XB360: AN INCONVENIENT TRUTH / Finance Analyst Ehrenberg: XB = "disastrous endeavor"

[ChadSpeed]

No worries, and thanks for the understanding response. To be fair, my reaction is largely based on recent situations involving others, and not you, so I apologize for taking some of that anger out on you.

Here's to having a civil discussion...



That is the traditional model, at least when a console is first released, although it is my understanding that the Wii sells for a profit as does the PS2, and perhaps the 360, certainly in terms of hardware cost... but the real cost of course is development, marketing, distribution, and administration costs. To make up for that, they must count on software sales, and ideally first party software sales, as that is where they can make a decent profit. Otherwise they are just getting license fees leaving the publisher, developer and retailer getting the largest chunk of the sales revenue.




Actually the Wii surpassed the 360 a long time ago in regards to world wide sales.

Which is truly remarkable consider, like the PS3, it came out a year after the 360. The only question now is whether or not the Wii can sustain this pace and eventually pass the PS2 in terms of world wide hardware sales… although unlike the PS2, the Wii’s software sales have not matched the PS2’s historical software sales rates.

More importantly, the Wii is really it's own unique product, and doesn't necessarily compete directly with the 360 and PS3 in terms of it's target market... although I'm sure both Sony and Microsoft wish they had released and marketed a similar product to the Wii based on it's success in that market.

In fact last year, most of the multi-platform games that were released for all four current consoles (PS2, PS3, 360, Wii), the PS2 version sold the best.

Also, world wide sales only tells one part of the story, as the PS2 has over 125 million units sold... but it's also been out a long time.

A more accurate figure to follow in terms of predicting the success of a product compared to other products is to compare sales rates over both the same period of time, as well as day-to-date sales rates.

For instance, while the 360 has sold more units than the PS3, it also came out a full year earlier than the PS3. If you compare actual sales rates, you can see why Sony is not nearly as concerned about PS3 sales as others appear to be:

And outside of America, the PS3 has been selling much faster than the 360:

European Sales Rates

Japanese Sales Rates



Although this topic (sales rates between consoles) has been discussed in far greater detail here.

Great info DN, I think with the 360's increase in sales over the holiday season in Europe it may close a bit of the gap there, but who knows if it will continue to grow that fast. Also while I think the 360 machine is sold as profit, replacing it cost a lot of money. I just hope mine holds out until a new M$ system is released, and M$ better pray a new system doesn't have those issues.

 

[Max_DC]

source

I state again : Sony can't be happy with these figures, since they dominated the last gen.
Of course MS is losing a lot of money, but Sony also has problems to earn enough money for compensating the huge developments costs for the PS3.

Also have a look at total hardware sales at vgchartz.com. It doesn't matter if you consider the past 12 or the past 6 months. Xbox360 and Wii are both selling better. That is no success for a company, that owned last gen.

 

[Digital-Nitrate]

Max_DC;3316331... are you aware those attach rate figures are for the US sales ONLY?

The fact is that the US accounts for about 60% of all 360 sales, 45% of all Wii sales, and only about 35% of all PS3 sales means it hardly tells the whole story right?

Would you care to post the world wide attach rates for all three consoles?

 

[Max_DC]

Max_DC;3316331... are you aware those attach rate figures are for the US sales ONLY?

The fact is that the US accounts for about 60% of all 360 sales, 45% of all Wii sales, and only about 35% of all PS3 sales means it hardly tells the whole story right?

Would you care to post the world wide attach rates for all three consoles?

I can't provide worldwide figures, as there are no global statistics afaik.
But since the numbers above are not directly related to the number of sold units, it at least shows a tendency.

Also have a look at total hardware sales at vgchartz.com. It doesn't matter if you consider the past 12 or the past 6 months. Xbox360 and Wii are both selling better. That is no success for a company, that owned last gen.

This argument however is still valid, isn't it ?
Actually the PS3 should sell a lot more in order to become 2nd in this generation, so far I can't see that tendency.


Same thing in Europe :

http://www.developmag.com/press-releases/43331/XBOX-360trade-RECORDS-BEST-EUROPEAN-CHRISTMAS-IN-ITS-HISTORY-EIGHT-MILLION-CONSOLES-SOLD-TO-DATE

or

http://www.mcvuk.com/news/32819/360-hits-8m-sales-in-Europe

Nick Gibson, Founding Analyst, Games Investor Consulting, said:“Microsoft appears to have enjoyed an excellent end to 2008 in Europe. According to GFK Chart Track data, the Xbox 360 recorded in excess of 100% growth in December sales compared to 2007 across the UK, France, Italy, Germany and Spain, well ahead of any other console. It also recorded comfortably the highest rate of year-on-year growth for the final quarter of 2008 overall.”

Nick Parker, Founder and Games Analyst, Parker Consulting, said:“I have seen early returns for the December 2008 sales data indicating that Xbox 360 has shown a significant sales increase year on year and furthermore is ahead of its nearest rival in terms of lifetime consumer hardware sales in the EMEA region, with an installed base of over eight million units.”

