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[sonycowboy]

Sony PS3
After several setbacks that included the PS3 being delayed from its original “Spring 2006” launch date as well as a reduction in global launch quantities (from 2 million to 500,000), the PS3 appears on track for its scheduled launch.

We expect the PS3 to launch in Japan on November 11 (the 20GB SKU at ¥49,980 (~$429) and the 60GB at “open price”), in the U.S. on November 17 (the 20GB SKU at $499 and the 60GB SKU at $599), and in Europe in March 2007 (the 20GB SKU at €499 (~$633) and the 60GB SKU at €599 (~$761)). Sony has promised launch quantities of 400,000 units in the U.S. and 100,000 in Japan, and expects to have shipped 1.0 - 1.2 million units by December 31 in North America and 6 million units worldwide by the end of its fiscal year (March 31, 2007). Sony has not disclosed U.S. launch titles, but in Japan, it expects to have 10 titles at or near (by the end of December) launch. We believe that there may be approximately 20 games at launch in the U.S. with an additional 5 titles by the end of the year. We have made many assumptions, and speculate that Electronic Arts and Sony will have the greatest number of titles in the U.S. at launch with five each, followed by Activision and Namco Bandai with three each, although we note that there are many games with uncertain release dates. Most titles will be priced at $59.99.

Nintendo Wii
The Nintendo Wii console will launch in the U.S. on November 19 for $249, in Japan on December 2 for ¥25,000 (~$213), and in Europe on December 8 for £179/€249 (~$337/$316). Nintendo expects to ship 6 million units worldwideby the end of its fiscal year on March 31, 2007, but no geographic breakdown has been provided. Nintendo has
announced that approximately 24 games will be available at launch with another six by year-end. Based on confirmed titles, we expect Ubisoft to deliver the greatest number of launch titles with nine, followed by Activision with five (two are budget titles), and Electronic Arts and Nintendo with two apiece. We note that these publishers and others have several additional titles planned (but unconfirmed) for release at or near launch. Most titles are expected to be pricedat $49.99, although it is possible that a handful of premium titles will be priced higher.

Activision
PS3 Revenue: $54 million (9% of total December quarter revenue)
Unit Estimates: Call of Duty 3 (600,000), Marvel Ultimate Alliance (300,000), Tony Hawk's Project 8 (300,000).

Wii Revenue: $27 million (4% of total December quarter revenue)
Unit Estimates: Call of Duty 3 (200,000), Marvel Ultimate Alliance (200,000), Tony Hawk's Downhill Jam (300,000), Rapala Trophies (<50,000), World Series of Poker (<50,000).

Atari
PS3 Revenue: $0 (0% of total December quarter revenue)
Unit Estimates: None

Wii Revenue: $7 million (8% of total December quarter revenue)
Unit Estimates: Dragon Ball Z: Budokai Tenkaichi 2 (200,000).
Our estimates for Atari are modest, and we believe that they are likely to be attained.

Electronic Arts
PS3 Revenue: $126 million (10% of total December quarter revenue)
Unit Estimates: Fight Night 3 (400,000), Madden NFL 07 (700,000), NBA Live 07 (500,000), Need for Speed Carbon (800,000), Tiger Woods PGA Tour 07 (400,000).

Wii Revenue: $38 million (3% of total December quarter revenue)
Unit Estimates: Madden NFL 07 (500,000), Need for Speed Carbon (500,000).

GameStop
GameStop is probably more leveraged to successful launches of the PS3 and Wii than any publisher. Thus, better than expected shipments should benefit GameStop, while a slower than expected ramp of manufacturing could result in sales that are lost forever, as its mass merchant competitors will clamor for supply in the months following the launch. We expect GameStop to favorably compete for 25 – 30% of initial launch quantities of the PS3 and Wii, and note that its bundles could drive its comps dramatically higher than our expectations for the January quarter. Our current estimates reflect sell-through of 6.5 million next generation consoles in the U.S. in GameStop’s January quarter (1.5 million PS3s, 2.5 million Wiis, and 2.5 million Xbox 360s), and think that GameStop will capture at least 20% of these sales. We think these estimates are exceedingly conservative, with possible upside from both the Wii and the Xbox 360. We believe that management is being prudently conservative about the company’s ability to deliver 7 – 9% comp growth in FY:06. GameStop management had expected about 1 million PS3 and 750K Wii in the
U.S. during the quarter, and it now appears that at least 1 million PS3s and 2 million Wiis will be available by December, with additional shipments in January. Our GameStop hardware revenue estimate of $530 million in Q4 reflects sales of $450 – 480 million in next generation hardware, and of only $50 – 80 million in current generation hardware and handhelds. Should quantities be higher than we have modeled or should GameStop capture a disproportionately high market share, we think that the company could deliver comps well above the 7.3% we have modeled, and could deliver significant operating leverage from the increased sales level.

