Consequences, Sonyquences

So what does this mean for the PS3 and the video game industry in general? First, we have no doubt that the console will sell out when launch day hits on Nov. 17 in the US, but that will only be because there will be a small amount of units to go around (and you can also bet that eBay will be filled with PS3 units that will go for well over the $599 retail price tag). The first party launch titles for the console don’t look that promising either, with only Resistance: Fall of Man looking like it will stand out from the crowd.

The PS3 delay in Europe and the shortage in the US also means that sales of PS3 games for 2006 will likely be on the lower end of expectations. Electronic Arts, Activision, Sega and UbiSoft all had PS3 launch games in the pipeline, but with only one or two exceptions all of their PS3 launch titles will also appear on the Xbox 360, the Wii, or both. With the unit availability of Microsoft’s and Nintendo’s console certain to be more than the PS3, the Xbox 360 and the Wii will certainly benefit from higher sales of those ports. In addition, both the Xbox 360 and the Wii are looking like they will have solid first party exclusive games. At the same time appears as though retailers who were looking for a major jump in their sales may have to have their expectations adjusted thanks to the lack of PS3 consoles on store shelves.

Some of our speculations were confirmed Wednesday in a research note written by Michael Pachter, the well known financial analyst for Wedbush Morgan Securities. In the humorously titled paper “Flirting with Disaster: The Trilogy”, Patchter wrote that total US and European video game sales for 2006 would grow by 2 percent versus their previous prediction (made just the previous Tuesday) that sales would grow by 3 percent this year. In a phone conversation with FiringSquad following the release of his report, Pachter told us that he believes that the PS3 shortfall will help Microsoft’s Xbox 360 sales somewhat but really help Nintendo’s Wii the most thanks to its lower price. So will people who wanted a PS3 this year go and get an Xbox 360 instead? Pachter told us that he expects only 200,000 Xbox 360 consoles sold this year will be “substitutes” for people waiting for a PS3. Ultimately, Pachter feels that while the shortfall will affect Sony in the short term they should turn out OK in the long term. Indeed his 2007 sales predictions for video game sales as a whole remain unchanged and retailers will be mostly unaffected in his opinion.

A few weeks ago, Michael Goodman, an analyst for financial firm the Yankee Group, predicted that the PS3 would be the overall winner in the next-gen console wars, edging out the Xbox 360 and blowing away the Wii in terms of total console units sold in five years. With the announcements of the European delay and the shortfall of PS3s in the US and Japan for the launch, we contacted Goodman again to find out if he plans to change his predictions. Goodman told us over the phone Wednesday that he had just heard about the changes on Sony’s part and as a result was not able to say whether his earlier predictions would stick, but did say he will be making some kind of changes in his report in the next couple of weeks.