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Analyze This: Handicapping
the 2006 Holiday Gift-Buying Season
On the next-generation consoles: Many dub this holiday season the start of the next-gen "race" or "battle" -- we don't see it in such simple terms. Although there is some overlap, each next-generation console is essentially chasing a different type of consumer and their challenge is to expand their particular target market. This is what will ultimately lead to overall market growth. Hardware shortages will see PS3 and Wii selling out until well into 2007 in all major territories. U.S. and European markets will drive increasing sales volumes on handheld and Xbox 360 platforms. We estimate that Xbox 360 will generate around $1.6 billion in global software sales in 2006, up from $260 million in 2005.
Other thoughts: We feel that Nintendo DS will perform strongly this Christmas in all major territories while PS2 software, nowadays largely ignored by the mainstream media, will continue to sell in significant volumes until 2008. PS2 software will generate around $5.2 billion in software sales in 2006, down from $7.6 billion in 2005. Although new hardware launches are exciting, it is easy to forget that launch performance is not indicative of longer term results. The first meaningful indications as to how the next generation will shape up will not emerge until late 2007. Got a business-related question concerning the games industry that you would like to suggest for discussion in Analyze This? Are you a professional analyst who covers the market and would like to take part in this column? Feel free to send an email to howardhwen@gmail.com. |
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