Midway Games
PS3 Revenue: $0 (0% of total December quarter revenue)
Unit Estimates: None

Wii Revenue: $11 million (11% of total December quarter revenue)
Unit Estimates: Happy Feet (100,000), Ant Bully (100,000), Rampage: Total Destruction (50,000), The Grim Adventures of Billy & Mandy (50,000).

Nintendo
Wii Revenues: N/A
Unit Estimates: The Legend of Zelda: Twilight Princess, Excite Truck.

We think that Zelda will have a disproportionately high attach rate (greater than 50%), but note that Nintendo’s announced launch lineup is quite light, leaving room for the U.S. publishers to establish market share on the Wii.

Sony
PS3 Revenues: N/A
Unit Estimates: Resistance: Fall of Man, Gran Turismo HD, Untold Legends: Dark Kingdom, NBA 07, Genji: Days of the Blade.


Like Nintendo, we expect Sony’s first party titles to generate high attach rates. In particular, we think that Resistance will have at least a 25% attach rate, while Gran Turismo may exceed that rate. Notwithstanding these lofty expectations, we think that there will be significant room for other publishers to capture PS3 market share.

Take-Two Interactive
PS3 Revenue: $27 million (10% of total January quarter revenue)
Unit Estimates: NHL 2K7 (200,000), NBA 2K7 (400,000)

Wii Revenue: $0 (0% of total January quarter revenue)
Unit Estimates: None

Take-Two is leveraged to the PS3, and its NBA game has received stellar reviews on all of the other platforms. We expect NBA 2K7 to outsell offerings from both Sony and EA, although initial sell-in quantities will likely be similar to those for EA’s game.

THQ
PS3 Revenue: $0 (0% of total December quarter revenue)
Unit Estimates: None

Wii Revenue: $38 million (8% of total December quarter revenue)
Unit Estimates: Avatar: The Last Airbender (200,000), SpongeBob SquarePants: Creature from the Krusty Krab (300,000), Cars (300,000), Barnyard (200,000).

Ubisoft
PS3 Revenue: N/A
Unit Estimates: Rainbow Six: Vegas, Blazing Angels: Squadrons of WWII
Wii Revenues: N/A

Unit Estimates: Rayman Raving Rabbids, Red Steel, Open Season, Blazing Angels: Squadrons of WWII, Far Cry, GT Pro Series, Monster 4X4: World Circuit, Splinter Cell Double Agent, Prince of Persia.

Ubisoft has an ambitious release slate, and we expect Rainbow Six for PS3 and Red Steel for Wii to have attach rates
in excess of 20%.

 

[Wollan]

GTHD is spring for US and Europe.

 

[JohnTinker]

GameStop
GameStop is probably more leveraged to successful launches of the PS3 and Wii than any publisher.

What?

Apples and oranges?

 

[jamesinclair]

"and expects to have shipped 1.0 - 1.2 million units by December 31 in North America"

PS3 Revenue: $126 million (10% of total December quarter revenue)
Unit Estimates: Fight Night 3 (400,000), Madden NFL 07 (700,000), NBA Live 07 (500,000), Need for Speed Carbon (800,000)


80% sell through?


Riiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiight

 

[Chris Remo]

What?

Apples and oranges?

Yeah of course, they're just saying that of the companies which make money from video games and video game systems being released (ie, retailers and publishers), the retailers stand to take better advantage of a launch. It's not like investors have to just pick one or the other.

 

[The Faceless Master]

they expect 2k7 to outsell live on ps3 as well!?!? gloom and doom for ea basketball!

 

[Chris Remo]

"and expects to have shipped 1.0 - 1.2 million units by December 31 in North America"

PS3 Revenue: $126 million (10% of total December quarter revenue)
Unit Estimates: Fight Night 3 (400,000), Madden NFL 07 (700,000), NBA Live 07 (500,000), Need for Speed Carbon (800,000)


80% sell through?


Riiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiight

..."and 6 million units worldwide by the end of its fiscal year (March 31, 2007)"

Why did you leave that part out?

 

[typhonsentra]

I'm surprised they have NFS as a bigger seller than Madden. Might be a bad sign?

 

[Chris Remo]

I'm surprised they have NFS as a bigger seller than Madden. Might be a bad sign?

Well, think how many Madden fans have already bought the game. It's on every single system, and the people who are buying a brand new console at launch likely already own at least ONE other currently supported console. Many of them will already own Madden on a current-gen or even a 360.

 

[plagiarize]

the sell through on the EA stuff is daffy.

