E3 06: Analysts offer E3 preview

Michael Wallace and Stephen Tam with UBS Securities give investors a heads-up on what they expect from next week's big show.

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UBS Securities analysts Michael Wallace and Stephen Tam have released an investor preview for next week's Electronic Entertainment Expo, and the pair is making some interesting calls on the industry's near- and long-term future.

Heading into the next-generation of console wars, Wallace and Tam caution that the coming battle won't be waged like the last one. With the PlayStation 3 and the Xbox 360 priced higher than consoles in years past, the pair expects fewer gamers to own both platforms, while Nintendo's Wii is a unique enough piece of hardware that companies won't be able to blindly port titles to it from other platforms.

"How the software companies fare over the next several years will not be simply a matter of mass-producing games across all platforms," the report states. "They have to make the right choices and support the right platforms, since there is no clear-cut winner in the hardware market like there was in 2000 when Sony launched the [PlayStation 2]. Guessing the installed bases for each platform is harder than it's been in the past."

As for what is expected at the show, they break it down by console. Despite Sony's assertion at the Game Developers Conference 2006 that Warhawk will be playable at the event, they don't expect the PS3 to be playable, and they don't expect Sony to put a price tag on the console yet.

"More importantly, what we will be looking for is what kind of software there is for the PS3 and how far along it is," they write. "There is still a lot of frustration from third parties regarding Sony development kits and their ability to get quality software done in time for the launch."

On the PlayStation Portable front, Wallace and Tam are expecting a hard drive-equipped version of the system to debut. And while they're also projecting a price cut in the works, they say Sony might put it off until closer to Thanksgiving.

Moving to Microsoft, Wallace and Tam are focusing on how it can take the best advantage of its year-long head start in the console wars. The note says the keys for getting people to jump on the 360 instead of waiting for a PS3 are "momentum and more software, pure and simple."

As for countering the PS3 launch this fall, they suggest the software giant might lower the price of the Xbox 360 by somewhere between $50 and $100. They also expect Microsoft to show its HD-DVD add-on at the show, although they don't expect the add-on to have an impact on the format's struggle with Blu-ray for market supremacy.

Turning to Nintendo, the company's redubbing of the Revolution as the "Wii" hasn't gone over too well with Wallace and Tam, though, ultimately, they don't believe it matters. "Seems like a kiddie name to us, but if people like the games, who cares what it is called," they remark.

They project a fall release at a $199 price point for the Wii, with Nintendo's other existing hardware making some news as well. Wallace and Tam peg June as a possible release date for the Nintendo DS Lite, and they expect a GameCube price cut to $79, possibly to take effect during the show itself.

While they don't venture a guess as to the ultimate winners and losers in this round of console wars, Wallace and Tam are positive on the Wii and favor it to gain some market share for Nintendo this time around.

"All the signs are pointing to a Nintendo revival with what they are doing in the console market," they suggest. "The company has a great chance to expand out of its kids-only market and gain a bigger piece of the cross-ownership pie among platforms."

As for specific reasons why, they expect much better third-party support than the GameCube received because of cheaper, simpler development compared to the Xbox 360 and PS3. And given the Wii's unique controller, they expect more Wii-exclusive titles from the third parties. However, they insist Nintendo needs to do a better job supporting the console with its own games than it did for the GameCube launch.

"In order to succeed, we need to see real first-party support early in the system launch window. This means that we need more games like the groundbreaking Mario 64 for the N64. At the show, we will be looking for Mario, Zelda, Metroid, Donkey Kong, and other staples of the Nintendo lineup."

The pair also offers their take on what some publishers will be showing at the expo, and while most of the games they expect are a given to appear (Gears of War, Killzone for PS3), there are some notable exceptions. For one, they expect the next Halo to be featured at the show (not a big stretch, but still not something Microsoft has confirmed). They also mention a Tony Hawk Downhill Jam in Activision's roster, noting that it will be a brand extension intended to target younger consumers.

Despite all the excitement about next-gen systems, the pair still expects the current industry-wide, transition-year slump to continue for 12 more months. They also expect it will be that long before Sony has enough supply to meet demand for the PS3.

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nightseye

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is sony gonna show anything about a new controller for the PS3??

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SithHappens

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i dont know, its seeming like its gonna be a pretty predictable E3. even the assumed secrets arent big secrets look at Halo 3, Bungie has been tight but we all kno what they're up to. Oh well, E3 will still be awesome.

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ds_null

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Interesting, I was guessing some of that. I'm guessing that the console wars are going to be extreme this time around. I think their will be less fanboy's with more of a struggle on the business side of things.

