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PS3 vs 360 - My Predictions

Posted on Wednesday, October 3 @ 21:03:57 PST by Duke_Ferris
Unlike most Manifesto entries, this one isn't funny, and I don't insult anyone, except the Belgians because they smell bad.

Through the random conflux of events, I sometimes get asked for my opinions about video games and the industry from strange quarters. The Dept. of Homeland Security even consulted with me about video game violence. Your tax dollars at work.

This time it was an investment banker who studies Sony and wanted to know the future. When I finished my response, I realized many of you might be interested as well, so I decided to post it here too.

Without further ado:

Sony has made a lot of mistakes the last couple years, and I'm not just talking about SCEA. But i don't think the PS3 is doomed.

On the other hand, I don't think either the 360 or the PS3 stands a chance of being the dominant Seabiscuit runaway winner, like the PS2 was. I think it will be a much closer and harder race - think  SNES vs Sega Genesis back in the day. And it's not about technology, the first Xbox was superior in every way to the PS2, the problem, as one 12 year old told me was that "Xbox is gay". ie. It's more about brand perception than actual product. The Toyota Prius is another example of this, It's not actually better than other hybrids, but it's the one everyone wants.

It's pointless to talk about the Nintendo Wii, because it's not a comparable product, and will not stop even one 'hardcore' gamer from getting a PS3 or a 360, and thus will not effect total sales.

The problem is the huge loss Sony takes on every unit sold, it's going to be rough making up that deficit without a massive sellthrough like the PS2 had. Although the 360 failure rate may mean that Microsoft's up front costs become similar. Microsoft is used to that though, where Sony is not. They took about a $2bil loss on the life of the first Xbox, and came back for more.
Short version of my prediction for this generation of machines (five year timeline):

- Microsoft H & E will show a small profit, thanks to Xbox Live subscriptions, not being a first-timer, and a closer race.

- SCE / SCEA will show a small loss, with profits from PS2 sales in emerging markets helping to offset PS3 losses.

Am I right or am I stupid? I'm sure you'll have opinions, and we'll find out either way in 4 years. (Note, SCEA = Sony Computer Entertainment America, SCE = Sony Computer Entertainment, Microsoft H & E = Microsoft Home & Entertainment Division)

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