Why the Wii and Xbox are killing Sony's PS3

Today's Wall Street Journal has an interesting piece illustrating why the PS3 is floundering in the contest with Nintendo's Wii and Microsoft's Xbox 360. PS3 sales are on the decline while the competition is rising at a dramatic rate.

So, what are some of the main issues with the PS3?

It's overpriced
Microsoft dropped prices on the Xbox 360 to gain market share, and it worked. Sony is intent on becoming profitable (the right motive) but is doing so at the sake of building momentum. A console that starts at $400 (with only one controller and usually zero games) puts you over $500 before it's much fun.

According to the WSJ article, "U.S. sales of the PS3 fell 19 percent last month from a year earlier, while sales doubled for the Wii console and rose 8 percent for the Xbox 360, according to research firm NPD Group. Analysts say they expect PS3 sales for this month to be flat or lower than last year, while sales for its rivals are likely to rise."

Lack of exclusive games
It's gotten much harder to find compelling games that are only available on PS3, a strategy that has been very successful in the past.

Sony also is suffering from a lack of attractive titles that are exclusive to the PS3. Microsoft has hit the jackpot with two action-adventure game franchises, Halo and Gears of War, which are available only on the Xbox 360. Most of Nintendo's top games are made in-house and are playable only on the Wii.

Minimal modern touches (i.e. social features)
The Wii makes your goofy little Mii character come alive by connecting consoles online. Xbox Live has a community and marketplace. Playstation Home is compelling but empty, which should even out over time. But, the competition is so far ahead, Sony needed to do something much bigger and better.

Personally, I thought the social stuff was a little stupid until my nephew destroyed me in Wii bowling while playing 3,000 miles away. Now I get it.

It's being significantly out-marketed by the competition
Generally, games drive the marketing for consoles, but the Wii and Xbox have both built very strong brand awareness around the products themselves. The games are the accessories to the Wii lifestyle, and Microsoft makes the Xbox the center of your interactive gaming lifestyle. From the consumer perspective, the PS3 is a good gaming console, but not a brand that users feel a huge loyalty to or affinity for.

The user experience is somewhat burdensome
The games themselves look and feel good, but the experience of launching a game and getting up and running takes way too long (I feel this way about most consoles), to the point where many users I spoke with get so annoyed that they curse the machine. For the record, the cause may rest with the game developers, but the perception is that the console is the barrier.

Don't forget the Internet
A bigger threat looms for all console makers, and that's the fact that people spend way more time online then ever before and that browser-based casual games are not feeding console sales, but instead pushing consumers to stay on their PCs.