Sony (NYSE: SNE) 
will continue to rule the video game kingdom through 2011 with its Playstation 3 console, research firm Yankee Group forecast this week. However, it will be sharing more of the market with Microsoft (Nasdaq: MSFT) 
and Nintendo as growth slows for unit shipments among consoles overall.
With 44 percent of the cumulative, third-generation console sales in North America, Sony will be on top in five years, Yankee Group said. However, Microsoft will be close behind with its Xbox 360 with 40 percent of the market, while Nintendo will stay in third place with its Wii console, with about 16 percent of the third-generation console market, the research firm said.
Sales of the new consoles will not keep pace with the growth of second-gen consoles Playstation 2, Xbox, and GameCube, which was about 20 percent higher than the previous round of gaming machines, according to Yankee Group Senior Analyst Mike Goodman.
"I don't anticipate anything like that [kind of growth] this time," Goodman told TechNewsWorld, referring to price as the primary reason. "At the prices of these consoles, fewer people will be buying multiple consoles."
The PS3 system is expected to sell for US$500 to $600, and the Xbox 360 sells for $299 to $399. The Wii is expected to be priced at around $250.
Next Level
Sony has enjoyed a solid hold on more than half of the game console market with its PS2, and while it will remain on top, its lead will be smaller, Goodman said. Attach-rates, or game sales, have so far been good for Xbox 360, but the software side is much too complex to forecast for the other consoles, he said.
By 2011, Sony will have sold approximately 30 million PS3s, while Microsoft will have sold nearly 27 million Xbox 360s, and Ninendo will have sold more than 11 million of its Wii consoles, Goodman estimated in his report.
Driving the next-generation consoles' popularity will be their potential as distribution channels, drawing both content providers and advertising dollars for in-game and game-related advertising.
What About Wii?
Other industry analysts have suggested that the Yankee Group may underestimate the market's reception to Nintendo's Wii, the least expensive of the next-gen consoles. DFC Intelligence predicted in May that the steep price of Sony's new console would significantly limit its sales and might even knock the company out of the console lead.
Goodman argued, however, that Microsoft will put significant price pressure on Sony during PS3's lifecycle starting next year. As for Wii, despite the innovation and solid design evident in the console, Nintendo may miss the mark with most gamers because its new motion-sensory controllers cause physical fatigue, he opinied.
"The whole thing that makes it immersive makes you have to work," Goodman said.
Gamers may enjoy using the remote to mimic throwing a pitch, swinging a bat or other action, but after 15 minutes, the game system grows tiresome, in Goodman's opinion.
Nintendo's appeal to more casual gamers might work to extend the firm's user base, but its approach is not expected to significantly grow market share for the company, Goodman said.
"Casual gamers don't buy consoles," he concluded.
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