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PS4 to "win" console wars - Analyst

PS4 to "win" console wars - Analyst

Thu 02 Jan 2014 4:40pm GMT / 11:40am EST / 8:40am PST
RetailHardware

Michael Pachter projects Sony's latest to outsell Xbox One by 30 percent through 2016, publishers focused on core gamers to benefit

After stretches in which Nintendo and Microsoft dominated the console market, Sony is in position to reclaim the sales throne in the coming years, according to Michael Pachter. Over the holiday break, the Wedbush analyst released his industry forecast for the next three years, saying, "we expect Sony's PS4 to 'win' the next console generation," while noting the PS4 and Xbox One should both thrive through the end of 2016.

Pachter projects the PS4 to post cumulative worldwide sales of 37.7 million systems by the end of 2016, 30 percent higher than his expectation of 29 million Xbox One's sold. Bringing up the rear will be the Nintendo Wii U, for which Pachter projected worldwide sales of 20 million units through 2016. He said a "disproportionately high percentage of Nintendo customers play more casual games," which leaves the company vulnerable to competition from mobile and tablet games.

Pachter's projections included a few assumptions about the retail prices of the consoles, specifically that they will experience only modest cuts over the next three years. Pachter expects the Wii U to drop 50 percent to $150 by the end of 2016, but acknowledges a possibility of Nintendo discontinuing production on the console entirely if sales lag. Meanwhile, Pachter expects the PS4 to drop $100 to $299 over the next three years, with Microsoft narrowing the cost gap of the consoles by dropping the Xbox One $150 to $349 over the same period. While Pachter has the PS4 "winning" the console generation (putting quotes around all uses of the word), aggressive pricing from Microsoft could throw a wrench into that prediction.

"We think 'winning' is important to both companies," Pachter said, "and it is possible that Microsoft will reduce Xbox One pricing far faster than we have forecasted. Should hardware prices come down faster than we have modeled, it is likely that hardware and software sales will grow faster."

Regardless, Pachter paints a brighter picture of industry software sales than seen in some time. In the US and Europe, Pachter believes gaming software sales will jump 10 percent this year, 7 percent next year, and 6 percent in 2016. Microsoft and Sony platforms will account for much of that growth, with Pachter expecting the two companies' various platforms to grow by a combined 50 percent in the next three years. As a result, the real winners may not just be Sony and Microsoft, but core gaming publishers as well. Pachter noted that the highest-rated stocks in Wedbush's gaming coverage--Electronic Arts, Activision, Take-Two, Ubisoft, and GameStop--all focus on core gamer audiences.

18 Comments

Sasha Yelesin
Student

47 24 0.5
A fair prediction of who will sell the most console based at this point. But I think actual winning will come from customer satisfaction/entertainment value rather than sales. The original Wii sold incredibly while the PS3 struggled for a long time and stayed in third place, even if sales just about equal Xbox 360 right now. Though to me, it was the PS3 and PC that won the last generation. Steam exploded with digital games and crazy sales, no wonder the Xbox One tried to make things all digital. Meanwhile, PS3 destroyed 360 in terms of exclusive games without half of them breaking down. To the gamer, the winner isn't based on sales and it's really to early to determine who that will be.

Completely disagree about Nintendo halving the price of the Wii U. Sony did it to the PS3, but that was because it was a 600 bucks. The Wii U is already being sold under $300 in some places. And Nintendo will not discontinue it, either. Where's the prediction that Sony will drop the Vita? And PC gamers aren't even considered here.

Posted:3 months ago

#1

Paul Jace
Merchandiser

768 1,001 1.3
On one hand you can look at all three as winners. For Sony the PS4 should outsell the Xbox One and Wii U thru out this generation. As long as Microsoft continues supporting the 360 it will continue to outsell the PS3 and Wii. And nothing will ever touch the one-two combo of the 3DS/2DS, given Nintendo the obviously expected handheld win. But as far as this gen goes, based on price alone this gen is Sony's to lose. Things will get much more interesting once Microsoft drops the price but I don't think thats going to happen for atleast another 1-2 years.

Posted:3 months ago

#2

Andy Samson
QA Supervisor

223 170 0.8
Nintendo's never going to ditch the Wii U prematurely, it's not a virtual Boy wherein the technology and usability is severely flawed. This guy doesn't seem to do his homework and brush up on gaming history. See what happened to SEGA when it tarnished its reputation by abandoning their consoles too early into its life cycle. Nintendo's going to support the Wii U for a minimum of 5 years, that's how it has always been for them.

Look at Project Cars, they know the Wii U is more than capable of selling their game since there are already established franchises on the other two systems. The system has more potential for new IPs to flourish. Nintendo's investing heavily on securing exclusives from salvaging projects and collaborations with 3rd parties instead of paying for multi-platform games.

