Innovation & Design

Xbox to Lead U.S. Market Through 2009


That's the verdict according to A.G. Edwards analyst, Bill Kreher. Sony, unsurprisingly, doesn't agree

Kreher said in a phone interview with Next-Gen, “Basically the 360 had the first-mover advantage, so they already had 5 million units in US households before the PS3 and Wii launched. That’s a lot of the reason why I think they’ll end up winning.”

He added that Xbox Live and its 6 million users have a lot to do with his projections. “Live’s been a huge bonus for them,” he said.

But doesn’t Sony have a little something called PlayStation Home that is expected to go toe-to-toe with Xbox Live in October? Kreher said that although Home’s concepts are attractive to more casual gamers, it won’t be enough to sway them to spend $500-$600 on the console.

“The trick here is that the popularity of these online features depends on people,” Kreher said. “It’s great that Sony is going to have this service, but the reason Xbox Live is so popular is because you have 6 million-plus people on this thing. If the people don’t come, it doesn’t matter how great the service is.”

Kreher made it clear that he believes Sony has to change its strategy if it wants to capture a larger chunk of US market share, and it goes beyond a strong online component.

“There’s just not enough compelling software,” he claimed. “I see Resistance, everyone can point to that, and MotorStorm is going to do very well. But you look outside and the third party software support just isn’t that significant, and I think that part of that is because the installed base isn’t doing that well.”

Kreher compared the PS3 to the PSP, which has a relative lack of software support. “[PSP] is starting to fade away on us. I could see that happening on the PS3 before Sony even has a chance to show their stuff,” he said.

Kreher admitted that Sony has the option of cutting the PS3’s price down the line to attract consumers. But with strong rumors of an Xbox 360 Elite package with a 120GB hard drive and HDMI support, he said that Microsoft plans to make the PS3 look less compelling.

He also downplayed the Blu-ray factor, one of the distinguishing built-in features that the Xbox 360 will continue to lack. “The fact that Sony is essentially forcing its proprietary technology on the consumer kind of puts some people off,” he said. “Especially when there’s no assurance that Blu-ray is going to be used in games in any significant way.”

Sony Computer Entertainment America PR boss Dave Karraker disputed Kreher’s PS3 notions when contacted by Next-Gen. “PS3 just had the biggest launch in European history,” Karraker wrote in an e-mail. “In the UK, it nearly beat the launches of both Wii and Xbox 360 combined.In North America, we outpaced the original PlayStation and PS2 in sales during the first three months—both of those systems went on to sell over 100 million.

“Given this, the assumption that PS3 might be fading seems not only inaccurate, but also short-sighted given the extensive catalog of first and third party games that are coming down the pike, along with the potential that exists with the PlayStation Network,” Karraker concluded.

And then there’s the Wii, which Kreher expects to fall between the Xbox 360 and PS3 through 2009 with 34 percent market share, despite doubters who say that the Wii is simply a fad or novelty. He expects the younger crowd will have a big say in the console’s success.

Kreher stated, “Speaking in terms of a holiday, if mom and dad are looking to buy a system for their kids, first of all they’ll see the $250 price tag versus $400 or $600. Then they’ll see those familiar titles like Mario, Mario Kart and even the licensed games from THQ, whether it’s Disney Pixar or Nickelodeon, those are the type of games that are going to sell well on that system.

“Long term, I think the Wii is very viable,” he said.

Big expectations for Activision

When asked which game company interests him most, he said without hesitation, “My favorite of the bunch is Activision by far.” He said that the publisher has lots of potential for further growth with the Guitar Hero franchise and its wide appeal, as well as movie licenses such as Spider-Man 3 and Shrek the Third. More entries in franchises such as Call of Duty and Tony Hawk will make significant contributions later in the year, he said.

Provided by Next Generation—Interactive Entertainment Today

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