WMS: Wii To Double PS3 Game Sales This Xmas?

In a new research note, Wedbush Morgan's Michael Pachter has predicted that Wii game sales will be double those of the PlayStation 3 in North America this holiday season, based on hardware sales that are also almost double as strong for Wii. Pachter notes: "We think it is important to note that we expect total U.S. software sales of only $144 million for the PS3 and only $288 million for the Wii, with additional European software sales of $156 million for the Wii in 2006." This means that game revenues for the Wii will be around 3 times that of the PS3 in the West, according to the analyst. He continues: "These figures are based upon an estimated sell-through of 1.2 million PS3s in the U.S. and a tie ratio of only two (given the likely limited release slate), and sell-through of 2 million Wii hardware units in the U.S. and 1 million in Europe with a tie ratio of three." Regarding the PlayStation 3 launch, Pachter details, for the benefit of investors: "Sony has promised launch quantities of 400,000 units in the U.S. and 100,000 in Japan, and expects to have shipped 1.0 - 1.2 million units by December 31 in North America and 6 million units worldwide by the end of its fiscal year (March 31, 2007). Sony has not disclosed U.S. launch titles, but in Japan, it expects to have 10 titles at or near (by the end of December) launch." He continues: "We believe that there may be approximately 20 games at launch in the U.S. with an additional 5 titles by the end of the year. We have made many assumptions, and speculate that Electronic Arts and Sony will have the greatest number of titles in the U.S. at launch with five each, followed by Activision and Namco Bandai with three each, although we note that there are many games with uncertain release dates. Most titles will be priced at $59.99." For specifics on Wii, it's explained by Pachter: "Nintendo has announced that approximately 24 games will be available at launch with another six by year-end. Based on confirmed titles, we expect Ubisoft to deliver the greatest number of launch titles with nine, followed by Activision with five (two are budget titles), and Electronic Arts and Nintendo with two apiece. We note that these publishers and others have several additional titles planned (but unconfirmed) for release at or near launch. Most titles are expected to be priced at $49.99, although it is possible that a handful of premium titles will be priced higher." Finally, what of the longer-term future for game companies? The report concludes that the real revenue bonanza for video game publisher may be a little further away than some might have expected, noting: "We believe that software sales for the next generation consoles will increase dramatically in the March quarter, when both are expected to be widely available in the U.S., and when the PS3 launches in Europe. We expect PS3 and Wii combined software sales to grow by 50% during the March quarter."