PS3 News: Analyst Firm: PS3 Will Win, Blu-Ray Is A Factor - PS3 News

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Analyst Firm: PS3 Will Win, Blu-Ray Is A Factor

It's probably the most popular question amongst gamers today, and it's a simple one: "who will win the console war this gernation?" Well, the analysts always have their predictions, and while several have issued their expectations earlier this year, we've seen the first with real numbers in the prediction. It comes courtesy of Wedbush Morgan Securities' giant 207-page report on the interactive entertainment industry for 2007 (source: GameDaily.biz).

The report concludes that while the "main driver of console hardware sales is the quality and quantity of underlying available content" (it's always about the games!), Blu-Ray could be a deciding factor for Sony's PS3.

"Notwithstanding the efforts of the three console manufacturers to deliver compelling exclusive content, we expect the ultimate outcome of the console wars to be decided by the motion picture studios. Should the studios embrace Sony's Blu-ray standard for high definition DVDs, we think Sony will gain an insurmountable advantage over Microsoft; should the studios embrace Sony rival Toshiba's HD-DVD format, we think that Microsoft can maintain its first mover advantage and will dominate software sales for years to come," analyst Michael Pachter explained.

Of course, there are many factors to be considered, and in the end, who do they believe will come out on top? The PS3, if only by a slim margin. Pachter believes an additional "wild card" factor will center on each contestant's ability to "either develop content internally or to secure third-party commitments for software designed exclusively for a single platform." Well, it almost seems like exclusives are a thing of the past these days, but it's probably true. He also says Nintendo will likely end up with the highest number of exclusives, which makes sense.

Here's how they see the eventual breakdown:

"We expect the dominant console at the end of the next cycle to be the Sony PlayStation 3 (PS3), primarily due to our assessment that Sony will win the high definition DVD format war," Pachter said. "However, we expect Microsoft's Xbox 360 to enjoy a first mover advantage for the next two years, capturing approximately 44% of U.S. and European combined next generation hardware unit sales by the end of 2007. We forecast the PS3 and Nintendo's Wii to capture approximately 21% and 35%, respectively, of the next generation hardware market in this same period. We forecast the Wii to take the lead in 2008, with 39% market share, and expect the race to even out in 2009, with all three console makers capturing between 30 37% of the overall market.

Well, that sounds awfully fair, don't you think? It seems reasonable to believe the three will end up splitting the pie in almost equal pieces, but Pachter does say the PS3 will end up with the biggest piece with 36% of the market. He expects the 360 to be a close second at 34% and Nintendo in third with 30%. As for the industry on the whole, Pachter predicts the combined U.S. and European software markets to grow at a 16.1% CAGR from 2007 to 2009. Wedbush Morgan ultimately expects the market opportunity for U.S. software publishers to hit a gigantic $17.7 billion in 2007.

As time goes on, more and more industry analysts seem to be selecting the PS3 as the eventual winner, although every one predicts the console war to be a close race. Furthermore, all of those who predict a PS3 victory believe Blu-Ray will catch on and be one of the PS3's biggest selling points.

5/7/2007 Ben Dutka

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