With the upcoming launches of next-generation consoles from Nintendo, Sony and Microsoft on the horizon, analysts at Piper Jaffray estimate hardware sales for each console will be down significantly compared to current-gen consoles.
Analysts Michael J. Olson and Andrew D. Connor expect an average decline of 53 percent for software sales in the first 14 months of the next-gen console cycles from the three companies, based on "meetings with industry sources."
The Wii U, which Olson and Connor expect will ship in the fall of this year with a price tag of $299 or greater, is forecast to sell only 35 percent of the volume of the original Wii during its first 14 months, due to "disappointing" hardware specs and competition from the mobile games industry.
Sony's next console will launch during the 2013 holiday season, suggests the analyst firm, and will only sell 50 percent of the volume that the PlayStation 3 managed -- again, due to competition from tablets and smartphones.
Finally, Microsoft's next Xbox will launch in 2014 says Piper Jaffray, and will sell only 55 percent of the volume that the Xbox 360 has before it. The firm believes that this will be down to the next Xbox being "an incremental improvement, not a quantum leap" over its predecessor.
"Unfortunately, we do not expect a console refresh to fully offset the secular declines in console gaming," the firm said.
"We believe console gaming will continue to be a time-share donor to social networks, mobile games and tablets. We, therefore, favor companies with increasing exposure to social/mobile gaming, including Zynga and EA."
But if you look at public markets, everyone heavily dependent on consoles or retail has already been punished in expectations of these results. So yes it's a scary forecast but the actual event has already been priced in.
He says this as if console's can't support social games.
I am constantly reminded of why "analysts" aren't actually successful investors. They are an entire industry of people who have set themselves up to say things that sound clever enough to get them paid, but the things they're saying aren't actually clever enough to pay for themselves; if you see what I mean.
I.E. An analyst that actually knows what he's talking about often enough to be successful is called a millionaire day trader, by which I imply that there's often little reason to listen to analysts.
In defence of the article, and particularly the mention of social networks, I think there might be something in it. I see very little drift of the traditional gamers in my circles from console to phone and tablet gaming (hardly surprising, given that PC/console do it better in almost every case), and only limited drift from handheld to tablet/phone (again, handhelds do it better).
But, these same people now spend a lot more time on social networks than they did ten or even five years ago, and at the end of the day this stuff all competes for free time.
That said, on the other hand, I'd expect similar sales of consoles, just less playtime (and so probably less software) on them - I don't know anyone's who traded a console for facebook! Just lots of people that now spend more time on facebook but still game. I'd be very surprised if these forecasts are as dire as expected, unless competition from streaming services manages to catch on (which I think is much more likely angle of disruption to the traditional console model, although one I don't think telecommunications networks are ready for at the scale required to do this that broadly - at least yet).
I think these analysts should re-analyse their data, and caffeinate themselves. It makes no sense at all that gamers will spend $700 on a 10" iPad with awful games instead of $300-$500 on a console with good games.
Also, if the WiiU and next Xbox have both announced disappointing specs, but the Playstation 4 hasn't, wouldn't that make you think most gamers would choose the PS4 or PC for the next generation?
And why does Gamasutra keep publishing whatever these analysts have to say? They're just shoveling it out to you for free self promotion. Every one of your writers is at least 35,000 times more knowledgeable and qualified to speculate about these things.
I am constantly reminded of why "analysts" aren't actually successful investors. They are an entire industry of people who have set themselves up to say things that sound clever enough to get them paid, but the things they're saying aren't actually clever enough to pay for themselves; if you see what I mean.
I.E. An analyst that actually knows what he's talking about often enough to be successful is called a millionaire day trader, by which I imply that there's often little reason to listen to analysts.
But, these same people now spend a lot more time on social networks than they did ten or even five years ago, and at the end of the day this stuff all competes for free time.
That said, on the other hand, I'd expect similar sales of consoles, just less playtime (and so probably less software) on them - I don't know anyone's who traded a console for facebook! Just lots of people that now spend more time on facebook but still game. I'd be very surprised if these forecasts are as dire as expected, unless competition from streaming services manages to catch on (which I think is much more likely angle of disruption to the traditional console model, although one I don't think telecommunications networks are ready for at the scale required to do this that broadly - at least yet).
Also, if the WiiU and next Xbox have both announced disappointing specs, but the Playstation 4 hasn't, wouldn't that make you think most gamers would choose the PS4 or PC for the next generation?
And why does Gamasutra keep publishing whatever these analysts have to say? They're just shoveling it out to you for free self promotion. Every one of your writers is at least 35,000 times more knowledgeable and qualified to speculate about these things.