"Euro 360 sales have hit a wall" - Screen Digest

Sales of the Xbox 360 in Europe have hit a wall according to a new report from Screen Digest, which suggests Microsoft is struggling to expand the user base for the next-gen console.

The report also observes that the Nintendo Wii is dividing the market, with some publishers happy to ride Nintendo's coat tails to pick up business with poor quality titles, while others are betting the farm on the innovative machine.

"For Xbox 360, European hardware sales seem to have hit a wall. The target market is still too focused on adult males and the brand does not enjoy the same cachet in non-Anglo Saxon markets as it does in the US and, to a lesser extent, the UK," reads the report.

While there are no concerns about appealing to a dedicated gaming audience, "failing to break out of a small number of genres and thereby appealing to groups outside of hardcore gamer," is a bigger problem according to Screen Digest.

Despite these issues the report does highlight that some of the most anticipated titles for the coming Q4 are for the Xbox 360 and Xbox Live is described as a "beacon of hope".

According to the analysts group, the Nintendo Wii is splitting business models across the industry.

"Some publishers are investing much less saying they will leave the platform drivers to Nintendo and ride their coat tails by spending very little on mediocre quality titles which will give some return."

On the other hand, "the combination of lower development costs and fastest growing installed base confers significant economic advantages in publishing games for Wii relative to competitive consoles, and this has lead to some third-party publishers increasing investment levels in developing for the platform."

The report points out that a low return on Wii software may hamper investment by publishers in other formats, as it simply does not generate as much profit at a time when PS3 and Xbox 360 development costs are rising.

And on the PlayStation 3, the report criticises Sony for not educating consumers as to what's in the box and relying too much on the PlayStation brand. Because of this a price drop is inevitable, says Screen Digest.

"A price drop before the end of the year is inevitable and would be in line with previous PlayStation first time price reduction timings."

"Marketing material has tended towards the esoteric and abstract and has seemingly failed to resonate with the consumer."

It also points out that Sony could drop a "bombshell" by the end of the year with a combined price drop and the launch of the Home virtual networking and online game service.