I know that these links above reflect MS data, yet I don't see a reason not to believe most of it. Total hardware sales show similar numbers.

360 sold two times as many consoles in the USA as PS3, leads over PS3 in Europe ( hardware sales ) - what remains is Japan. But the PS3 isn't selling that great in Japan aswell.

Note that I'm not against Sony, but let's face it, I don't think Sony planned it that way after the huge success of the PS2.

 

[Digital-Nitrate]

If you are unclear on the difference between sales rates and total sales... I suggest you scroll up in this thread. If the 360 and PS3 were released at the same time, then yes, comparing total sales would be an accurate way of comparing their success in the market. The fact that the 360 came out a year before the PS3 is why sales rates since launch are the most accurate way of comparing and predicting their success.

In terms of sales rates, as shown in the posts just prior to yours, the PS3 is selling faster world wide and in every country except for the US.

As has been mentioned already, yes, the 360 had a great 3 month sales period over the holidays thanks to a big price cut and a huge multi-million dollar advertising campaign (however so far it resulted in a net loss instead of profit ).

More importantly, anyone making snap judgments based on such a small sales period and ignoring everything else is going to find themselves terribly mislead.

 

[Tornado]

The fact is that the US accounts for about 60% of all 360 sales, 45% of all Wii sales, and only about 35% of all PS3 sales means it hardly tells the whole story right?

It does, however, paint a very surprising picture. While it isn't definitive enough to make any conclusions off of, it is notable that the Wii has been managing to have a better attach rate despite the system being a whipping boy for that very reason (among others).

 

[Max_DC]

Ok :

Go VGChartz.com > Chartz > March 31st 07 - Feb 14th

I can't see PS3 outselling Xbox360 in total. What I see is that they are having a tough fight, all in all I don't think that Sony was able to shorten the lead of MS considerably within 2 years.

Sony's goal however should have been to dominate the market again. That's a natural wish after the PS3 success. Yet in two years they didn't leave their third place. The success of Nintendo Wii is another story, but beating the 360 should have been possible.

In that regard, so far, the PS3 is failure. I don't say that selling millions of consoles and pieces of software isn't enough to survive or even to make profit, but having been in lead in 2005 - everything but being in lead in 2009 is a loss. Being number 3 of 3 with a total market share of not even 25 % is not a win, no matter how much you want it to be .
In order to win Sony would have to sell a lot more hard and software than MS. I don't see that coming atm.

Just one point, because this is the internet, I'm no 14 year old Xbox fanboy, I've been a multiplatform gamer for over 15 years, owning more than 20 consoles and over 200 games for the Playstation brand alone. And I attend university, med school to be precise, so I basically know how economy etc works.
I know that you are no 14 year old Sony fanboy and that you know what you are talking about, just to put things into perspective. I'm not trying to make the 360 look good, I just describe my view.
Also I'm a huge fan of Japan and Japanese technology, I really wished Sony was ahead, but imo it isn't and I don't see that coming in near future.
If they sell the PS3 as long as the PS2, well, it might be a profit in the end, yet I'm not as optimistic as you are atm.

 

[ROAD_DOGG33J]

If they sell the PS3 as long as the PS2, well, it might be a profit in the end, yet I'm not as optimistic as you are atm.

I think that's what will happen. The PS3 will probably go on as Sony's top console for a while longer too, even after Microsoft releases their next console. Also, I think Sony has invested enough into the PS3 so that the costs for their future PS4 console will be considerably less. All they will have to do is make the cell processor a bit more powerful, add more memory and upgrade the GPU.

 

[Digital-Nitrate]

Being number 3 of 3 with a total market share of not even 25 % is not a win, no matter how much you want it to be .

First of all I could care less if the PS3 "wins" or not... I have already gotten my money's worth out of mine. In fact from a financial stand point I want MS to "win", and so far the biggest financial burden MS faces is it's Xbox division... simple point of fact and the reason for this thread.

If the only way the 360 can stay ahead of the PS3 in terms of total units sold is to continue to take billion dollar losses by slashing prices and spending a fortune on advertising... who wins? Having sold more total units, but losing close to $10 billion dollars in the process and canceling first party games and killing off first party developers is not what I call a victory.

Second of all, 25% of what market? Seriously, we are back to square one with you cherry picking data points. For instance:

In order to win Sony would have to sell a lot more hard and software than MS. I don't see that coming atm.

They already are... by a wide margin... assuming we are talking about the video game hardware and software market and not just a single console. Heck, even in the US, Sony sells far more hardware (PS3, PS2, PSP) and more software for that hardware than MS. So not only is the PS3 selling at a much faster sales rate than the 360, but even Sony's other video game products are outselling the 360 world wide in both hardware and software.

I'm glad to hear you are not a fanboy, but I suggest you may want to broaden your scope of data and research in terms of the video game market before you go around declaring something to be a failure.