Just like with the Vita, SONY will hesitate to lower the price of the PS4. They will wait for Microsoft to make the desperate move and match their pricing. The Wii U could easily slash the system's price next holiday to coincide with another blockbuster they keep for such an occasion.

Posted:3 months ago

#3
Indifferent of each side - its just amazing how the two manufacturers (and Nintendo) have shed their claimed capabilities and now focus on the basics. If the investment on TV content is as holed as some suggest MS will be in a painful position - and the rumors about poor voice and connectivity that the new Kinect brings to the table could be a serious failing! That said - this is now a game content battle and not a DLC conflict... yet.

Edited 1 times. Last edit by kevin williams on 3rd January 2014 2:50am

Posted:3 months ago

#4

Rick Lopez
Illustrator, Graphic Designer

1,203 816 0.7
Honestly, I think all 3 consoles are on level ground, now that the next gen hype has calmed down. Now its a matter of waiting for more software and to be honest, its who has more and better software that will win this.

Regarding Nintendo, they probably arent doing as good as they used to, but I dont think the WiiU is a failure. This chrismas I saw Nintendo shift alot of units and there library of games seems to be getting better and better. So i wouldnt count them out.

Both XB1 and PS4 are suffering software droughts and all 3 platform holders seem intent on launching there killer apps in 2014. In 2014, we will see who is the winner and the loser... right now it seems pretty even to me, with my PS4 gathering dust as I enjoy my PS3 and 3DS a whole lot more.

Posted:3 months ago

#5
The "elephant in the room" question regarding Nintendo is..."are they a part of the console games industry, or have they created their own new business model that dose not need to comply with the norms that Sony and MS have to consider?"

The more I read, and the more I see, I get the feeling that even though the Wii-U has been a badly handled product release this is a system that can still survive in the "Nintendo Universe" where any other machine would collapse with such issues. Not a true Next Gen, but in reality a Next-Nintendo-Gen system.

That said, I have always seen Nintendo steering their own profitable path (since their playing card, arcade, and toy days), the only one of the video game companies that has a operational reserve of funds and is not in a make or break race with their latest gen hardware!

If Nintendo is a self contained business, then that means that a lot of cycles are being wasted by independent media and developers on a platform that will offer zero return on this investment (just as Rare how that worked out for them!)

Posted:3 months ago

#6

Klaus Preisinger
Freelance Writing

953 804 0.8
Sony and Microsoft are like two gunslingers in some Wild West showdown following the trope of "this town is not big enough for us both", while Nintendo, mobile, third parties, indies, and the PC have long since made this "town" but one suburb of a larger landscape of gaming cities.

Sony and Microsoft sometimes try to raid those surrounding villages for players, but not to an extend which is threatening the existence of those towns. We often talk about Microsoft also branching out into TV, but I honestly do not see their console as some type of IPTV receiver yet and you can certainly not plug in a satellite dish and get a picture. Replacement for a Logitech Harmony, really?

Posted:3 months ago

#7

Mike Wells
Writer

59 23 0.4
Popular Comment
There are two kinds of forecasters: those who don't know the future; and those who know they don't know the future.

Posted:3 months ago

#8

Mark Dygert
Lead Character Animator

19 18 0.9
MS could offer up a kinect-less version and drop the price substantially. I'm not sure the PS4 could go any lower as it doesn't have any superfluous hardware to drop.

I still think it will be determined by software sales and the networks that the gamers friends are on. They could both start offering up digital downloads at reduced prices and not have it eat into profits that much. In the past they've tried to stay out of pricing wars but that might change. Gamers really never bought into the price hike that came with last generation and their fortunes haven't improved much so they might need adopt a lower price point and push more digital distribution, but they need a stepping stone option, they need to offer physical media at an additional cost, but still cheaper than full retail.

Posted:3 months ago

#9

Anthony Chan

83 68 0.8
I disagree with Pachter and it seems his statements are more geared towards generating volatility in the stock prices of MS, Sony, and Nintendo. All 3 companies are here to stay in this generation. There will be no bankruptcies/insolvencies from the entertainment/gaming units of the corporations. There will be no ultimate winner, no ultimate loser. There will be no buy-outs amongst the big 3.

This generation will still have three consoles; where none of them is a clear winner. I would venture as far to say next generation will have 3 consoles as well, with Steam the one struggling to break market share from the traditional console demographic.

Posted:3 months ago

#10

Greg Wilcox
Creator, Destroy All Fanboys!

1,993 902 0.5
Oh, good lord. Can we all memorize that line from Pulp Fiction after those two assassins clean out that bloody car and make it look all nice, but get reminded by The Wolf that they're not quite out of the woods just yet? Whenever I read one of these crystal bald -faced over-projections, I just cringe as a gamer first.

