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Gadgets PlayStation 2 on the Decline, Says Analyst
Marcus Yam (Blog) - October 23, 2007 9:15 AM
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Analyst declares PlayStation 2 "on its way out of the industry for good."

Approaching nearly a year since the launch of the PlayStation 3, something is happening that Sony could have never expected: one of its home consoles continues to sell well, as does the software that it plays. What few, including Sony, could have guessed is that it would be the PS2 leading the way, rather than the new technology-packed PlayStation 3.

Last month, the PlayStation 2 sold 215,000 consoles, once again outpacing the PlayStation 3 which moved only 119,400. For casual gamers, the draw of the PlayStation 2 may be its low price and extensive library – two characteristics that the PlayStation 3 has yet to display.

The PS2 still exhibits surprising market strength in its seventh year, though Sony would like to think that it is all a part of their plan, as the games company has boasted that its PlayStation platforms were all designed with a 10-year lifecycle in mind.

One particular analyst at the Deutsche Bank observed a slight dip in PS2 performance in the September NPD sales figures, and noted that it could mean the beginning of the end for Sony’s most successful platform yet.

“PlayStation 2 software sales fell 47%Y/Y to $85mn, representing a deceleration from the 33% Y/Y decline last month,” declared Deutsche Bank analyst Jeetil Patel. “While this substantial decline was inevitable, it is currently unclear whether the drop reflects consumer transition to next-gen software or weak spending patterns amongst the low-end consumer. Needless to say, with tougher comps ahead for PS2 software sales, we think that the PS2 may finally be on its way out of the industry for good.”

Whether or not the PS2 is on the way out, Sony still intends to sell plenty of it to consumers this holiday season. SCEA announced late summer that it will be bringing this November a special edition Ceramic White PS2 console bundled with SingStarPop and two microphones. With both Guitar Hero 3 and Rock Band set to appear on the PS2 also, the old console appears to still be relevant in the eyes of publishers.

In fact, a report from Nielsen GamePlay Metrics finds that as much as 42 percent of all console use was on the PS2.

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By comparison...
By Demon-Xanth on 10/23/2007 9:29:21 AM , Rating: 2
I'm sure the Xbox and Gamecube sales dropped like Joe Kittinger right after the 360 and Wii were launched.




RE: By comparison...
By FITCamaro on 10/23/2007 9:46:14 AM , Rating: 4
Yea they went down faster than Paris Hilton on a guy in a crappy hotel room.


RE: By comparison...
By mdogs444 on 10/23/07, Rating: 0
RE: By comparison...
By BladeVenom on 10/23/2007 10:00:04 AM , Rating: 1
At least there's the video tape of it.


RE: By comparison...
By FITCamaro on 10/23/2007 10:05:45 AM , Rating: 5
I don't know about you, but I prefer not to get a VD.

Besides, Paris Hilton is f*ing ugly. She looks like a holocaust victim in expensive clothes and makeup on.


RE: By comparison...
By mdogs444 on 10/23/2007 12:21:00 PM , Rating: 2
While I dont think shes the hottest thing in the world, I happen to think shes far from ugly. She would not be my first choice, but i wouldnt kick her out of bed for eating fruit loops.

However, I guess if you are looking for a girl who has the mind of a rocket scientist (or a mind of her own at all), then you best look the other way.


RE: By comparison...
By FITCamaro on 10/23/2007 10:41:39 AM , Rating: 2
You people need a sense of humor.


RE: By comparison...
By mdogs444 on 10/23/2007 12:18:24 PM , Rating: 2
I know, too many uptight people on here. We can be serious on this issues, as well use some humor


RE: By comparison...
By mikeyD95125 on 10/23/2007 5:36:40 PM , Rating: 2
We are not uptight, it just wasn't that funny.

I believe the funny posts get rated up very quickly.


RE: By comparison...
By rsasp on 10/23/2007 1:08:09 PM , Rating: 2
you can't even find xbox or gamecube after couple months when xbox360 released.


