Blu-ray will help PS3 be dominant - Analyst

Mike Bantick
Tuesday, 08 May 2007 09:27

Opinion and Analysis

According to a recent analyst report, the PS3 will ultimately win the games consoles wars because of the Blu-ray drive.  Don’t the games count?

A recent report on Gamedaily.biz gives yet another Analyst view of the multi-billion dollar direction of the gaming console war.

This one by Wedbush Morgan Securities in a 207 page report detailing the key factor to winning the sales war in the home entertainment space is the format war between HD DVD and Blu-ray, the next-gen high-def disc formats.

Analyst Michael Pachter notes that while "the main driver of console hardware sales is the quality and quantity of the underlying available content," the high definition format war between HD DVD and Blu-ray could be a key factor in determining the console war outcome.

"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," Pachter explained.

Pachter goes on to expand on the Wedbush Morgan Securities prediction of a winner; "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," he 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.

"Ultimately, we see Sony 'winning' the console war with 36% of the market, with Nintendo 'capturing' second place at 34% and Microsoft finishing third at 30%. We believe that this is essentially a dead heat, and each manufacturer will have sufficient market share to generate significant profits. These estimates do not include market shares in Japan, which we expect to be dominated by Nintendo (51% through 2011) and Sony (44%)."

Of course none of this takes into account the fact that we are dealing with gaming machines.  And as much as we have the “alternative” technological features of these consoles rammed down our throats’ by the manufacturers, at the end of the day it is the smiles on our faces when playing with the toys that counts.

There are many factors that go through a consumers mind when faced with a purchase of this kind, whilst the disc format is one, there are many more.  It will be an interesting space to watch over the next period.