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Sony Will Regain Market Leadership Position in Five Years

by Rainier on Aug. 17, 2006 @ 6:45 p.m. PDT

A Yankee Group study predicts that eventhough Microsoft is off to a fast start, launching the Xbox 360 nearly 12 months before the PlayStation 3, by the time third-generation consoles reach market maturity in 2011, the PS3 will once again be the market leader.

Yankee Group today revealed that despite intense competition from Microsoft and Nintendo, the Sony PlayStation 3 will lead sales in North America - though by a narrow margin. As a result of video game consoles’ emergence as platforms for digital distribution, Microsoft and Sony are engaged in a bruising battle for market dominance. Microsoft is off to a fast start, launching the Xbox 360 nearly 12 months before the PlayStation 3. However, by the time third-generation consoles reach market maturity in 2011, the PlayStation 3 will once again be the market leader.

According to the Yankee Group DecisionNoteSM, Can Sony Hold Off Microsoft as Video Game Consoles Emerge as a Platform for Digital Distribution?, published today, by 2011 the PlayStation 3 will have sold about 30 million units and account for 44% of cumulative third-generation console sales in North America. Comparatively, Microsoft will have sold nearly 27 million units by 2011, accounting for 40% of the market and Nintendo will have sold just over 11 million units, accounting for 16% of the market.

"With a growing installed base of connected consoles, content owners are beginning to recognize the potential video game consoles offer as a distribution channel," said Michael Goodman, Yankee Group Media & Entertainment Strategies Senior Analyst. "Additionally, these platforms will serve as a strong medium for advertising, validating the growing market for in-game and around game advertising."

Additional findings in this Yankee Group DecisionNote include:

  • Overall, fewer consoles will be sold this generation. Yankee Group anticipates that as a result of higher console prices, overall unit sales will lag the previous generation of consoles (i.e., PS2, Xbox and GameCube).
  • Microsoft will put significant price pressure on Sony during the PS3’s lifecycle. In addition to starting at a lower price than the PS3, Microsoft is well positioned to make a large price cut in the spring of 2007 and each year thereafter—putting significant price pressure on Sony.

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