RE: By comparison...
By wallijonn on 10/23/2007 1:45:51 PM , Rating: 2
quote:
I'm sure the Xbox and Gamecube sales dropped like Joe Kittinger right after the 360 and Wii were launched.


That's because everyone bought every GC that they could find when it hit $99. You couldn't find a GC after Christmas in most stores. Basically all stock was sold out. All Xboxes sold out because MS didn't continue to manufacture them. The same will happen when the PS2 is no longer produced. The big question for Sony is, if they discontinue the PS2, will the PS2ers buy a PS3 or a 360?


RE: By comparison...
By Locutus465 on 10/23/2007 10:11:20 PM , Rating: 2
And today the only nintendo you'll find in the stores 'round these parts is the GC... Well, you'll find DSes as well, but I'm talking consoles....

As for PS2ers going to 3 or 60... I'm guessing the deciding factor will be the available game cataloges, price and value added packages.... At least Sony is coming around on price as best as they can... They're still being beat by MS (as evidenced by the fact that Core/Arcade systems are hard to find), but with the a (much) better game catologe Sony won't totally lose out.


RE: By comparison...
By inperfectdarkness on 10/23/2007 2:02:06 PM , Rating: 2
i'd also like to point out that unlike the pos xbox1, the gamecube still has a place in gaming--it has a player for GBA games. only if/when nintendo releases a gba/ds player for the Wii, will i get rid of my gamecube.

and no, the Wii could not have simply been a repackaged gamecube. there's too much difference in architecture. disk sizes, controller bios, wi-fi, etc.

funny how everyone learned back around 1993 that systems with a base price of $450+ were doomed to the scrap heap. sony is over 10 years behind the learning curve.


RE: By comparison...
By Gnoad on 10/23/2007 10:41:35 PM , Rating: 2
I think all companies learned this time around that we, the consumers, are FAR more budget dependent than they initially thought. With the middle class in the US slowly being phased out by price increases in everything from milk to gas, we simply can't fork out $400+ to play on new systems when we can get a ps2 and Guitar Hero for much, much less.


RE: By comparison...
By ViperROhb34 on 10/23/2007 9:09:31 PM , Rating: 2
One thing the article didnt mention is the PS2 just went on sale as a NEW console only three yrs ago in china after they agree'd to let it be sold there.

That helped sales. Either way PS3 selling in 5th or 6th place ( if you include handhelds ) says alot.

I had a PS2 for a long time and this time around I'm not a PS3 fan. They lack game support which stalls exclusive games that used to be strong in the PS2. Seems there are more exclusives on the 360. I have a 360 and Im gettig a Wii for Christmas.


$1 Million Question
By Guyver on 10/23/2007 10:29:52 AM , Rating: 2
The $1 million question that should be on everyone's mind is how many PS2 owners will remain loyal to PS3 and how many will defect to the XBox 360?

Afterall, Sony now has a cheaper PS3 with no backwards compatibility and no killer title while the XBox 360 is cheaper with a handful of killer titles under its belt.

By removing backwards compatibility on their entry level PS3, they have removed any monetary incentive for cost-conscious gamers to remain loyal to PS3 since people will start from scratch if they can only afford the entry level PS3.

This can only help XBox 360 and the Wii in my humble opinion.




RE: $1 Million Question
By michal1980 on 10/23/07, Rating: 0
RE: $1 Million Question
By Guyver on 10/23/2007 12:11:03 PM , Rating: 2
I agree that backwards compatibility was an after thought for Microsoft and they only implemented it because Sony put the heat on them in terms of features.

The reason why the other two companies got away with it is because prior to the the next gen console war starting, the PS2 was the undisputed champion. Their marketshare was nowhere near Sony's PS2.... but going forward, Sony has the most to lose because of their predecessor's marketshare.

I'm not trying to spell gloom and doom. Just that for some people, backwards compatibility may be THE feature to get them to at least migrate to the newer platform while they wait on a good PS3 game. Some people baby-step it. I suspect cost-conscious gamers do this the most.

