SE fanboy
03-08-2006, 06:58
Kraft and Kwak state, "While the whiff of a PS3 delay sends most of us into a tizzy, that scenario has the smallest impact. In time, publishers will generate the revenue they lose to a PS3 delay. However, current-gen software unit and price cuts have a significant impact. These cuts also have permanence. If publishers cut software prices or lose more software units in the next few quarters, the revenue opportunity will be lost."
The two presented four different downside scenarios. The first and least damaging case speculates on what would happen if the PS3 were to globally launch after March 2007. In this case, large publishers such as EA and Activision would suffer the most due to their relatively high percentage of next-generation publishing revenue. EA's annual sports games would be most hurt by said PS3 delay, and Activision would be hurt if PS3 Call of Duty and Tony Hawk titles missed the 2006 window. On the other hand, companies such as THQ, which has little next-gen software exposure but plenty of handheld exposure, would be more immune to a PS3 delay.
The second proposed scenario muses upon an additional 20 percent drop in current-gen software unit sales. Kraft and Kwak believe this scenario could be brought about if Xbox 360 hardware and software shipments pick up later in the year. Another possible cause for this case could come from customer apathy towards potentially big-sellers such as Cars, Grand Theft Auto: Liberty City Stories (a PS2 version was announced) and Bully. The analysts also bring up a familiar practice of consumers skipping current-gen titles in order to save money for next-gen hardware and software. In this case, it's advantageous for publishers to have a good next-gen and portable software lineup.
The third scenario theorizes on a 25 percent price cut on current generation software. We've already seen substantial price-cuts from EA, as the current-gen versions of The Godfather, Black and Fight Night Round 3 all debuted or will debut at $40, a 20 percent cut from the normal $50 price tag. The erosion of sales prices may be caused by publishers trying to unload inventory, or by publishers that target budget shoppers. This scenario could cause major publishers' earnings to drop between 35 and 49 percent. Revenues could shrink between 12 and 14 percent, in this case. Companies such as Activision and EA, which have invested heavily in next-gen game development, will naturally avoid the worst effects of current-gen price erosion.
Lastly, the duo presents the ominous "worst-case scenario", in which all three aforementioned scenarios occur. The analysts note that this case "may be highly improbable", but "certainly not impossible." Kraft and Kwak speculate on a chain reaction in which, in addition to a PS3 delay, current-gen software units drop 20 percent, causing publishers to discount their prices 25 percent. According to the report, this could lead to a 22 to 27 percent drop in publishing revenue, and a decline in earnings estimates of 60 to 88 percent.
I am sick of Analyst blaming lost of sales because of PS3 delay. If the companies made some decent games peopl would actualy buy them. They say that gaming sales were down 11% in feburary because of PS3 but in reality there were no good games out in Feburary. Now in March its going to jump high because there are tons of good games coming out.
Hope it wasn't posted already Cookie (http://www.next-gen.biz/index.php?option=com_content&task=view&id=2428&Itemid=2)
The two presented four different downside scenarios. The first and least damaging case speculates on what would happen if the PS3 were to globally launch after March 2007. In this case, large publishers such as EA and Activision would suffer the most due to their relatively high percentage of next-generation publishing revenue. EA's annual sports games would be most hurt by said PS3 delay, and Activision would be hurt if PS3 Call of Duty and Tony Hawk titles missed the 2006 window. On the other hand, companies such as THQ, which has little next-gen software exposure but plenty of handheld exposure, would be more immune to a PS3 delay.
The second proposed scenario muses upon an additional 20 percent drop in current-gen software unit sales. Kraft and Kwak believe this scenario could be brought about if Xbox 360 hardware and software shipments pick up later in the year. Another possible cause for this case could come from customer apathy towards potentially big-sellers such as Cars, Grand Theft Auto: Liberty City Stories (a PS2 version was announced) and Bully. The analysts also bring up a familiar practice of consumers skipping current-gen titles in order to save money for next-gen hardware and software. In this case, it's advantageous for publishers to have a good next-gen and portable software lineup.
The third scenario theorizes on a 25 percent price cut on current generation software. We've already seen substantial price-cuts from EA, as the current-gen versions of The Godfather, Black and Fight Night Round 3 all debuted or will debut at $40, a 20 percent cut from the normal $50 price tag. The erosion of sales prices may be caused by publishers trying to unload inventory, or by publishers that target budget shoppers. This scenario could cause major publishers' earnings to drop between 35 and 49 percent. Revenues could shrink between 12 and 14 percent, in this case. Companies such as Activision and EA, which have invested heavily in next-gen game development, will naturally avoid the worst effects of current-gen price erosion.
Lastly, the duo presents the ominous "worst-case scenario", in which all three aforementioned scenarios occur. The analysts note that this case "may be highly improbable", but "certainly not impossible." Kraft and Kwak speculate on a chain reaction in which, in addition to a PS3 delay, current-gen software units drop 20 percent, causing publishers to discount their prices 25 percent. According to the report, this could lead to a 22 to 27 percent drop in publishing revenue, and a decline in earnings estimates of 60 to 88 percent.
I am sick of Analyst blaming lost of sales because of PS3 delay. If the companies made some decent games peopl would actualy buy them. They say that gaming sales were down 11% in feburary because of PS3 but in reality there were no good games out in Feburary. Now in March its going to jump high because there are tons of good games coming out.
Hope it wasn't posted already Cookie (http://www.next-gen.biz/index.php?option=com_content&task=view&id=2428&Itemid=2)