newspapers because newspeople don't know anything about the games industry. They just need to fill their papers with interesting sounding stuff.

[FuzzTop]

I agree with half of the message. There is no doubt in my mind that PS3 sales will endure longer than Wii sales. Plainly put, the Wii for the most part is a novelty system, 99% of third party titles are horribly designed for the controller and frankly, games just aren't as pretty as on ps3 and the 360. The PS3 is used by a lot of people as more than just a console, many use it as a home theatre hub. Between being able to play blueray, being able to stream info to a psp, including whatever ps1 game you want, I see the PS3's livelyhood outliving the Wii's.

However, like you said, to achieve those numbers, sales need to increase like my patience when dealing with most people. That I see as a problem, because frankly, the majority of people that truly utilize the ps3 to its maximum potential have already been in the "Playstation 3 is the shizznit because playstation 2 was the best EVAR!!!!!11111oneone" camp for a while. And the only time sales tend to uncharacteristically surge is at launch or if a killer exclusive app comes out after the consoles come down significantly in price.

Furthermore, in order to topple xbox in sales, PS3 quickly needs to put together an online service to match the xbox's. For all the bitching I commit to concerning the cost of the xbox gold membership, for the most part, i DO get my money's worth, and then some. If Sony wants my business, they have to show that the online component of their console can be better than Microsoft's.

Like I'd said before, though, the second possibility that may lead to a surge in sales is a killer app after prices have dropped. Right now, sony is in the perfect position to drop their long due "halo killer". That being said God of War 3 is en route which is sure cause waves. If Sony releases a kick ass game with wide appeal in the near future, with at least a year and a half left in this generation's console wars, and then package it WITH the console, then I can see these numbers happening. However, knowing Sony, their response will be that the PS3 needs more power, after a small fusion nuclear generator to power the even more needlessly complex processor that only marginally outperforms the cometitor's cheap triple core, they will then continue with their plans of world domination.

[BreakABone]

Sweet we get to play the sales number game!

Okay first, this analyst, there isn't much to say really.
He expects sales of the Ps3 to quadruple over the next 3 years, which would be miraculous for a product that has already been on the market for 3 years. Even more importantly, they expect this thing to sell at a rate much greater than the PS2 or the Wii. I mean just under 90 million in 3 years? Yeah good luck with that one.

And yeah the Wii is on a downturn, I can honestly say I don't know any console that has remained with constantly high sales in its 4th year. The PS2 peaked in its 3rd holiday with like 2.88 million sold in Dec of 02. The Wii probably has peaked this past Dec with the 3+ million it sold.

As for senor Fuzztop, the Wii is a novelty system like pretty much every other console in existance. They aren't needed, but are enjoyed by people for the things they offer.

I do support that blu-ray would have been a big boom for the PS3, but at this point there are cheaper standalone players than the PS3, and while they may not be as good, not everyone checks that stuff.

The big game theory is a bit iffy this generation as well. A lot of games have come and hit it out of the park, but haven't really swung momentum to a console one way or another.

Even the Wii, seems to sell more on the strength of its backlog than any game that is currently coming out.

So this new game or maybe even the ARC would have to be something truly special.

[Typhoid]

This reminds me of one of Earls' threads.

[BreakABone]

Originally Posted by Typhoid

This reminds me of one of Earls' threads.

Oh that isn't true, mine would be more heavy handed and would dig up all type of numbers.

Like industry growth, and year over year change.

Though that reminds me, people also seem to forget that the reason PS3 sales did so well last year were that they finally dropped the price of the console by over 100 bucks and it is now half the price of when it launched. Also they introduced a new model.

They basically, did two console boosters at once. The only other thing they could have done was include a pack-in game.

I would point out that Nintendo hasn't really changed their core bundle, and have only dropped the price once.

They still have the option to: a) Offer different colors of Wiis, b) Drop the price again, c) Pack-in more stuff like Wii Sports Resort/Wii Motion Plus or Wii Fit/Balance Board

[Typhoid]

I stand by my idea that the Wii only sells so much because A) It's cheap because it is technologically inferior B) It is for casual gaming and C) It's great for kids under 12. Meaning parents will buy their kids a Wii rather than a $100 extra for a PS3/360. Not to mention the fact that adults over 40 who've never played games in their life enjoy the interaction of it.

Is that a knock on the Nintendo? Nope. Nintendo does what they do well - market to specific categories of people for lots of profit.

[TheSlyMoogle]

Originally Posted by Typhoid

I stand by my idea that the Wii only sells so much because A) It's cheap because it is technologically inferior B) It is for casual gaming and C) It's great for kids under 12. Meaning parents will buy their kids a Wii rather than a $100 extra for a PS3/360. Not to mention the fact that adults over 40 who've never played games in their life enjoy the interaction of it.

Is that a knock on the Nintendo? Nope. Nintendo does what they do well - market to specific categories of people for lots of profit.

Couldn't have said it better myself.

[BreakABone]

Oh hey look its my old friend, same ole argument! Long time no see!

First, I shall pose a question, if price and audience are such a huge factor, why didn't the Cube sell as well as either the Xbox or the PS2?

It was always the cheapest of the 3 consoles, sometimes by even a hundred bucks, and as many developers claimed, it catered to different audiences, but that didn't help.

So why is price all of a sudden a deciding factor.