And I agree on your assessment of simply adding the newer controllers to the GameCube. But Nintendo needed to reinvent their image and they needed to market a "new" product. Not breath life into something that the PS2 easily beat out.


RE: $1 Million Question
By ViperROhb34 on 10/23/2007 9:15:01 PM , Rating: 2
Yes, but Xbox had NOWHERE close to established userbase of PS2, nor did they have 500+ games the PS2 had.. yet the majority of Xbox games run perfect on the 360. Sony should've kept BC around.. they flip-flopped on their own "values" about BC the same way they did about rumble saying rumble was old tech no one wanted.. and twice they show they'll say or do anything. Integrity is something they dont have anymore.


RE: $1 Million Question
By Locutus465 on 10/23/2007 10:12:21 PM , Rating: 2
Most of my x-box games weren't supported on 360... Not even the POA sequals (sands of time was the only one that worked).


RE: $1 Million Question
By joemoedee on 10/24/2007 12:53:45 AM , Rating: 2
quote:
Yes, but Xbox had NOWHERE close to established userbase of PS2, nor did they have 500+ games the PS2 had.. yet the majority of Xbox games run perfect on the 360. Sony should've kept BC around.. they flip-flopped on their own "values" about BC the same way they did about rumble saying rumble was old tech no one wanted.. and twice they show they'll say or do anything. Integrity is something they dont have anymore./quote>

I believe the number is somewhere around 300 Xbox games that are compatible with the Xbox 360 (Total released games as shown on Xbox.com is 800) Not a real strong percentage.

I'm unsure if it is an integrity thing, or Sony just trying to feel the buyers pulse. Backwards Compatibility was big with the PS2 and PS1, however it does not seem to be a huge selling point this time around. (Probably due to the high number of installed PS2s in the market) Customers wanted rumble, they're adding rumble. The PS3 is not selling due to its high price, so they're trying to address that. Now if they could only get some games on it...


RE: $1 Million Question
By Chaser on 10/23/2007 11:12:04 AM , Rating: 3
And switching over from a PS2 to a 360 wouldn't be starting from "scratch" too? If a person has a vast library of PS2 games I seriously doubt he's in some crisis of choice to consider the 360 because there's no BC on the cheapest PS3 model.

I think we need to stop living in 6 month time segments. The PS3 was built with a long life cycle in mind. There are and will be games coming out for the PS3 because consumers are eventually going to demand more powerful gaming technology, better graphics, seemless connectivity, high def, etc. Some of those future games will probably be (exclusive) PS2 crossovers like Final Fantasy 8 for instance.

So even though he can't play his PS2 library on the cheaper PS3 doesn't mean he's inclined to dive into a 360 and start over. Some might I guess. But those that place a very high priority over BC are probably going to "pay" for it and not get the cheapest PS3, or just keep their PS2 rather than fly over to the 360 and start over.

I don't think its a 1 million dollar question. And I don't think its going to "help" the 360 or Wii all that much. Man if I could go back and read all the gripes and predictions of doom regarding PS3 pricing.


RE: $1 Million Question
By Guyver on 10/23/2007 12:03:28 PM , Rating: 2
That was my point exactly. By removing backwards compatibility on their entry level player, Sony removed any incentive to sweeten the deal for cost-conscious gamers to remain with Sony. Cost-conscious PS2 owners will start from scratch regardless of which console they migrate to.

I don't think a 100% upgrade path from PS2 to PS3 is a given. There is some concern I'm sure about just how many gamers will migrate to either a Wii or an XBox 360. After all, Sony said last year that backwards compatibility was an important core technology of the PS3 only to recently contradict themselves in another press release concerning this entry level player coming out without compromising on core technologies.

And no, I did not mean someone would be more inclined to switch away from Sony. I meant there's less incentive to stay loyal. A cost-conscious gamer could arguably for the most part remain with Sony and never consider XBox 360 or the Wii. But starting from scratch does level the playing field of options. But then again, there could be a specific game that is only found on a console which could retain a gamer's loyalty for Sony.

