According to NPD, the PS3 outsold all other home video game consoles in the United States for the month of September.
- PlayStation 3 491,800 units
- Wii 462,800 units
- Xbox 360 352,600 units
Although these results are good news for Sony, Nintendo’s profitability remains significantly higher than both Sony and Microsoft. In addition, Nintendo continues to outsell other console makers in software.
So what is behind Sony’s sudden surge in popularity, and will it continue?
Most news articles have pointed out that Sony introduced new lower-priced models in September, while dropping the price on existing models. Certainly, both of these factors played important roles. However, part of Sony (and Microsoft’s) relatively improved performance is part of an ongoing sales trend that we first identified in our book several months ago. That does not necessarily mean that Sony will continue to lead in sales over the short term. Nintendo will likely enjoy a resurgence in sales during the holiday season, despite the fact that sales will continue to remain down compared to the same period last year. Yet, over the long term, we expect Sony and Microsoft to continue to make relative improvements. The reasons for this are several:
- Higher HDTV penetration
- A shift to online gaming and distribution
- Device convergence
HDTV penetration will make consoles like the PS3 and Xbox 360 more attractive relative to the Wii, which lacks HD features, such as the ability to play high definition games, Blu-ray movies (PS3) and Netflix (Xbox 360). Moreover, the advent of Natal and Sony’s motion sensing wand could put an end to the Wii’s one competitive advantage.
Device convergence offers both benefits and challenges for Sony and Microsoft. Currently, gaming consoles can do more than other home entertainment devices, but the situation is rapidly changing as Internet, music, and streaming video become available on DVD players, DVRs, and even directly on newer model TVs.
Prof. 
Hi,
I read this blog and it’s very apparent that you are not a member of the expanded audience. With a statement like this, “Moreover, the advent of Natal and Sony’s motion sensing wand could put an end to the Wii’s one competitive advantage.”, I see that you have missed entirely the point of the Wii and it’s appeal to the expanded audience.
Could you please demonstate how you understand the core values of the expanded gaming audience, and then map those values to the product offerings of MS and Sony? I think this would be an enlightening exercise for you.
Without going into a lot of detail, let me just point out that hardware is only a small part of the equation for us (the expanded market), but the largest part of the equation is the software.
On hardware, what we want:
1) Appealing and can comfortably and stylishly fit into our living rooms
2) Low heat and decible output, highly reliable, small footprint and low weight to fit on my small limited space shelf
3) Quick access to software, minimal ‘fiddling’ or ‘expanding’
4) Integration with our existing TV and stereo equipment
5) No/minimal wires please! Clutter is a big no-no in the family room!
6) Do your job! I have a PC to do PC jobs, and I have a TV tuner and DVR to do those jobs, so just do your job and play games! I don’t need or want anything else (unless you figure out how to consolidate all of this into one box that I can rent through the cable company, phone company, or satelitte tv company).
On software, what we want:
1) Arcade syle gaming
2) Easy to learn, difficult to master
3) Hassle free (no installation, no bug patches, no downloads of added content unless it is simple and straight forward)
4) No cinematics or time wasting content (we only have so much time to play games and I don’t want to waste it by watching some wannabe movie or TV show)
5) Professional content (not user generated content for the love of god, give me a reason to spend my valuable time on a video game)
6) Fun. And don’t feed me some line of BS about gaming being art or some such and they don’t need to be fun. I game to have fun, not to ‘experience’ media or ‘interact’ with art.
I hope you can see how this might be relevant to your blog.
Thanks and good luck!
Thanks for your comments. I understand your concerns and they are dealt with in detail in the book.
I believe that Nintendo has done a better job than Microsoft and Sony at filling the needs you describe. However, all console makers are working hard to make their products more attractive to a wide audience.
Project Natal goes a long way to close the gap in hardware, and Sony has been working very effectively with independent developers to bring innovative content to the PS3.
Much of the book is about how companies like Nintendo have been able to use innovation to reach new audiences while avoiding the types of traps you mention (hence the title of the book). However, once a product reaches the market, it is not the end of the story.
Even the best products face new threats and opportunities, which is what this website is about, not to replace the in-depth analysis of the book, but rather to complement it by focusing on specific recent developments and how they can affect the industry in both positive and negative ways.
I hope that, overall, the articles on this site will present a balanced view.
Hi again, thank you for your response. Just one more comment from me:
“Project Natal goes a long way to close the gap in hardware, and Sony has been working very effectively with independent developers to bring innovative content to the PS3. ”
The bottom line for me is that I will not likely experience Natal, nor PS3 content. I don’t have nor will I buy these consoles (they are too big, too noisy, consume too much power, do not pass the wife test, and too time consuming to deal with). My gaming console must be an appliance, and I see both the XBOX 360 and PS3 as PCs/Platforms, not appliances. My kids are too young (6 and 3) to even care about them, so I have no motivation to purchase one for them.
So good luck to MS and Sony to try to pull in the expanded audience gamers! Perhaps I am a minority in this audience and the offerings and content Sony and MS are developing will entice folks to their systems. I’ll keep an eye on them for there next product offering to see if it better fits my needs.