Analysts are unanimously negative about the outlook for Sony’s PS3 games console. Following recent announcements about a European postponement and limited availability, several analysts have lowered their sales forecasts. In addition to the European delay, Brian O’Rourke of In-Stat also cited the high price of the game console as a reason to see the future of the next-generation game computer more gloomy. Chris Crotty of iSuppli even lowered his forecasts for the entire console market into 2009, but says he remains optimistic about the long-term outlook for Sony’s PS3.
The company itself also announced that it is expected to sell fewer consoles than first planned. Shareholders took these messages seriously and Sony saw its market value sharply take resulting in the largest share price drop of the past two weeks. The game console manufacturer saw its share decrease by 1.6 percent to $ 42.60 in Tokyo. The Playstation 3 has a big task ahead of it: CEO Howard Stringer puts his hopes in the PS3 to revive the company, which has seen half its market value go up in smoke over the past six years. Andrew Millward of Henderson Global Investors, however, says Microsoft and Nintendo will already have completed a full round, while Sony will have yet to start the race when the PS3 launches. In the past six months, Sony’s stock market cap has fallen by 7.3 percent, while the Nikkei 225 index rose by 1.8 percent.
SeekingAlpha examined meanwhile, whether the PS3 could match the success of the Playstation 2, which despite coming later on the market still serves most of the market. This is based on the assumption that the launch date and the available quantities at that time are not important. What does count, according to the authors, is how many consoles will be available by the end of December. However, the factors that are really important to make the console a success, according to SeekingAlpha are the following:
- Available games
- Relative launch date
- Price
- The market penetration of the console’s predecessor, in this case the Playstation 2
- To a lesser extent the technology used
In terms of games, no console is doing very well, but the PS3 is no worse than the rest, according to SeekingAlpha. The relative launch date refers to the lead of certain consoles. For example, the authors assume that strong sales of Xbox 360s during the Christmas period could mean bad news for Sony. Users who purchase the Wii may still be able to be persuaded by Sony to buy an additional PS3 later, but Xbox 360 buyers will be disappointed by the cost and image of the console – which, unlike that of the Wii, bears strong resemblance to that of the PS3 – much less easily drawn to the opposite camp. The European, Japanese and American markets are completely incomparable and based on successes in one market, no statements can be made about the other.
However, the writer is of the opinion that the large amount of PS2 consoles will ensure that the sale of the PS3 will in any case not be a complete catastrophe. However, the market share of the Playstation 2 will probably not be able to match the new console. However, the price tag is one of the main barriers to making the PS3 a success. Sony’s persistent Blu-Ray demand has left the PS3 pricey by definition, while Xbox 360 buyers have the choice between a more expensive HD-DVD bundle or the cheaper base versions. In addition, the price of the PS3, according to the authors, also means that the console will not take full advantage of the Christmas season, because it is simply too expensive for a ‘present’.