I think it's a legitimate question. The console is being marketed to the people who will probably count every nickel and dime than the the people who forked over $600. The people with the deeper pockets are probably the least likely to care about "living in a 6 month time segment". I'm not so certain that cost-conscious gamers would not want to play their PS2 games much on a PS3 while they wait for a Halo 3 killer.

With no blockbuster title, almost indistinguishable performance / graphics against the competition, and now no more backwards compatibility (an already developed and easily implemented feature), you have to ask why bother spending the extra money? For now, there's no real incentive.

I don't care either way. I just don't think you're going to get 100% of the PS2 owners to agree to stop living in "6 month time segments".


RE: $1 Million Question
By Chaser on 10/23/2007 12:43:24 PM , Rating: 2
Does what Sony "said" have any impact on a buyer's choice? I disagree with you on how you perceive the importance of backward compatibility when as I said if its THAT important they probably will just keep their PS2. And the bean counters at Sony agree it seems.

Nor do I believe a "Halo 3 killer" is significant to your argument.

Regarding the six month time segment: you might be right if new console hardware were released each "segment" period. But buyer like it or not, the PS3 was designed for a long life cycle. And that most certainly was a wise choice.

I think you're trying to squeeze water from a rock with your non-BC theory. Cost or no cost. Again if its that important the person will keep their PS2 around for PS2 gaming. Sure a 360 is cheaper but that may be the only factor.

This idea of "sweetening the deal"? I think you over prioritize PS2 owners contemplating a PS3 purchase out of the rest of the world just going out and buying one.

I really don't think the percentage of potential PS2 owners that are contemplating a new PS3 purchase over a 360 is going to be a huge noticable segment of all PS3 buyers that will be noticed by more Wii/360 sales. Time will tell I guess. Do you move forward to go backward? Lets hope not.


RE: $1 Million Question
By Guyver on 10/23/2007 1:25:28 PM , Rating: 2
The issue is that Sony's right hand does not know what the left hand said. What Sony says now is that they were wrong about what they said a year ago and that in order to give the cost-conscious consumers an entry level PS3, they had to remove the software-implemented PS2 backwards compatibility. Something they said was a "core technology".

I think where we disagree is that you universally believe that no PS2 owner would possibly care for or value backwards compatibility on a PS3. Like it or not, backwards compatibility was a major incentive and feature for PS1 owners to go PS2. You seem to imply that 100% of all PS2 owners will migrate to the PS3 regardless of backwards compatibility. If so, I do not know how you can come to some conclusion. I agree there are some that will be like this, but there may be some that are the total opposite.

I have my doubts while you feel 100% confident lack of backwards compatibility will not endanger migration to the PS3 for SOME bean counting PS2 gamers. You fundamentally do not believe this is possible for some reason.

For now, the PS3 has no Halo 3 killer therefore demand is not as high for the PS3 as it could be. Why buy a console when you don't have a game everyone wants? Who wants to pay a premium for a console whose games do not yet look superior to the competition even though on paper your hardware is superior? What I see now with the PS3 is several gamers buying more into Blu-Ray movies waiting for the big game to come out for their PS3s. More than likely this will be UT3.

Bean counting indeed. I think what we are seeing here is how tight the money is with Sony and what they had to drop in order to bleed less money. Sony and their bean counters dropped pricing at the expense of backwards compatibility. Hard to say how this will pan out and any company in this position will talk down any consequences / risk (as they should) in order to minimize share holder fears.

Halo 3 is clearly an incentive for gamers to buy into their console. All I am saying is that backwards compatibility is a major feature for SOME PS2 gamers. Not all. When you remove the one thing that SOME PS2 gamers value, then you RISK potentially losing them to the competion who may offer better features & games at a better price point. I'm not so quick in saying that Sony is guaranteed loyalty by all their PS2 consumers. Where did all those Wii consumers come from?