And I know, "Xbox and PS2 didn't cost as much as the Ps3/Xbox 360), and that is a relatively good point, but nor did the Cube cost as much as the Wii.

Also, the Xbox 360 Arcade was cheaper than the Wii for about a year, until last Sept or so, brand confusion aside, why didn't people start picking up the 360 in doves then? I mean going by all logic, it offered pretty much the same thing you would get on the Wii and more.

You get HD sound, you get all them terrific games, you get Netflix, online, friend's list, you name it.

Instead of focusing on why Nintendo won, why don't people look at where Sony and MS screwed the pooch. They jumped started a generation with a prospect that people cared as much about graphics as the vocal "hardcore" gamer, so they had to jack their console launch price to almost double what is usually expected. They both launched with weak software line-ups and really didn't get the ball rolling until half way through their first full year. And they continually cater to a singular audience, and I know for everyone here that isn't a big deal because you are that audience, but in the long run, this generation I believe will have done more harm than good to the industry.

And, that's a random rant at the end, but hell at this point we aren't even talking about the opening post anymore.

[Xantar]

So...I guess everybody agrees this analyst is full of it? Just trying to stay on topic, here...

[TheGame]

Originally Posted by BreakABone

Oh hey look its my old friend, same ole argument! Long time no see!

First, I shall pose a question, if price and audience are such a huge factor, why didn't the Cube sell as well as either the Xbox or the PS2?

It was always the cheapest of the 3 consoles, sometimes by even a hundred bucks, and as many developers claimed, it catered to different audiences, but that didn't help.

So why is price all of a sudden a deciding factor.

And I know, "Xbox and PS2 didn't cost as much as the Ps3/Xbox 360), and that is a relatively good point, but nor did the Cube cost as much as the Wii.

Also, the Xbox 360 Arcade was cheaper than the Wii for about a year, until last Sept or so, brand confusion aside, why didn't people start picking up the 360 in doves then? I mean going by all logic, it offered pretty much the same thing you would get on the Wii and more.

You get HD sound, you get all them terrific games, you get Netflix, online, friend's list, you name it.

Instead of focusing on why Nintendo won, why don't people look at where Sony and MS screwed the pooch. They jumped started a generation with a prospect that people cared as much about graphics as the vocal "hardcore" gamer, so they had to jack their console launch price to almost double what is usually expected. They both launched with weak software line-ups and really didn't get the ball rolling until half way through their first full year. And they continually cater to a singular audience, and I know for everyone here that isn't a big deal because you are that audience, but in the long run, this generation I believe will have done more harm than good to the industry.

And, that's a random rant at the end, but hell at this point we aren't even talking about the opening post anymore.

Timing and pricing were still big factors this generation, as is quality. It's hard to really compare it to last generation, because last gen GCN was a lot more geared towards being like the competition and didn't introduce much of anything that hasn't been seen before other then the mini disks.

Also, there wasn't different price level packages last gen like there is this gen. Yeah the Xbox Arcade package was cheap, but it didn't even outsell the full packages 360 offered because people simply didn't want the cheap/incomplete package. Plus, the price advantage that Wii holds this generation over the "complete" Ps3 and 360 packages has generally been better then gamecube had last generation.

My answer to why Nintendo "won" is because they changed their mindset and stopped trying to compete with Microsoft and Sony for the hardcore gamers.. and they offered a package that had a nice gimmick that managed to swoop up the non-hardcore and/or cheap gamers from under Microsoft and Sony.

Now Sony and Microsoft are gonna offer the motion control things to try and give those casual gamers with hardcore tendancies a reason to look twice at Ps3. And we'll see what happens with that.. (Note: I think if both companies advertize it good enough, and offer enough content, Wii's sales will fall. Because now it will actually have to compete.)

And Xantar, yes everyone agrees that the Analyst is full of it. But like I said, a lot of times groups make wild statements like this knowing that people won't take them seriously. 2 years from now, nobody is going to be thinking about this prediction unless it turns out to be right.

[Bond]

Originally Posted by BreakABone

Instead of focusing on why Nintendo won, why don't people look at where Sony and MS screwed the pooch. They jumped started a generation with a prospect that people cared as much about graphics as the vocal "hardcore" gamer, so they had to jack their console launch price to almost double what is usually expected. They both launched with weak software line-ups and really didn't get the ball rolling until half way through their first full year. And they continually cater to a singular audience, and I know for everyone here that isn't a big deal because you are that audience, but in the long run, this generation I believe will have done more harm than good to the industry.

You're missing the business point here. Market share domination does not always necessarily equate with success, just as having less market share does not equate with failure. If Microsoft and Sony are able to carve out a sufficient percentage of the video game market, and remain profitable, it is a successful business venture.

I see why you are upset from your own personal vantage point / where you would like to see the video game industry go, but the fact that Nintendo knowingly removed itself from direct competition with Microsoft and Sony was an extremely smart business move, just as Microsoft mainly focusing on the "hardcore" demographic was a smart business move.


On the analyst, I agree his prediction is not realistic. I suppose this may be a high-reward, low-risk prediction, though. From my experience, financial predictions / reports on the video game sector are not taken extremely seriously. Up until a year ago CNBC was routinely misspelling "Xbox," and the anchors and guests had absolutely no idea what they were talking about.