Both Sony and Microsoft are set to launch the PlayStation 4 and the Xbox 720 during the fall of this year and that means we’ll soon have three new home consoles competing for the attention and the budget of players.
One analyst believes that despite high expectations from hardware makers, the coming devices will sell less than the current ones and companies will be hard pressed to drop prices fast and to compensate by launching and selling more video games.
Billy Pidgeon, an industry watcher for Inside Network, tells GamesIndustry that, “I believe the console business has changed fundamentally, and there will be slow uptake and increased downward price pressure not only for the Wii U but also for the next generation from Microsoft and Sony.”
He adds, “Nintendo can realize strong profits with a smaller base if Wii U and 3DS gamers buy more software, particularly paid digital downloads.”
Much of the future of hardware depends on the actual specifications of the Xbox 720 and the PlayStation 4, which will not be available for quite some time.
Rumors have suggested that Sony and Microsoft are interested in introducing more motion tracking capabilities to the consoles and that digitally distributed content will become more important than it is today.
Market success will also be determined by initial prices and the experience that Nintendo is having with the Wii U suggests that most gamers will not be ready to pay more than they do for a mobile phone on their next gaming hardware.
In 2014, the market might see big price drops as long as sales stay low and gamers could also benefit from the spread of the free-to-play business model for an increasing number of titles.
Nintendo is expecting to sell 5.5 million units of the Wii U home consoles before the end of March.