Xbox: An Analyst's View

One, Two, Middlesboogie · #1 03-06-2002, 02:18 PM

From Xengamers:

:

With Microsoft's Xbox available on Japanese shelves for less than two weeks, several analysts have begun weighing in with their impressions on the launch. Among them, outspoken videogame analyst for Morgan Stanley, Shunji Yamashina. This week Yamashina-san discussed his vision of the marketplace, where the Xbox fits in, and how software developers will be affected by supporting three major consoles.

Question: What are your thoughts on the Japanese launch of Microsoft's Xbox?

Yamashina-san: First and foremost, the launch was too late. While Christmas isn't as big a holiday in Japan as America, Microsoft missed out on the holiday sales period. As the numbers have shown, many people purchased PlayStation 2 and GameCube consoles in the closing weeks of last year. Secondly, there aren't enough games for the Xbox yet. The Xbox lacks the kind of recognizable brands that will sell consoles in Asia. Historically, Japanese software developers are apprehensive about supporting a console which originates from another territory. To Microsoft's credit, they've tried to fix this problem by forming partnerships with Japanese firms and supplementing development resources.

Question: What are your thoughts on Microsoft's strategy and how the Xbox stacks up against the competition?

Yamashina-san: Microsoft's strategy to sell consumers on the Xbox has been to pitch the abilities of the console, rather than what's actually available. Case in point, Microsoft's trump cards have been the built-in hard-drive and Ethernet capabilities of the Xbox. The console is being sold on the idea that Microsoft will lead the online game marketplace because they're the best equipped. Unfortunately, the majority of consumers aren't even interested in online gaming. There are studies which suggest online gaming will continue to appeal only to the high-end demographic, which breaks down to 1-2 million users globally. Speaking about the software, the success of online games depends on the level of interaction by human players. The amount of time needed to build that level of interactivity sets a high benchmark for casual players.

Question: How do you think the market will grow with the introduction of new consoles such as Xbox?

Yamashina-san: There will be oversaturation in the market, except for Europe which could continue its upward growth trend. This console generation is expected to continue growing till 2005, but based on the market cycle of the past twenty years, things seem to be leveling off. For example, while there was growth in the American market last year, some segments of the Japanese market declined. I believe the American market will experience this oversaturation as well. It's estimated that 50% or more of American homes already have a game console, compared to about 30% in Europe. As for the software market, there's still room for growth. Not only are the number of players increasing, but new demographics such as people in their 30's are playing consoles. The majority of these new console owners are casual players who will buy 1-2 games per year.

Question: In terms of marketshare, who do you see as leading this generation?

Yamashina-san: I don't think Sony's dominance will be challenged. By the end of March, more than 27 million PlayStation 2 units will have been shipped worldwide. Software developers are reassured by that, and will continue to support the PlayStation 2. As for marketshare, I believe the PlayStation 2 will control more than 50% of this generation. Nintendo's GameCube is going after a different demographic. Compared to the Nintendo 64, I believe the GameCube will have much better results in the marketplace with more attractive software. By broadening their appeal of to different age categories, I believe Nintendo could achieve a 30% marketshare. Microsoft's Xbox, on the other hand, is going after exactly the same demographic as the PlayStation. When you factor in Sony's user-base and Nintendo's market segment, there's only 15-20% left for the Xbox. While hard-core players will purchase multiple consoles this generation, they represent a small segment of the market. Xbox sales have been strong in America and the console could continue to perform well there. But things will continue to be difficult for Microsoft here in Japan.

Question: What about software developers?

Yamashina-san: In the software market there's a tendency to spread yourself thin and commit virtual suicide with a multiplatform strategy. That's why more and more you see companies targeting their games based on the audience of the console. Other developers, such as Square, have lowered their risks further by choosing to support only one console. However, there are advantages to a growing hardware market. For example, hardware providers often pay a portion of development and advertising costs in order to ensure key software from third parties for their platform. Three players in the console market is considered viable, and the battle within this hardware generation is expected to drag on for quite sometime. As a result, I don't think we'll see software prices fall. Rather, in order to ensure platform dominance we'll likely see more hardware price cuts. If software prices were also drastically reduced, the entire market could collapse.

Microsoft hopes to appeal to traditional console software developers and some new companies as well. By using familiar development environments and tools such as Windows, PC developers will be better suited to release their software on the Xbox this generation. When compared to traditional console developers such as Capcom, Konami and Sega however, PC software developers have little influence in the console market. Certainly there's a segment of fanatical players, but their software likely won't appeal to casual players.

MojoMan220 · #2 03-06-2002, 05:57 PM

The person being interviewed is obviously biased against the XBOX.

One, Two, Middlesboogie · #3 03-06-2002, 06:03 PM

No, it's actually a very unbiased account. It's written by an analyst; who specialise in looking at things neutrally.

munchman · #4 03-06-2002, 06:03 PM

i dont like that dude, he is mean to my kind

MojoMan220 · #5 03-06-2002, 06:10 PM

:

Originally posted by One, Two, Middlesboogie
No, it's actually a very unbiased account. It's written by an analyst; who specialise in looking at things neutrally.

So you are saying an analyst can never be biased. He might say he's not, but you'll never know for sure. BTW the XBOX has just been released in Japan, so he does not no anything.

One, Two, Middlesboogie · #6 03-06-2002, 06:14 PM

Nowhere does he say that the XBox has not been released in Japan. Read it carefully.

MojoMan220 · #7 03-06-2002, 06:21 PM

:

Originally posted by One, Two, Middlesboogie
Nowhere does he say that the XBox has not been released in Japan. Read it carefully.

