PS3 vs. Wii vs. Xbox 360: PS3 Demand Soaring but Sticker Shock Cometh

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Every few years, video gamers of all ages collectively rejoice with the dawn of a new generation of game consoles. The long-awaited 7th generation console battle, which began with the launch of the Xbox 360 last November, heats up in earnest over the next few days with the release of Sony’s PlayStation 3 (PS3) and Nintendo’s Wii. The stakes (and prices) this time are higher than ever.

The ubiquitous PlayStation has sat atop the gaming world for over a decade. Sony, however, has lost some of its luster of late and is counting on the PS3 to help right the ship, drive adoption of its nascent BluRay DVD format, and of course, help it maintain its video game dominance. It’s a tall order for one machine, let alone one which will shatter the price ceiling for game consoles and arrive in only very limited quantities for the holidays. These supply constraints are certainly not the elixir Sony needed.

Microsoft, with a year head start, has raced to an early lead with over 6 million Xbox 360 sales to date "” this despite not having a Halo title to drive interest. Nintendo opted out of the graphics arms race this time around, and instead has focused on a strategy of making the Wii innovative and easy to use.

Plenty will be written about how these consoles compare on a feature by feature basis; however, comparing demand for each console provides insight into how well each is faring in the marketplace even before the Wii and PS3 hit store shelves.

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Note: Compete, Inc. calculated console demand based on the number of U.S. consumers who shopped for the respective consoles at leading online retailers.

The chart above shows the monthly U.S. demand for each console. Demand for the Xbox 360 spiked to nearly 1.75 million U.S. consumers when it arrived last November. So far this year, the Xbox 360 has attracted an average of 418,000 U.S. shoppers each month. In the meantime, PS3 and Wii demand has been steadily climbing in anticipation of their release. PS3 demand surpassed Xbox 360 demand for the first time in September. Wii accomplished that same feat in October. Demand for all three consoles should spike this month with the Wii and PS3 launching and the holiday shopping season beginning.

Sony will undoubtedly sell all the PS3s it can ship this year, but what are the long term prospects for it as well as the other consoles? How long will the Xbox 360′s lead last? A sample of the findings from Compete’s October 2006 survey of active current-generation console gamers confirms that this race is anything but decided.

Though much has been made in some circles about the PS3′s hefty price tag ($600), word has apparently not reached most consumers"¦many of whom have the PS3 on their shopping lists. In fact, almost half (48%) of those considering a PS3 expect it to cost less than $300"”equivalent to the original price of a PS2. When told of the PS3′s actual retail price, 73% of all gamers and 59% of those considering a PS3 thought it was overpriced. Wii fared much better and many of its buyers will be pleasantly surprised by its value. Among those considering a Wii, 75% expected it to cost more than $200. It goes on sale for $250.

Wii’s price may be right, but a troubling sign for Nintendo emerges on the loyalty front. Nintendo’s strategic decision to simplify its console may in fact be turning off a number of its loyalists. 39% of GameCube owners are considering a Wii purchase while 40% are considering a PS3. PlayStation loyalty is considerably higher with 63% of PS2 owners considering a PS3.

It’s bound to be an exciting, albeit potentially frustrating, holiday season for you if you are a gamer or have one on your shopping list. On the one hand there is now a choice of three amazing video game consoles, all of which have their advantages: the PS3 has the bells and whistles; the Xbox 360 has Xbox Live and a library or titles; and the Wii has its franchise games and revolutionary controller. On the other hand, Wii supplies may be limited and PS3s will be near impossible to find, so getting a hold of either one will be tricky and expensive (Read: ebay markups). That being said, I’m sure Microsoft will be more than happy to sell you an Xbox 360 as a substitute.

About Matt Pace:
As VP of Retail and Consumer Products at Compete, Matt Pace is responsible for leading a team of client services professionals who deliver digital intelligence and insights to clients in the retail and consumer packaged good industries. Before Matt joined the Compete Team he was a CPA and senior auditor with Deloitte & Touche. Follow Matt on Twitter @mattpace.

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