Game on: PS3, Wii finally hitting stores

No longer does Microsoft's Xbox 360 have the next-generation video game console market to itself. But who will come out on top?

Daniel Terdiman Former Senior Writer / News
Daniel Terdiman is a senior writer at CNET News covering Twitter, Net culture, and everything in between.
Daniel Terdiman
5 min read
After 18 months of hype, the three-party, next-generation video game console war is finally upon us.

For longer than many would care to remember, the video game industry has been all but consumed with speculation about which of the three new consoles--Microsoft's Xbox 360, Sony's PlayStation 3 or Nintendo's Wii--would become top dog.

The Xbox 360 has had the run of the field, since it hit stores a year ago. But now the game is finally on. The PS3 made its debut in Japan on Saturday and it will hit North American stores Friday at 12:01 a.m. EST. Sony executives have boasted that some gamers have already started lining up to buy the new console. Two days later, at 12:01 a.m. EST Sunday, the Wii goes on sale.

So which console will come out on top? Many believe the real winners in the console wars will be consumers, as they will have more top-shelf choices than ever before. But some industry experts think Sony, despite a high price, will once again be the leader among the 150 million or so consoles analysts at DFC Intelligence predict will be sold in the next six to eight years.

"At the end of the decade, which is to say, midlife of this console generation, Sony will be first, with Nintendo battling Microsoft for second," said Richard Doherty, president of the analyst firm Envisioneering.

There's a big caveat to this prediction of Sony's continued console dominance: The top-end PS3 will cost $599, while the premium Xbox 360 runs $399. The Wii will cost $250. So Sony will have to overcome a major pricing disadvantage.

Doherty thinks it will. He bases his prediction on several factors: First, PS3 can play all old PS2 and PlayStation games, while the Xbox 360 plays many--but not all--original Xbox games.

PlayStation 3

Second, Microsoft could alienate retailers if it cannot meet demand--as he expects--for its new Xbox 360 add-on: an HD DVD player that costs $199. Microsoft said the device, which had a mid-November launch target, has already began slowly trickling into retailers and will continue to do so over the next week or so.

But after putting retailers in an awkward position last fall with Xbox shortages, Doherty said, Microsoft could really tick them off with another supply snafu.

"If there aren't enough HD DVD players," Doherty said, "it's going to be a situation of retailers saying, 'The heck with this.'" Of course, many worry Sony could run into the same supply issue with the PS3, which features a Blu-ray high-definition DVD player.

A bigger pie?
So what about Nintendo's Wii, the low-cost alternative with a considerable amount of buzz among gamers because of its motion-sensor technology?

"The (Wii) controller is just so innovative and so new and exciting in terms of what it can do for gamers in general," said Nick Earl, vice president and general manager at gamemaker Electronic Arts' Redwood Shores, Calif., studio. "I think that's going to really play in (Nintendo's) favor."

If (Nintendo) is able to expand the pie, "and we think they can, and bring new folks who are not the traditional gamer into this business, that's a fantastic thing for everybody in the industry," said Scott Steinberg, vice president of marketing at Sega. "Their strategy has been one that's more inclusive and less exclusive in potentially bringing families together to play, rather than just the older son."

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Video: Nintendo Wii rumor check

But Steinberg also recognizes that Sony's marketing machine and international reach are daunting.

"From an international standpoint, you can't deny the power of the Sony brand," he said. "On a global basis, they are the No. 1 brand."

One executive at Electronic Arts, the biggest game title producer in the world, said Sony has a strong hand.

"Despite the fact that Sony and the Wii (are) a year behind the Xbox 360, we feel that that's just going to be a rounding error in the long run. It's really year two to six where you get to volume," Earl said.

Sony's history shows it is a force that cannot be taken lightly, he added.

"Sony is a powerhouse," Earl said. "They're so strong, with great marketing and a great machine. I just don't personally feel, and EA doesn't feel, that (Microsoft's headstart) is going to be a handicap for (Sony) in the long run."

In an interview in May, Sony Computer Entertainment of America co-Chief Operating Officer Jack Tretton told CNET News.com that his company has to stick to its knitting to stay on top.

"We have to do just what we've done in the past," Tretton said, referring to Sony's domination of the video game industry since 2000 with its PlayStation and PS2 consoles. "You have to have the best system at the end of the day. You have to have the consumer's confidence, and you have to have a pureness of vision, in terms of the way you execute your strategy."

For its part, Microsoft thinks that it is in an enviable position.

"We've had a full year head start and we intend to take full advantage of it," said Peter Moore, a Microsoft corporate vice president and head of the Xbox team. "We've announced we've crested the 6 million (units shipped) mark, and we fully expect to hit our number of 10 million sold by the end of December."

Moore added that Microsoft execs believe they have another edge because, all told, there will be 160 games available for Xbox 360 by Christmas and that the Xbox Live online service has signed up more than 4 million users. That said, some in the industry think Microsoft's headstart won't mean much over time, even though Sony is for now holding off on a European launch.

Of course, it's possible that the next-generation console market could be split evenly three ways, said David Cole, president of DFC Intelligence. But he said the more likely scenario is the market splitting 50-25-25.

In that scenario, Cole said, even if it can't match the 70 percent market share the PS2 enjoyed, "You have to say Sony's still the favorite."