Updated: Tuesday, 29 April 2008
DFC: 360 Likely "Biggest Loser" in Europe
By DFC

David Cole with DFC Intelligence is betting that PlayStation-loving Europe will soon be switching its loyalty to Nintendo platforms, with the Xbox 360 being left in the wakes of both rivals.

Over the next few months DFC Intelligence will be releasing its forecast for the game industry. 2007 was a record year for the industry and it has resulted in some significant adjustments to our overall forecasts. The two most notable international growth trends highlighted in 2007 were 1) the continued strength of online PC games and 2) the success of Nintendo on a truly global basis. DFC believes that some of the most exciting growth opportunities for the videogame business are in the European markets and DFC believes Nintendo will be the leader in Europe over the next few years.

Nintendo’s growing strength in Europe is an important trend for the entire industry. DFC Intelligence has always argued that Europe in general has been an under-performing market for videogames. In recent years, the Europe game industry has been dominated by Sony and its PlayStation systems. Of course, the PlayStation 2 (PS2) was the leader in all major markets, but in Europe the PS2 had over 80 percent market share among its generation.

Ironically, a great deal of the PlayStation 2’s success in Europe was driven by more casual products designed to reach a broader mass market. Non-traditional game products published by Sony Computer Entertainment, such as the SingStar music games and the EyeToy camera products, were major hits in Europe, much more so than in the U.S. A key driver behind these products was Phil Harrison, the U.K.-based president of SCE Worldwide Studios. However at the end of February 2008, Harrison left Sony. In many ways this departure is symbolic of how the torch in Europe seems to be passing to Nintendo.

The Nintendo DS and Nintendo Wii are enjoying tremendous success in Europe. In large part this is because Nintendo is following the mass market design philosophy that made Sony Worldwide Studios such a success. In 2007, sales of the Nintendo DS in Europe nearly doubled and the installed base soared past the 20 million mark. Meanwhile, the supply constrained Wii managed to pass the Xbox 360.

With the recent success of Nintendo, DFC Intelligence is now forecasting that over the next few years Nintendo’s systems will supplant Sony’s systems as the leader in most major European markets. Of course, the DS is already a smash hit in Europe and this is expected to continue. More significantly, DFC Intelligence now forecasts that, over the next five years, sales of the Wii will outpace both the Xbox 360 and the PlayStation 3.

The emergence of Nintendo in Europe marks a major change for the videogame industry. Nintendo has had periods of major success in Japan and North America but, unlike Sony, they have never been a leader in all three territories (North America, Japan , Europe ) at once. Europe is expected to be the fastest growing market and Nintendo’s products are perfectly designed to appeal to European tastes. As mentioned, the Wii product line and control system are an evolution of what made the PlayStation 2 so successful in Europe. Combine this with the lowest priced hardware and software and you have a recipe for success.

Perhaps one of the most notable signs was with the recent release of Konami’s Pro Evolution Soccer 2008. This title came out with versions for seven different game systems including the Xbox 360, PlayStation 3, and Wii. The Wii version received the highest overall rating on review aggregator sites like Metacritic and Gamerankings.com. Soccer is arguably the most important game genre in Europe and now the Wii has what many consider to be the best soccer game. This alone is likely to be a driver of significant Wii sales, especially among customers looking to upgrade from their PlayStation 2.

What will Nintendo’s success mean for the other platforms? It is important to note that DFC Intelligence is also forecasting strong sales for the PlayStation 3 and, to a lesser extent the Xbox 360. This generation is not expected to be a case of one platform dominating like the PS2 did in the last generation. One factor that will increasingly take hold in Europe is what DFC has labeled the “second car in the garage." In the U.S. over 40 percent of game households now buy two or more of the current console systems. By comparison, Europe has largely been a one car in the garage market. In recent years, that car has been the PlayStation 2.

As the game market in Europe grows we expect to see more consumers buying two or more systems (although not to the extent of the U.S.) The Wii is forecasted to be the market leader, but with a market share less than 50 percent compared with the PlayStation 3 and Xbox 360. Consumers will still need to play World of Warcraft, Grand Theft Auto IV, games on the go and so on. No one system satisfies all the diverse tastes in today’s market.

Another significant point is that the Wii clearly will not be the only platform for software. One issue with the Wii is that it is designed to appeal to a more mass-market casual gamer. While DFC believes that the whole concept of bringing in senior citizens and other types of non-historical gamers is over-hyped, it is true that the platform does appeal broadly to consumers appreciative of a less intense video game experience, so the software-to-hardware tie ratio is expected to be lower for the Wii than it is for the Xbox 360 and PlayStation 3. In fact, DFC Intelligence forecasts that by 2011 software revenue from the PlayStation 3 will equal that of the Wii despite a lower installed base.


It appears inevitable that, for the PlayStation 3, Sony will lose a big chunk of its PS2 user base. However, in the long-term, DFC Intelligence believes the PlayStation 3 will be a fairly strong competitor. The biggest loser in Europe is likely to be the Xbox 360. Microsoft has seen its self-proclaimed fall 2007 “greatest holiday lineup in videogame history” come and go with very little impact on the Xbox 360’s position in the European marketplace. To spur sales in 2008, Microsoft is being forced to lower the price of a system that is starting to look like a senior citizen as it approaches its third birthday.