I think the one thing you overlook is not all cost-conscious gamers can afford to buy new PS3 games right after taking the big plunge into a PS3. We're talking cost-conscious consumers. As much as they would like to play nothing but PS3 games from day 1, some or many will probably play their current PS2 games while they wait for a Halo 3 killer. Or rent the few PS3 games worth playing. And how many people want to disconnect / reconnect their PS3 everytime they want to play on their PS2? It's a smaller gripe, but it's a convenience thing. I'd rather have one console in my living room.

And to set the record straight, I rather have a PS3 over the other two platforms due to hardware specs alone. That being said, I'm more than happy with my PC.


RE: $1 Million Question
By michal1980 on 10/23/2007 5:24:58 PM , Rating: 1
you know whats sad... halo 3 really isnt that great of a game ethier.. Both Bioshock, and Gears IMHO are way better. Halo 3 just have the 3000000000000000000000000000 billion marketing deperatment, thats all over. (including virual). You HAVE to like halo... otherwise something is WRONG with you.


RE: $1 Million Question
By dagamer34 on 10/23/2007 6:06:51 PM , Rating: 2
However, people often sell their previous generation console to help fun their next-gen one. Now, that isn't really plausible. Plus, with a lot of good games on the PS2, but a drought in PS3Land, a PS3 owner would enjoy just being able to pop a game into their new system and not NEED their PS2 anymore.

Convenience is a powerful thing.


Thank you Captain Obvious!
By daftrok on 10/23/2007 9:28:07 AM , Rating: 2
This just in, a previous generation console will eventually decline and disappear! Um....dur?




RE: Thank you Captain Obvious!
By retrospooty on 10/23/2007 9:50:34 AM , Rating: 3
The strange thing is that it took so long.

I guess not so strange when you consider the whole debacle with the overpriced PS3 - then again, everything Sony does lately is a total mess.


RE: Thank you Captain Obvious!
By Assimilator87 on 10/23/2007 11:20:35 AM , Rating: 2
What's really a sign of a console's longevity is how long developers keep pumping out games for it after production is discontinued. The Dreamcast for example got the axe in 2001, but games kept coming out up to this year. Another prominent example is the Neo-Geo, which was discontinued in 1997, but the last game came out in 2004.


By crystal clear on 10/23/2007 10:23:08 AM , Rating: 2
quote:
it is currently unclear whether the drop reflects consumer transition to next-gen software or weak spending patterns amongst the low-end consumer. Needless to say, with tougher comps ahead for PS2 software sales, we think that the PS2 may finally be on its way out of the industry for good.”


Catch word - currently unclear

IF its so unclear then how does this analyst come to the conclusion that-
the PS2 may finally be on its way out of the industry

Not unclear but very crystal clear he is just guessing.

Catch word- Needless to say, with tougher comps ahead for PS2 software sales,

From where did he get this conclusions ?

Sitting in front of computer analysing sales figures is not the way to reach such conclusions.

Get out of the office - see for yourself,ask those in the selling business whats the market indicators are & what are their directions.

For this you got to visit sales outlets & ask around,& get the facts & figures.

For this you got to ask buyers for their opinions.

Conclusions-

Stop guessing is my message & dont give vague reports.

By the way Add in a MOD chip on a PS2 & load whatever you like & play all the way.(ask those kids they will show you HOW)




RE: Very unclear & vague observations from an Analyst.
By Aerius on 10/23/2007 7:12:36 PM , Rating: 2
I'll assume that you've never read an annual report, listened to a conference call, read a research report, or talked to an analyst. There is something called "forward looking statements." Basically this means that if it's something in the future you cannot say with certainty that something will happen because it might not. Rules are set up this way because some people made bad decisions that were a "sure thing." (ie, buying stocks because x product WILL succeed, as compared to, MAY succeed)

I'm sure this guy does his share of market research too, and what he said doesn't prove otherwise. So he visited a couple EBs and 17 year old kids told him that XBox360 is rad and that ps2 sucks. So he is supposed to write that XBox360 is going to take over the entire market? C'mon..