Edited 1 times. Last edit by Greg Wilcox on 4th January 2014 12:16am

Posted:3 months ago

#11

Andrew Ihegbu
Studying Bsc Commercial Music

416 111 0.3
I don't know why they still publish this guy. Pachter has a long list of fallacies and inanely vague judgements purely aimed at attracting non-gamer investment.

How about I make a prediction. PS4 will outsell XB1 from the outset purely on an RRP basis. As the large list ofof Xbox exclusives start to arrive mid-2014 that should start moving many more units and, combined with the inevitable price drop and maturation of the multimedia stuff MS is trying to do, should at least level things up.
The rest is in the air for me, Nintendo included. If something great

Posted:3 months ago

#12

Andrew Ihegbu
Studying Bsc Commercial Music

416 111 0.3
I don't know why they still publish this guy. Pachter has a long list of fallacies and inanely vague judgements purely aimed at attracting non-gamer investment.

How about I make a prediction. PS4 will outsell XB1 from the outset purely on an RRP basis. As the large list ofof Xbox exclusives start to arrive mid-2014 that should start moving many more units and, combined with the inevitable price drop and maturation of the multimedia stuff MS is trying to do, should at least level things up.
The rest is in the air for me, Nintendo included. If something great, exclusive, and already popular with the west doesn't arrive in many flavors next year, Nintendo may end up having to lean on their home audience to keep the WiiU cost effective.

Posted:3 months ago

#13
It's too early to have enough solid data to make such long run predictions. With everything that Microsoft and Sony keep announcing it seems that the two systems will be more similar in a year's time than they are at the moment. What is interesting to me, and I see so few people talk about is the fact for the first time in the industry we have four very different marketing messages. Sony is attempting to market to the core gamers who also want to use the system for some media functions, Microsoft is marketing to those who want a powerful media box that plays games, Nintendo is (finally) marketing to kids, families, and those who want their style of games, and Steam/PC only developers are attempting to show the breadth and depth of creativity of their platform. A 30% gap in sales now does not mean there will be a similar gap in the long run. As far as product cycle goes, we are still in the introduction stage, we have yet to see what sales will be like during the main growth period. I wish I had the data available on the industry to work on some models for predicting the these sales, but I don't so I will attempt to make a prediction based on what I know at the moment.
The PS4 and Xbox One will both sell very well, but it will be issues within Sony and Microsoft that are unrelated to their gaming departments that will cause the most trouble for the products and related services. Nintendo will start to do better than people expect, but will continued to be shunned by the majority of big name developers. This hopefully will lead Nintendo to seeking out smaller studios and independent developers to make new games for their systems. The average number of PC gamers will continue to increase not just because of sales in the traditional markets, but because of other countries gaining access to the digital downloads. Most notably countries that are trying to push the use of the PC forward.

Posted:3 months ago

#14

Christian Keichel
Journalist

416 562 1.4
Plausibility check:
Pachter projects the PS4 to post cumulative worldwide sales of 37.7 million systems by the end of 2016, 30 percent higher than his expectation of 29 million Xbox One's sold.
Microsoft and Sony platforms will account for much of that growth, with Pachter expecting the two companies' various platforms to grow by a combined 50 percent in the next three years.
Current number of PS3 and XBox360 systems sold: 160 million
Sales of PS4 and XBox One so far: about 5 million
50% of 165 million (combined sales of MS and Sony stationary console platforms): 82.5 million.
Pachter's estimated sales of PS4 and XBox One sales till the end of 2016: 66.7 million
Pachter's estimated sales of the combined 360 and PS3 sales till the end of 2016 15.8 million.
Sales of the PS2 in the 3 years after the introduction of the PS3: 30 million

Edited 2 times. Last edit by Christian Keichel on 5th January 2014 12:11pm

Posted:3 months ago

#15

James Prendergast
Research Chemist

730 410 0.6
This is for the American market only, right? Since when did Microsoft "dominate" any console generation worldwide?

After stretches in which Nintendo and Microsoft dominated the console market, Sony is in position to reclaim the sales throne in the coming years, according to Michael Pachter.

Posted:3 months ago

#16

Nick Parker
Consultant

264 124 0.5
This is a re-run of his comments in November following the London Games Conference. There will be market share shifts and territories lost and won but gamers will buy what they need for their own experiences; gamers have a choice, now let them choose.

Posted:3 months ago

#17

Gareth Eckley
Commercial Analyst

96 69 0.7
So Sony is going to win the console wars, just like everyone predicted for the last two generations eh?

In other news, PC gaming is dead, free to play is the future and tablets are going to replace your FACE in 2014.

Sound advice.

Posted:3 months ago

#18

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