Playstation 3 to win console war because of Blu-Ray?

In a massive 207-page report on the interactive entertainment industry for 2007, Wedbush Morgan Securities 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.

"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%)."

Looking at the overall health of the industry, Pachter is forecasting the combined U.S. and European software markets to grow at a 16.1 percent CAGR from 2007 to 2009. WMS estimates that the addressable market opportunity for U.S. software publishers is a whopping $17.7 billion in 2007.

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HD DVD and Blu-ray could be a key factor in determining the console war outcome.

Oh no, the Wii has neither, not even a DVD drive, it's sales must be terrible...

/sarcasm

Who pays these people??

Wedbush Morgan Securities, you need a new analyst...

That was one of the main reasons why the Playstation 2 was so popular, it contained a DVD Player and at the time of it's release DVD Players were expensive.

lol PS3 36% wii 34% i'd say nintendo are the winners there!! considering nintendo actually MAKE money on each sale - remember?

That's very strange, because I'm pretty sure that only something like 800,000 Blu-ray disks have been sold so far (or around that number), yet more than 3million PS3's have been "shipped" or bought. Most people are buying a PS3 for the games, not the HD films they can play on it. And by the time Blu-Ray (OR HD-DVD, I don't believe there's a clear winner yet by a long shot) becomes mainstream, there will be far cheaper players than the PS3 anyway.
In fact, I'm pretty sure someone just released a $300 BR player, so if someone wants Blu-Ray, they don't have to buy a PS3.
The only people that are going to buy a PS3 are the gamers, the only people that are going to buy a PS3 for Blu-Ray are also going to be gamers who just happen to like Blu-Ray. In the end, I can't see it making a major difference.

It will win the console wars? o rly? That's why my local bestbuy can't sell them and yet I still can't seem to find a Nintendo Wii at normal price.

"I know! We'll win by making out console far more expensive than anything out there and also make sure that all of the games are sub par!"
"Brilliant!"

Don't I remember Microsoft saying before that they would make a Blu-Ray drive for the 360 if it becomes the dominant format in the long run?

True, the PS3 is the cheapest Blu-Ray player you can buy, but just look at the history of format wars. The last time Sony made a format that clashed with another format (BetaMax vs. VHS), Sony lost it pretty quickly, and the format died out soon after. This could be the same situation here.

How hard would it be for Microsoft to put a blueray drive instide that small plastic housing they supply the current HD-DVD player in? As its an external drive, Microsoft have that option open to them, if HD-DVD doesn't make the cut.

netutgamer said,
How hard would it be for Microsoft to put a blueray drive instide that small plastic housing they supply the current HD-DVD player in? As its an external drive, Microsoft have that option open to them, if HD-DVD doesn't make the cut.

Depends how hard it would be to buy the technology from sony.

[I think it will be impossible, because than Microsoft will admit they made the wrong choice with the HD-DVD.
Than Microsoft admits Sony to be the winner... will they ever do that?

--> Not a chance!!