A new report released by research firm DFC Intelligence has strongly disagreed with Sony,s positioning and marketing of their PS3 next gen console. In the report, David Cole, an analyst for DFC, said that Sony needed to take drastic measures in lowering its price points or suffer the consequences of coming in third against Microsoft,s Xbox 360 and Nintendo,s Wii.
Cole stated that its competitors could overtake Sony in a possible shift of game console dominance that has been historically held by Sony. “For the past ten years Sony Computer Entertainment (SCE) has been the king of the video game market. The first PlayStation (PSOne) and PlayStation 2 (PS2) platforms were THE platforms on which the leading third party publishers made the majority of their revenues. For third party publishers other game platforms had become of secondary consideration to the Sony driven gravy train. Even in 2006, the PS2 continues to sell the most units at retail…however two things are clear: 1) the high price of the PlayStation 3 is going to slow overall industry growth, especially for software and 2) if Sony does not change its current strategy for the PS3 the system will probably end up in third place in installed base.”
Mr. Cole also questioned the notion of marketing the PS3 as a computer instead of a game machine, a critical PR tactic in Sony’s PS3 campaign. Cole stated, “The problem with that computer strategy is that it means prices do not come down. By fixing its hardware standard for several years, video game console systems have been able to significantly lower prices over time by not having to upgrade to the latest technology.”
The unstable situation of the PS3 has its upsides, but not for Sony. DFC thinks that the big winners will be for the 360 and Wii, with Nintendo ending up on top. “So while Sony struggles with positioning issues Microsoft and Nintendo are free to try and build a solid base of actual video game players. The good news is that for both companies, under any scenario, DFC forecasts that the Microsoft Xbox 360 and Nintendo Wii will have a larger installed base than their respective predecessors. However, we think the company with the biggest opportunity is Nintendo. With a market leading price and a compelling mass market message the Wii has the opportunity to be the market share leader in all major regions.”
The announcement from DFC and David Cole is perhaps the most prominent report to date to predict the PS3 will come in last in the race between Microsoft, Nintendo, and Sony for console market dominance.