I never said it wasn't.

One, Two, Middlesboogie · #8 03-06-2002, 06:26 PM

Oh right, I think I see what you're getting at now. But it does say at the top of the article that the XB was released in Japan a fortnight ago, which is plenty of time to have written that report.

SeaRex · #9 03-06-2002, 06:28 PM

There isn't anything biased about the review. Everything in it is true. However, I think Middlesboogie has made it blatently clear that she isn't an XBox fan...

MojoMan220 · #10 03-06-2002, 06:33 PM

I'm just saying that the guy does not seem to aknoledge that XBOX is a worthy competiter against the Gamecube or PS2, he doesn't even mention that there is some good in XBOX.

(Sorry about the spelling errors.)

MojoMan220 · #11 03-06-2002, 06:37 PM

He says it probably won't appeal to casual gamers, I'm one and I like XBOX. Also, I don't think this guys even tried XBOX. Halo just got game of the year by many, many game sites and magazines. You need XBOX to play Halo.

SeaRex · #12 03-06-2002, 06:50 PM

When he says "casual gamer" he means "casual Japanese gamer". And it won't appeal to them becuase the, like he said, the prime buying season has passed and their aren't that many games for the XBox. Even in Japan, sometimes change isn't fully accepted at first. Things aren't looking good for MS in Japan.

MojoMan220 · #13 03-06-2002, 06:59 PM

XBOX has just been released in Japan, of course there are few games!! I need more japanese opinions instead of some guy who I have never heard of!! BTW, XBOX has a great number of games for a launch, more then gamecube and PS2 did!!

SeaRex · #14 03-06-2002, 07:04 PM

Yes, but the PS2 and Gamecube have more games now than the XBox does. Earlier launch dates, dig? Although this is just speculation, I don't think the XBox would have that many games that would appeal to the Japanese taste. Hell, even JGR didn't fare well in Japan (go figure! Anime not selling well in Japan!), so JSRF probably won't do well either (but I hope it will so I can get a third installment!).

Joe the Intern · #15 03-06-2002, 09:50 PM

Has everyone forgot about Europe? Sure, the Japanese launch is unclear so-far (IMO), but what if the launch in Europe is as good as it was in the US? Maybe better? If that happens, Sony's dominance may definitley be threatened. I'm not so sure that the XBox is selling bad in Japan, because I heard before launch about every pre-order selling out. It might not be true, but I think it was. Anyway, analysts predicted XBox would do badly in the US too, but it seems that they were wrong. Maybe this guy is wrong. Then again maybe he isn't. We won't know until things have settled down, will we?

BTW, no offence, but Middlesboogie, you seem to be trying to post as many bad things about the XBox as you can.

Doug · #16 03-06-2002, 10:42 PM

:

Originally posted by MojoMan220
He says it probably won't appeal to casual gamers, I'm one and I like XBOX.

He's not talking about the XBOX, he's talking about Microsoft's marketing strategy. The point he's making is that MS is touting the XBOX's online capabilities instead of available titles, which is an attempt to appeal to the high-end gamer rather than casual gamer. The analyst thinks that is a relatively small share of the market. That doesn't mean he thinks casual gamers won't like XBOX, it means he thinks that there's a big casual gamer group out there that MS ought to throw some advertising $$ at. He never makes one comment, at least that I noticed, that denigrates XBOX as a console.

As far as a competitor with GC and PS2, the point is that GC appeals to a different type of gamer (generally younger, as I see it), and PS2 appeals to the same type of gamer as will XBOX and already as a very-well established user base. Therefore, MS has an uphill battle trying to establish a decent marketshare. The reason he doesn't say if XBOX is good or bad is that these are issues that Microsoft faces no matter how good XBOX is.

I found the article very neutral and unbiased. If there is a sniff of bias in the air, I think it's probably because this article is offered by 12M, who has made no small point of her bias for PS2. You can't blame her for that after she paid big money for one, and when she's perfectly happy with it.

One, Two, Middlesboogie · #17 03-07-2002, 01:23 PM

:

Originally posted by MojoMan220
BTW, XBOX has a great number of games for a launch, more then gamecube and PS2 did!!

Rubbish. The PS2 had 50 launch titles, the XBox had thirtyish.

Statikk HDM · #18 03-07-2002, 11:02 PM

I really don't care about the quantity of the games but the quality of 'em! I have the Xbox and love it! PS2 never got me by the heartstrings, but i just really like the XBOX. And maybe the type of ad stressing internet capabilities isn't bearing heavy on peeps minds now, but when a bunch of kick ass games for the box go online and PS2 owners need to by special shiz just to play online and have less and lower quality online games to play, you can bet your bottom dollar it will be a serious deal! In fact, some people are even playing games like Halo and Tony Hawk 2x on the 'net as I type this! Get tricky and true 'cause the Xbox is gonna beat you PS2!

One, Two, Middlesboogie · #19 03-09-2002, 07:40 AM

I think it's quite funny when people defend their favourite consoles so valiantly. Would it do the same for you?

That's why I have no qualms about standing up for the PlayStation 2 so much... I am one of the few people to have a sentient PS2; after my brother died it fused itself to his brain.
Taking Scott's advice, I also added a bazooka and some internet capabilities to it. I am actually surfing the web using my PS2 and a USB keyboard as I type! The only problem is that it sometimes doesnt let me use any punctuation And it eats all my cheese.

For the record, I don't actually hate the XBox. I do want one; I'm only taking the piss out of it because I haven't got one yet.