 

[Max_DC]

First of all I could care less if the PS3 "wins" or not... I have already gotten my money's worth out of mine.

Same here, it's my Blu-ray & DVD Player - and of course there are some great exclusive games

If the only way the 360 can stay ahead of the PS3 in terms of total units sold is to continue to take billion dollar losses by slashing prices and spending a fortune on advertising... who wins? Having sold more total units, but losing close to $10 billion dollars in the process and canceling first party games and killing off first party developers is not what I call a victory.

That is a point. Of course this kind of behavior is often called "investment".
It might pay off some day, obviously not in this generation, but maybe in future. Videogames are still a massively growing market, of course a little slowed down by the economic crises, but imo we are not even close to what "videogames" will mean for future generations.
So investing into this business is not a bad move. And MS accomplished to be ahead of last generations dominating company - at high costs for sure, but they are in the head of the consumer, Xbox today is a brand that most people know.

Second of all, 25% of what market? Seriously, we are back to square one with you cherry picking data points. For instance:
They already are... by a wide margin... assuming we are talking about the video game hardware and software market and not just a single console. Heck, even in the US, Sony sells far more hardware (PS3, PS2, PSP) and more software for that hardware than MS. So not only is the PS3 selling at a much faster sales rate than the 360, but even Sony's other video game products are outselling the 360 world wide in both hardware and software.

Come on, that's no way of discussing. You talk about software sales, hey, let's put in Windows & Dos. And Sony TV sets.

I was only talking - and I think that all my posts made that clear - about this generation of home consoles - Xbox360 and Playstation 3. Not Xbox, not PS2, not PSP, not Zune.

I mean of course we could talk about all this and of course it would put things into another perspective, but then I could reach into my pockets for my next joker : Nintendo Wii. I have it, but I don't like it. It's a rip off and every time I look at it, through a serious amount of dust, it yells "CASUAL" at me.
Still, Nintendo was able to dominate this generation, although being third in last gen. I know that it's hard to compare Wii with 360&PS3 because of their target audiences and, well, the fact that Wii seems to be less powerful than Xbox 1 at a price of an Xbox360. Not to forget the DS, since you were talking about PSP.

I state it again. The PS2 dominated last gen with Xbox and GC being 2nd and 3rd.
New gen. reset. 4 years later. Wii has almost a 50% percent market share, and not only that, even the 360 is still ahead after 2 years of PS3. Ok, even if as you say, the PS3 is selling at a, I wouldn't say much, more like slightly faster sales rate ( in comparison to what Sony has to sell in order to sell as much hardware & software in total as MS ), then how great is that for Sony ?

Having the perspective to maybe be 2nd someday in future ? Sorry, that doesn't sound too great. That would be quite an accomplishment for a company that just entered the console business, but not for last gen's superhero .

Also I didn't forget the news about Sony investing billions of dollars in the Cell chip and 2 huge chip factories - I wonder if these investments payed off. Sure MS might have lost more money, but I remember reading an article on gamesindustry.biz and the author wondered in what decade Sony would be able to get all that money back from the PS3. He wasn't talking about making money out of the PS3, but of coming even.

I'm glad to hear you are not a fanboy, but I suggest you may want to broaden your scope of data and research in terms of the video game market before you go around declaring something to be a failure.

I don't think that I'm lacking knowledge about the videogame business, maybe my point of view just is slightly different.
Being third in the FIA F1 world series is great for an Force India driver, but not for Louis Hamilton.
I know that you can't always win, but then we should be able to admit it : Sony - so far - has not been able to meet expectations from last gen.
That's ok, the PS3 is great, there is a great chance that it will work out in the end ( as I said, if the PS3 is running for 10 years, even long after the start of the next gen ), but I think I'm not the only one - I'd say even most people at Sony think like me - , who'd say : it's 2009, and well, it's ok, but it could be a lot better.



Personally, I indeed prefer the 360 as a gaming machine.
In total, the PS3 is awesome, it's and excellent blu-ray and dvd player and offers countless media applications. And it is of course a gaming machine with great exclusive software.

Yet, purely from a gamers perspective, the 360 wins imo.

- XBL is just so much better than PSN. Yes you have to pay about 3$ a month for it, but it is great. Sony wasn't able to come close within 2 years.
- I prefer the Xbox pad, especially for racing games and FPS.
- the 360 has just as many exclusive tittles worth playing as the PS3, if not more in certain genres.
- (Also at least in Europe, the MS service is way better than Sony's)


I have all 3 consoles, and i've always been a multiplatform gamer. I don't prefer systems because of their brand, image or the history of their creators.
What I just did is having a look at the past 3 years and coming to a conclusion. Do you own and use all three systems ? If not, then it will be hard to be objective. Of course we were not talking about " what system is more fun" in the first place, but it is an aspect we might add to the discussion.

80% of my gaming time is used by the 360, 15% by the PS3 and 5% by Wii.
Last gen Sony had that first place in my gaming life.
That alone is a big loss in my eyes, no matter how well they do in business.