Console wars come to a head with release of PlayStation 3, Nintendo Wii

Saturday, November 11, 2006

By MATT SLAGLE

The Associated Press

After years of hype and speculation, the latest round of video game console wars is finally about to begin.

Unlike past battles waged since the 1970s, consumers this time around will have some truly distinct options among three contenders, as each device is tuned to different tastes and budgets.

The sleek PlayStation 3 by Sony Corp. is the priciest system, crammed with the latest in cutting-edge technology. The Xbox 360 from Microsoft Corp., meanwhile, has had a yearlong head start to build a fan base.

By touting intuitive controls over fancy graphics, Nintendo Co. has billed its Wii as a simpler, cheaper alternative to Microsoft's and Sony's offerings.

If you compare the trio to automobiles, said Bruno Bonnell, chairman and chief creative officer at publishing giant Atari Inc., the PS3 "is a kind of prototype Formula 1. The Wii is definitely a fun car, a Mini Cooper or a Beetle, something that everybody can enjoy riding. The 360 fulfills so much of the demand of the standard player, it's one of the Toyotas or standard GM cars."

The Wii and PS3 go on sale in the United States within two days of each other this month, but getting one in time for Christmas could be a daunting task.

"November is going to be the most exciting month for video games for probably the next five or six years," said Tom Russo, editorial director at the G4 Games cable television network. "But everyone's going to sell out this season."

Sony, which has already delayed the PS3 launch twice, expects to have only 400,000 PS3s available for its Nov. 17 U.S. launch. Already, bidders on eBay have staked their claim on pre-ordered systems for more than $2,300, almost four times higher than the system's top retail price. The console debuted Saturday in Japan to long lines and word of near-immediate sellouts.

Nintendo expects to have 4 million Wiis ready worldwide when the console hits store shelves Nov. 19, with the bulk of those going to North America.

Microsoft, burned by supply shortfalls during the Xbox 360's launch last Christmas, expects to sell more than 10 million systems by the end of 2006.

Worldwide, Sony expects to ship only 2 million units by year's end instead of an original projection of 4 million, but a company executive shrugged off long-term supply concerns and expressed confidence that manufacturing problems will soon be fixed.

"Regardless of what the number is, we're going to take knocks," said Jack Tretton, executive vice president of Sony Computer Entertainment America. "It really has no bearing on what we're ultimately going to sell."

All three devices are taking the video game industry in new directions and promise to serve as centerpieces for an era of digital entertainment where games, movies and music coexist in a single, Internet-enabled box. But games will continue to be the main draw.

The Wii, pronounced "We," will be available for $250. Instead of sheer computing power, the Wii's primary attraction is a wireless controller that tracks movements to mimic a football pass or the swing of a golf club.

The Wii can't display high-definition video, and the system's storage and processing power are limited compared to the Xbox 360 and the PS3.

Perrin Kaplan, vice president for marketing at Nintendo's U.S. headquarters in Redmond, Wash., said the Wii is about attracting newcomers to video games, so cutting-edge technology isn't needed.

"We're not launching rocket ships," she said. "Everyone is going to bigger, badder machines. We have taken a complete right turn. It either fails or succeeds, and we're not afraid of that."

Two flavors of Sony's sleek black or silver PS3 will debut: a $600 version with a 60-gigabyte hard drive, built-in wireless and a Blu-ray player for high-def video. A version costing $100 less has a 20-gigabyte drive and fewer features.

Returning with a few tweaks from last year, the Xbox 360 comes in two models costing $300 and $400, depending on options. An attachment to play high-def movies in the HD DVD format, chief rival to the PS3's Blu-ray standard, is expected this month for an additional $200.

The new consoles come at a critical time for the video game business, which has grown in fits and starts from the simple days of "Pong" in the 1970s to an entertainment industry worth roughly $10 billion in the United States. That exceeds the $9 billion Hollywood grossed last year on domestic ticket sales, according to analyst estimates and the Motion Picture Association of America.

Software companies, in particular, have reason to rejoice after languishing in a sales vacuum created by shoppers who stopped buying games for older systems in anticipation of the new consoles.

Now analysts are predicting solid growth, with Colin Sebastian of Lazard Capital Markets expecting the games business to expand at a healthy 15 to 20 percent for at least the next two years.

Sony dominated the previous generation with 70 percent of the global market, including 35 million PlayStation 2 consoles in the United States. The original Xbox was second with nearly 15 million sold, followed by 11 million Nintendo GameCubes.

In the newest round, Sebastian predicts Sony will grab about half of the market, with Microsoft and Nintendo splitting the difference. That would mean Sony loses share, while Nintendo makes some gains.

All three devices will succeed in the short term because of pent-up demand and the lack of supply, said David Cole, president of market research firm DFC Intelligence.

"We'll have to wait, I think until holiday 2007 and even into 2008, before we start making really definitive judgments about what consumers are saying about these systems," Cole said.

Respond to this story

Posting a comment requires free registration: