Pricing Key

With consumer spending under pressure in the weaker American economy, the pricing strategy of each platform owner will be key, with higher priced models likely to be left on store shelves.

Nintendo's Wii is still retailing for $250 after two years on the market and current demand suggests that the consumer finds that price agreeable. Nintendo has no reason to drop its prices, and in fact has said as much publicly.

We believe that the average sale price (ASP) of the Xbox 360 remained about the same this month, around $275, while the PlayStation 3 has nearly reached an average sale price of just over $400 (indicating that virtually no stock remains except the $400 units).

Expect to see the ASP of the Xbox 360 fall more as consumers choose the $200 model as an entry-level system that fits the Christmas budget, and be prepared for painfully weak PlayStation 3 sales into the beginning of 2009.

Handhelds: Same Story, Different Month

With few big software releases to drive sales, both current handhelds – the Nintendo DS and the Sony PSP – appear to be on cruise control.

Nintendo's dual-screen system appears to have settled around an average of 120,000 systems per week while the PSP averages around 55,000 systems per week.

While these are both still healthy sales rates, it is worth noting that October PSP sales were down 33% year-on-year while the DS saw an increase of 7%.

Sony has temporarily delayed plans for standalone PSP-3000 hardware units at retail, and will continue to push bundled systems.

Based on estimates over several months, it would appear that consumers are paying around $190 for the PSP on average and so the bundles are probably an agreeable choice for both consumers and Sony.