Motion-Controlled Gaming Systems Aim to Revitalize Sales

Strategic Insights -

In an effort to boost sagging video game industry sales, Microsoft and Sony are introducing motion-controlled gaming systems, designed to go beyond the popular Wii console's motion-sensing capabilities. The PlayStation Move, for the PlayStation 3 console, and Microsoft's Kinect system, for the Xbox 360, aim to create a more immersive gaming experience. The move comes as the U.S. video game industry sales this year through August are down 8% to $8.37 billion compared to the same period last year.

Key Takeaways:

  • The PlayStation Move and Microsoft's Kinect systems are more sophisticated and accurate than Nintendo's Wii, with advanced camera systems and motion controls.
  • The introduction of motion-controlled gaming systems may draw away sales from pure software titles, as players spend money on hardware and accessories.
  • Analysts predict that game software sales for Move and Kinect will be a bigger story in 2011, as third-party developers wait for a sizable installed base to form before releasing games.
  • The release of Move and Kinect will help extend the life cycles of Sony and Microsoft's game consoles, giving them more time to recover their investment in those machines.
  • Manufacturers usually sell game consoles at a loss, expecting to profit from software sales over the life of the device.
  • The presence of new accessories like Move and Kinect may lead to more homes with multiple consoles, such as homes with a Wii that also purchase an Xbox 360 with Kinect.
  • Kinect uses a camera and microphone system to track players' movements and voice commands, while the PlayStation Move uses a camera system to track the location of handheld wands in 3-D space.
  • The PlayStation Move bundle retails for $99.99 and includes a PlayStation Eye camera, one Move motion controller, and game software.
  • Analyst Anita Frazier predicts full-year sales of $18.6 billion to $20 billion, slower than 2009 sales of $19.7 billion.
  • Hardware sales have taken the biggest hit, falling 12% to $2.71 billion year to date, while game software sales have fallen 8% to $4.32 billion.
  • Accessories sales are up 4% to $1.34 billion, according to the NPD Group.

Statistics:

  • U.S. video game industry sales this year through August are down 8% to $8.37 billion compared to the same period last year.
  • Hardware sales have fallen 12% to $2.71 billion year to date.
  • Game software sales have fallen 8% to $4.32 billion.
  • Accessory sales are up 4% to $1.34 billion.
  • Kinect uses a camera and microphone system to track players' movements and voice commands.
  • The PlayStation Move bundle retails for $99.99.
  • Microsoft's "Halo: Reach" raked in $200 million in global sales on its launch day last Tuesday.

Sources:

  • NPD Group
  • David Cole, analyst with DFC Intelligence
  • Billy Pidgeon, analyst with M2 Research
  • Anita Frazier, analyst with NPD Group
  • Sony and Microsoft press releases