 

[Juice]

Nintendo
Wii Revenues: N/A

Sony
PS3 Revenues: N/A

Weak. Those are the only numbers worth estimating. Cowards.

 

[Barry Lightning]

ps3 $200 price drop by dec 07 ftw

 

[JoshuaJSlone]

..."and 6 million units worldwide by the end of its fiscal year (March 31, 2007)"

Why did you leave that part out?

They talk about things in terms of "December quarter revenue", which without another given explanation sounds like Oct-Nov-Dec.

 

[demonkid666]

How can they sell 800,000 need for speed games for ps3 when only 500,00o ps3s are allocated to the u.s.?

 

[Deku]

How can they sell 800,000 need for speed games for ps3 when only 500,00o ps3s are allocated to the u.s.?

400k at launch, presumably, at least another 500-1 million by december.

Sony's official target is 2 million in Japan /US by end of December, with 500k at launch. That leaves 1.5 million to be allotted.

In anycase, its predicting a nearly 1:1 tie ratio.

 

[Lionheart]

If the unit estimates are just for November / December, then most of the numbers seem extremely high. Especially for the PS3, tie ratio would be crazy.

 

[sonycowboy]

Guys,

I missed a huge part of the article. I was focusing on the individual titles and missed the forest for the trees.

We think it is important to note that we expect total U.S. software sales of only $144 million for the PS3 and only $288 million for the Wii, with additional European software sales of $156 million for the Wii in 2006. These figures are based upon an estimated sell-through of 1.2 million PS3s in the U.S. and a tie ratio of only two (given the likely limited release slate), and sell-through of 2 million Wii hardware units in the U.S. and 1 million in Europe with a tie ratio of three.

and to explain people's disbelief regarding some of the numbers, they are through March 31, 2007. And the reflect "sell-in", which are publishers sales to retailers, not sell-through which is to the end customer.

We have analyzed our financial models for our covered companies to see if revisions to the release dates and launch quantities for the PS3 and Wii will impact reported earnings for the December and March quarters.

...

We believe that our estimates for Wii and PS3 software sales are reasonable for each of the publishers we cover. The discussion below sets out our expectations for launch titles, along with unit estimates (sell-in) and revenue contributions.

 

[Deku]

thanks for clarifying

 

[dogbowl]

Sony PS3
Activision
PS3 Revenue: $54 million (9% of total December quarter revenue)
Unit Estimates: Call of Duty 3 (600,000), Marvel Ultimate Alliance (300,000), Tony Hawk's Project 8 (300,000).

Wii Revenue: $27 million (4% of total December quarter revenue)
Unit Estimates: Call of Duty 3 (200,000), Marvel Ultimate Alliance (200,000), Tony Hawk's Downhill Jam (300,000), Rapala Trophies (<50,000), World Series of Poker (<50,000).

I didn't realize that a World Series of Poker had been announced for the Wii.. And raise your hand if you think Tony Hawk is going to outsell Call of Duty 3.

Barf.......

EDIT: I see thats "sell in" and not to consumers. I could see distributers thinking that. Good luck pawning off downhill jam to Overstock in a few months...

 

[KeithFranklin]

We think it is important to note that we expect total U.S. software sales of only $144 million for the PS3 and only $288 million for the Wii, with additional European software sales of $156 million for the Wii in 2006. These figures are based upon an estimated sell-through of 1.2 million PS3s in the U.S. and a tie ratio of only two (given the likely limited release slate), and sell-through of 2 million Wii hardware units in the U.S. and 1 million in Europe with a tie ratio of three.

What was the tie ratio of the 360 at launch. With the additional cost of the PS3 I do think the tie ratio will be lower. Also some people that are picking up the PS3 for Blu-Ray player will choose movies over games.

 

[puck1337]

I don't understand how the Wii will have a tie rate of 3 unless they're counting Wii Sports.

 

[sonycowboy]

What was the tie ratio of the 360 at launch. With the additional cost of the PS3 I do think the tie ratio will be lower. Also some people that are picking up the PS3 for Blu-Ray player will choose movies over games.

The tie ratio for the 360 was over 4 I believe (or maybe just under) + an average of 2 accessories.

They're basically saying that the money spent on hardware will preclude the money on software IMO as the slate is better than the 360's was.

 

[SuperPac]

I don't understand how the Wii will have a tie rate of 3 unless they're counting Wii Sports.

Xbox 360 was 3.9. Why wouldn't Wii be able to do 3? It has what, 20 games at launch?

 

[jarrod]

Xbox 360 was 3.9. Why wouldn't Wii be able to do 3? It has what, 20 games at launch?