By crystal clear on 10/24/2007 3:13:33 AM , Rating: 2
I certainly have read plenty of those annual reports/etc etc.

In the process developed the ability to see through them & draw the necessary conclusions-discarding the vague & exagerated claims/expectations & guess work etc etc leaving the core to be analysed.

This is would fit the defination of "forward looking statements."

Ruiz noted that worldwide demand for PCs "is very, very strong." However constraints on plastics, displays and possibly batteries could hamper sales.

AMD Q3 2007 Earnings Call Transcript

http://seekingalpha.com/article/50491-amd-q3-2007-...

This above is what I would call a well researched "forward looking statements."

Its accurate & based on facts that one finds acceptable & convincing.

The wording of the statement is carefully chosen to give clarity to the message conveyed.

Another example-

Current Outlook
AMD’s outlook statements are based on current expectations. The following statements are forward looking, and actual results could differ materially depending on market conditions and the factors set forth under “Cautionary Statement” below.

In the seasonally up fourth quarter, AMD expects revenue to increase in line with seasonality.


http://www.amd.com/us-en/Corporate/VirtualPressRoo...

Anyway I just respond to give you an idea what forward looking statements should be & be like.

Have a nice day.


Where do you sign up for these analyst jobs?
By joemoedee on 10/23/2007 12:32:09 PM , Rating: 2
So, in the month that the fastest selling game, well, ever comes out... The month that caused a huge surge in Xbox 360 sales to occur... The PS2 drops to a still strong 215k units sold. And that's the sign of it's looming doom...

Really?

I'd like to know how much this guy gets paid for his insight.

The PS2 is selling strong. It will continue to as long as games keep coming out for it.

Why? It's inexpensive.

It's half the price of the Wii with a ton of games already out, with more on the way. Additionally, the new games cost less than the competing consoles games.

Online play? It's free as well.

I don't have a PS2. (The Xbox's HDD spoiled me. I hate memory cards.) However, I'd be intrigued to buy one at say, $99 bucks new. That would seem to be a logical price drop for the holidays, if they decide to do so. If they do that, I could easily see it running neck and neck with the Wii for Holiday sales. Even without it, you'll see plenty sold for the Holidays, regardless.

For the low price of admission, you get a lot of entertainment value. Isn't that the whole point of playing video games, to be entertained?




By crystal clear on 10/23/2007 1:05:57 PM , Rating: 2
quote:
I'd like to know how much this guy gets paid for his insight.


what insight.......ha... plain guess work.

I sure you could write up a better,accurate,objective report as an Analyst. & ofcourse get quoted by everybody & get paid very well.

All you need is a MBA.


By nikon133 on 10/23/2007 3:41:39 PM , Rating: 2
Exactly my sentiments when I got PS2, last Christmas. It was about 200nz$ (should be around 130US?). Cheap, small - almost portable (not pocketable, but easy to carry on vacations). Tons of great games, and many of them Platinum (20US$, even less). We got about 40 games in less than a year - about 800US$ or more.

Since I got it, I did more games on it than on my PC. My wife will play it once in a while as well (big improvement over PC). With all bells and whistles of PC graphics and processing power, no Need 4 Speed can beat GT4 for it's beautiful playability. And platformers are so relaxing after being "stressed out" in many recent PC FPS (FEAR and likes). Beating a crap out of your mate in Tekken or Soulcalibur - or getting beaten by your wife - is also fun I was missing on my PC O:)


By Locutus465 on 10/23/2007 9:34:29 AM , Rating: 2
WII!!!!! :)




By JSK on 10/24/2007 4:56:33 AM , Rating: 2
Just because I saw this post.

It seems the GT-R 2009 Was unveiled tonight in the GT5 Prologue Demo, and its quite nice, very sharp. And its a beast on the road.

Looking at it in 1080p doesnt hurt either.




Its funny
By sj420 on 10/23/07, Rating: 0
"So if you want to save the planet, feel free to drive your Hummer. Just avoid the drive thru line at McDonalds." -- Michael Asher

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