The Xbox systems have enjoyed much greater success in the U.K. than in continental Europe. In large part this is because the U.K. does not have a strong PC game market like those found in other parts of Europe. However, as in the U.S. and Australia where intense violence is more popular with gamers, U.K. gamers enjoy first-person shooter (FPS) titles and the Xbox 360 is clearly the leader in that category. Unfortunately, outside of the U.K., DFC sees the Xbox 360 continuing to struggle in Europe.

A strong Nintendo presence in Europe is a major event for the game industry. However, as always, it is important to highlight that in Europe , like the rest of the world, the key trend is platform diversity. Not only are there three new console systems to compete with the PlayStation 2, but PC games and portable products continue to have increased sales. The good news is that sales in Europe continue to explode on all fronts. Look for 2008 to break all kinds of sales records.

http://www.next-gen.biz/index.php?option=com_content&task=view&id=10235&Itemid=2&limit=1&limitstart=1

A good read. 

Wow, that was indeed a good read. Finally, you might say! This guy knows what he is talking about.

nice read. Not biased to any platform. Good judgment.

hey

i enjoyed this--very well written might i add

and yes, he was fair to all platforms

- LOL

PES2008 on Wii lol

I thought they would talk about sales or something like this. And they just focused on review rating that is CRITICAL when u sell a game to casual (we all know this ...)

A little help ====> Guitar Hero on Wii !!!

- why dont u use some sales datas ?

Wii > PS3 > Xbox360

END

- I agree that this generation Wii =/= PS2
There will not be 1 big winner getting all the games even if Wii sales have the potential to reach amazing numbers (if Ninty get all the non-gamers) compared to the PS3 that are more classic console.

This is not a good read, this is yet another failure from an analyst.
These guys are complete morons.
Seriously, the article starts well, you begin to hope they understand, and then it fails miserably.

First, the guy try very hard to make us believe that if the Wii succeeds, that's because "the Wii product line and control system are an evolution of what made the PlayStation 2 so successful in Europe". What BS. The Wii is NOT an evolution of the PS2, the PS3 is. Every anti-Wii fanboys here or elsewhere agree that the Wii DOESN'T have the games that the PS2 had, but PS3 and XB360 have.
The PESWii they talk about, is nothing like the PES on PS2 or PS3. The guy contradicts himself on several topics like this one, throughout his article.
He just can't understand Wii or Nintendo, and can't understand that not "only Sony can be successful", so his article is full of self-contradictory comments and nonsense.

The proof is everywhere : everything is rationalised against Sony. Another example : "The Nintendo DS and Nintendo Wii are enjoying tremendous success in Europe. In large part this is because Nintendo is following the mass market design philosophy that made Sony Worldwide Studios such a success."
This guy is a complete moron, it's pretty obvious that the Nintendo strategy has nothing to do with the Sony one.

Nintendo keeps talking about disruption, but these guys are so stupid they think it's the same strategy as before. If that were true, Sony would be market leader.

Other quote of the article that is nonsense : "In many ways, Phil Harrison's departure from Sony is symbolic of how the torch in Europe seems to be passing to Nintendo.".
No, sorry, Sony didn't pass any torch to anyone : Nintendo just ran far faster than the others, who thus never had a chance to pass any torch. Notice he implies that Sony called the shot (they passed the torch, Nintendo has nothing to do with its success). Denial yet again.

EDIT : Oh look what I found on NeoGAF, credit for Avrum, and my thought above exactly :

or rather 

But wait, as Sony still calls the shot, the Wii will not be as successful as you think, even if now they admit that in the next years, Wii will outpace PS3 and XB360 (no shit? so insightful), still, "This generation is not expected to be a case of one platform dominating like the PS2 did in the last generation. One factor that will increasingly take hold in Europe is what DFC has labeled the second car in the garage.". Can you be more stupid? Especially when you contradict yourself with these gems :
- Consumers will still need to play World of Warcraft, Grand Theft Auto IV, games on the go and so on. No one system satisfies all the diverse tastes in today’s market.
- the PlayStation 2 (PS2) was the leader in all major markets, but in Europe the PS2 had over 80 percent market share among its generation.

So the Wii is an evolution of the PS2 which had 80 percent of Europe market, but "The Wii is forecasted to be the market leader, but with a market share less than 50 percent compared with the PlayStation 3 and Xbox 360", even though "Europe is expected to be the fastest growing market and Nintendo’s products are perfectly designed to appeal to European tastes.". Amazing!
There's so much contradiction it makes you spin endlessly. So the Wii is perfectly designed for European tastes (implying not to NA and Japan tastes, or that would mean both PS3 and XB360 would be big losers), but yet people will need to play very successful games that are not on the Wii...


At least he says some few things that make sense, like what I always said and believed : "The Xbox systems have enjoyed much greater success in the U.K. than in continental Europe. In large part this is because the U.K. does not have a strong PC game market like those found in other parts of Europe. However, as in the U.S. and Australia where intense violence is more popular with gamers, U.K. gamers enjoy first-person shooter (FPS) titles and the Xbox 360 is clearly the leader in that category. Unfortunately, outside of the U.K., DFC sees the Xbox 360 continuing to struggle in Europe.".
The only part with which I don't agree, is that the strong PC game market (BS) is part of the reasons of the XBox having more success in UK. This is BS.