I think Wii Sports packed in will likely retard extra game sales to a degree. Then again, Zelda at launch alone probably guarantees a good 1-2m in software sales by itself. Then there's also fairly popular exclusives like Monkey Ball, Rayman, Red Steel, THDJ and tons of multiplatform stuff to fill in the cracks. Unlike 360 though, backwards compatibility could take a toll on new software sales as well (see: PS2 & DS).

 

[sonycowboy]

I think Wii Sports packed in will likely retard extra game sales to a degree. Then again, Zelda at launch alone probably guarantees a good 1-2m in software sales by itself. Then there's also fairly popular exclusives like Monkey Ball, Rayman, Red Steel, THDJ and tons of multiplatform stuff to fill in the cracks. Unlike 360 though, backwards compatibility could take a toll on new software sales as well (see: PS2 & DS).

Regarding PS2, I'm assuming you mean at launch or early months, right?

Because, it's going to end up with the most unbelievable tie ratio we've ever seen for a system as it's getting well north of 12 to 1 in the US (vs the previous record of 8/9-1 with the PSOne)

 

[jarrod]

Regarding PS2, I'm assuming you mean at launch or early months, right?

Because, it's going to end up with the most unbelievable tie ratio we've ever seen for a system as it's getting well north of 12 to 1 in the US (vs the previous record of 8/9-1 with the PSOne)

Yeah, I meant near launch... it was bit worse in Japan though, remember all those reports of The Matrix and DQ7 being the most popular software among PS2 owners?

GBA managed a bit better I think but DS had a horrible launch. Backwards compatibility can be a nice asset in a new console but it can definitely hurt your tie ratio too. I think that's partially why 360 and PSP had such stunning early ratios recently.

 

[Deku]

I think Wii Sports packed in will likely retard extra game sales to a degree. Then again, Zelda at launch alone probably guarantees a good 1-2m in software sales by itself. Then there's also fairly popular exclusives like Monkey Ball, Rayman, Red Steel, THDJ and tons of multiplatform stuff to fill in the cracks. Unlike 360 though, backwards compatibility could take a toll on new software sales as well (see: PS2 & DS).

And VC content. If someone gets a Wii primarily to play VC, they might not even buy a new game until 2007.

 

[Son of Godzilla]

They comment Resistance will have a high attach rate but then give CoD3 an attach of at least 50% without blinking an eye?

 

[Frankfurter]

Unless they expect Nintendo to ship more than 4m till the end of the year (but the article doesn't sound like it) I really don't see how they could sell 2m till the end of the year in the USA alone + 1m in Europe. That would only leave 1m for Japan + Canada and that of course would mean that there are exactly zero units in transit (which is absolutely impossible).

 

[thestopsign]

There has been reports on how Nintendo has already produced 2 million units, and has 7 million more on the way before the end of the year. Some how I don't think Nintendo will have a supply issue.

 

[SuperPac]

After today's preview of the PS3 craziness, Nintendo may have some real problems here in the US. They're third out of the gate and they run a very large risk of the US just not caring. :\

 

[thestopsign]

After today's preview of the PS3 craziness, Nintendo may have some real problems here in the US. They're third out of the gate and they run a very large risk of the US just not caring. :\

What happens after the first 400,000 units go? The launch is going to be much like the 360's. Everyone looking for a PS3, but not finding one. The 360 and Wii are going to capitalize on it. The Wii will sell through to all the hardcore Nintendo fans anyways.

 

[Amir0x]

I don't think a mass of hardcore gamers and scalpers buying a system early is any indication about which system will have a problem, and which system will be a success.

 

[JohnTinker]

Yeah of course, they're just saying that of the companies which make money from video games and video game systems being released (ie, retailers and publishers), the retailers stand to take better advantage of a launch. It's not like investors have to just pick one or the other.

Thats precisely what I thought, I guess they just phrased it oddly.

 

[SolidSnakex]

What happens after the first 400,000 units go?

The wait for shipment 2 begins.

 

[Deku]

After today's preview of the PS3 craziness, Nintendo may have some real problems here in the US. They're third out of the gate and they run a very large risk of the US just not caring. :\

I think you're baiting with this post but I'll bite.

I really don't get this impression. There are some reports of no lines, and many reports of not needing to camp out overnight. Granted using 1st day pre-orders to guage success is premature and the first 400k not moving quickly would be a disaster for Sony of N-gage proportions and no one is expecting that at this state.

 

[davepoobond]

these are interesting estimates. i agree with most of it, actually.

 

[cw_sasuke]

I predict 1Mio RS solds....only in US.... realistic ?

 

[Mithos Yggdrasill]

I don't think a mass of hardcore gamers and scalpers buying a system early is any indication about which system will have a problem, and which system will be a success.

True. The long term will decide who will win this contest.