This year's Electronic Entertainment Exposition (E3) gave surprising momentum to Nintendo's Wii console, which is rumored to be set for release sometime in November 2006. Sony announced at the same trade show that the third version of its Playstation console (PS3) would be priced at $500-$600, compared to an estimated $200-$250 price tag for the Wii. Microsoft's recently released XBox 360 costs $300-$400.
Nintendo's new console has a motion-sensing controller that met with an enthusiastic reception, potentially appealing to more casual gamers. At E3, the controller was demonstrated with a tennis game, with players swinging controllers just like tennis rackets to control action on the screen. This type of gameplay has a visceral appeal which may add to the console's competitiveness even more than the $400 price difference with the PS3.
By all accounts, Microsoft remains convinced that the only reason Sony won the last round of the console wars is that it had a one-year head start, so Microsoft raced to get the XBox 360 to market first for this round. This suggests that gamers will simply buy what is available first. The Wii's appeal may, however, give the lie to the notion of first-mover advantage.
A number of research firms and industry publications, including IDG, Gamasutra, Merrill Lynch, Financial Times, Friedman, Billings, Ramsey & Co. and GameSpot, have already made projections about the installed base for video game consoles, with each showing Nintendo as a distant also-ran, even by 2011.
These numbers are based in part on announced production orders, leaving open the question of actual demand. It has to be wondered, however, what happens if, thanks to price and more innovative games, Nintendo becomes the must-have item during the 2006 holiday shopping season?
Moreover, what happens if consumers are still largely satisfied with the last generation of consoles and decide to hold back from the investment in yet another new system in this round?
These variables make it difficult to predict a winner with certainty. What does appear certain is that Sony will not dominate the market as completely as it has in the recent past.
With this in mind, marketers who used to look without thinking at the PS2 when considering exposure to a mass market via video games will have to broaden their horizons.
For more information about the video game industry, read eMarketer's Video Games: Where to Now? report.