This Gamasutra feature, Screen Digest: PS3 To Lead Through 2010, Wii ‘Great Unknown’, is VERY interesting.
The report is from a talk to Screen Digest’s Ed Barton, based on a research report they are selling. The outline of the report is here – but to actually read the report you’ll have to cough up, um, $3600.00. Yowsa.
“estimating $13.9 billion in global sales of next generation software by 2009”
This is about 3% lower than the estimate I blogged about six months ago:
Console online game software 2005 $0.26 billion
Console online game software 2010 $2.95 billion
Compound Annual Growth Rate 62.5%
Console game software 2005 $11.0 billion
Console game software 2010 $11.4 billion
Compound Annual Growth Rate 0.7%
The article doesn’t discuss a disparity between console and console online revenue growth, but the outline of the actual report does include a section titled Exploiting online business models. My estimates from last year also include PC, mobile and handheld figures, btw. In a nutshell, online is the only place there is either console or PC growth to be had, but mobile growth is better than both.
His overview comment:
“PS2-style dominance will not be repeated in the next generation hardware market: we anticipate that competition will be far more intense with market shares split on a territorial basis.”
Another good one:
“Third party publishers aren’t so concerned about showing off the particular technical features of a particular console, these guys are interested in selling as many games as possible. … This is why we think that you’re now seeing a lot of games going multi-platform which were previously exclusive to a single platform, say PS3 or Xbox 360”
I’d recommend clicking to see this developers-per-studio graph; it’s too small to be worth embedding here. Quick summary: EA is more than twice as big as anyone else, with over 5500 developers. Ubisoft and Sony are next in size, each around 2200. Nintendo is 11th in size and Microsoft 12th, with around 800 and 750 respectively. Interesting analysis of three distinct strategies from the big three:
The report notes that Sony’s Worldwide Studios employ around 2,200 staff in 14 studios, all but one, it notes, are strictly devoted to PlayStation 3 development, a number only rivaled by third party publishers like Ubisoft and Electronic Arts.
By comparison, though with a number of large teams under its own wing, Microsoft has instead focused on “aggressively forged relationships” with third parties to create Xbox 360 exclusive titles, which, the report says, is already beginning to find success with games such as Gears of War.
Nintendo’s own strategy, the report says, has been to focus on “game play innovation” and has “shunned high-definition graphics, ensuring the cost of making Wii games has not increased as dramatically as its counterparts,” a strategy Screen Digest says is similar to its own for the DS, “accessible hardware and software designed to appeal to a wider range of consumers, such as young women who would not usually consider gaming to be part of their lifestyles.”
This connects directly back to the point in my last post about Wii appealing to (and marketing to) girls and women. I think their estimates and predictions about Wii are low, but only time will tell. Here’s a link to the chart, and here’s the summary from the article:
In looking at the group’s predictions for regional market share by the year 2010, Screen Digest has shown the battle lines clearly drawn evenly between the PlayStation 3 and the Xbox 360, apart from Japan, where the PS3 shows a clear lead, while in all three markets, the Wii comes in a distant third.
A detailed explanation of his analysis:
“The one thing I would admit is that Nintendo’s strategy with the Wii is, at the moment, the great unknown,” said Barton. “Can they repeat the kind of success that they’ve had with the DS by applying that strategy with the Wii? Absolutely, if Nintendo can make this work on a home console and appeal to those demographics outside the core gamer constituency, the potential is absolutely huge.”
“However, we also have a lot of faith in the ability of, in particular, Sony, which we see has really got a huge amount of development resources, and they are backing the PlayStation 3 to enormous unprecedented levels for a first party publisher,” he responded.
“One of our core beliefs,” Barton continued, “is that no one buys one of these plastic boxes on technical specs alone, people tend to buy them for content. Our forecasts at the moment are based on the belief that PlayStation 3 has this level of support. The numbers that we’re seeing now for the Nintendo Wii, they’ve come out of the blocks fantastically strongly – no one would deny that – however it’s incredibly early in the hardware cycle. There’s still another five or six years to play out on this one, and the first big battleground will be Christmas of 2007.”
“There’s also a third pillar,” he added, “in that the PlayStation 3, and this is also true for the Xbox 360, is, if you like, a domestic broadband hub, the magic box which enables a consumer to buy premium content delivered over broadband. And so, if Microsoft and Sony can execute and convince consumers to buy content delivered over broadband stored and played in the magic box, then this could grow the market for the particular games consoles, and also has an influence, in my opinion, on how the market will shape up over the next five or six years.”
And two last points from him about how the Wii is the big unknown:
“As market forecasters,” Barton admitted, “it’s very hard to take a view on a new strategy which is effectively what Nintendo are executing with the Wii. They’ve stepped aside in the graphical arms race, and improvements in graphical technology in a gaming sense has historically been what’s driven market growth, and having seen what they’ve done with the Nintendo DS – which obviously they’ve executed fantastically, and which has basically created a new gaming phenomenon – we don’t deny the possibility that this is a possibility with the Wii.”
Tying together the challenges of rising development costs with the relatively modest costs for Wii development as compared the prior cycle, Barton added, “This is the massive positive point for the Wii, that it’s basically cheaper to develop games for. As to whether more cheaply developed games can continue to drive Wii sales momentum, when you put it against the kind of games pipelines we’re seeing for the Xbox 360 and PS3, I would argue that the jury’s still out.”