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Killagorilla27

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Really pumped for E3 this year. More than I have been since...ever. 04 was exciting with the "last of the GREAT games" for current-gen consoles - and the introduction to the new handhelds... Last year was really about everyone showing off their new consoles - not so many games - which I thought was pretty disappointing... But now, we get to see the future of the Xbox 360, hopefully some playable games for the PS3 (no more disappointing pre-rendered Killzone trailers) and Nintendo should FINALLY have some games on display for the Revolution (I refuse to call it the w-).

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ffmegaflare

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Kinda bummed that the PS3 might not be playable. Still hoping for the best though.

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blackIceJoe

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really nice

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johnnyboy232

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Weeeeeeeeee!!!

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neoand12

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Sony better have the PS3 playable or its going to get ULGY!!!!!!

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sacul555

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@gamespy123 WTF are u talking about the psp not having any compition. Right now the the DS is major competition for it because the PSP is considered a handheld console not a portable video player.(even though its more and more often only being used for video uses.) Also because of the video for it is popular a hard drive would help it alot. Also releasing a updated console normally extends the life of a console because it improves the problems it was having. Without the SP the GBA would have more then likely lost alot of its market share by now.

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Tomtomtom1990

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Has anyone noticed how "Market Analysts" don't know crap? Seriously, they know just as much as anyone else on the internet, and all of their "Analysis's" are just opinions.

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jono128

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Seems to be bad news for Sony, good news for Nintendo.

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gamespy123

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That PSP harddrive prediction would be a disaster. First of all, it has just been over one year since the PSP's first release. Who is SONY becoming: Nintendo and Nokia? Longevity helps a product. ESPECIALLY CONSIDERING THAT THE PSP DOESN'T REALLY HAVE MUCH COMPETITION CONSIDERING THAT DS DOESN'T OFFER VIDEO PLAYBACK, AUDIO PLAYBACK, RSS, INTERNET BUILT-IN AND SUPPORTED. Just a thought.

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Splincir

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It didn't really say (as some people here are implying) that Nintendo was going to take the lead this gen. It just said they are going to gain market share (which I agree with). And I think MS will gain market share also.

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Kempatsu_basic

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wow - and how much do analysts get paid? im in the wrong business. Viva la Wii!

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cluelesspunk

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Microsoft capturing the show at all depends completely on Halo 3. Otherwise, it's going to easily be a Nintendo/Sony E3 this year.

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comthitnuong

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cool

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sacul555

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this is the first time i actually agree with an anylist. lol. Honestly they are just repating the same thing that diffrent game industry reporters have said all along. Matt Cassimbina for IGN has said almost the same things about the revolution in better detail. Who didnt expect halo 3 to be at E3?(im personally think that its gonna be in playable form and a release date will be announced{i see this as the only way microsoft has a chance of combating the announcements from sony and nintendo this year, but i may be suprised by something else they do}. The only thing that suprised me is that they dont think the PS3 will be playable. I honestly dont see how sony can be insane enough not to have a playable ps3 there. IF they didnt have a playable ps3 at e3 sony will lose alot of crediablity and with microsoft having already luanched the 360 they cant afford to do that. But who knows E3 tends to have some of the best suprises of the year. EDIT: after reading through alot of these post i see that people think that it would be deadly for sony not to release a price at E3. However i think its the other way around i think that it will be dead for sony to release a price at E3. E3 is undoublty the biggest event for the game industry in the year. This means at E3 you always want to only show your strengths because if u show your weakness it will be highly covered at a point when the most people are watching. For sony everyone knows the price is going to be high and if they announce it at E3 and its 600-700 dollars thats going to distract from what they want to focus on there actual system. Its like with nintendo announcing the name of there system before E3 was a good idea becuase they knew it was going to have a bad recation in the US and that would distract from the system. Everyone is already getting used to the Wii name so it wont be a big deal at E3. However if they announced the Wii name at E3 it would have been a huge deal. The same princable goes for sony releasing a price at E3 could prove disasterous for them. We will see what happens when it happens but i hope this explained why releasing a price at E3 will do more harm then good.

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Doritoboy69

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I'm happy that there is gonna b a 360 price drop.

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shockwave04

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This E3 is going to be awsome.

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777rak

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Man I am so looking foward to this year's E3 show.

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BTBAM127

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i love G4TV Olivia is HOT!

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SolidFear

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Ah well, it's just 'analysts'...Metal Gear Solid 4 will the best thing there. I think Sony has a lot up their sleeve right now...This is an exciting time.

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barulez

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same here, guys. E3 is coming to town and it will show on playstation.com, gametrailers.com and G4TV for free.

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tait007

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Sound good, although I do expect Sony to anounce a price for PS3. It's what the public has been waiting. And I think they will show why the PS3 will be worth the wait.

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Dups79

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Excellent preview. I wish flamewars were more intelligent conversations such as this compared to the mud slinging crybabies we have. Alas :P

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sgtsaville

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Just show Halo already...it's killing me!! Some playable killzone would be nice as well!

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duque501

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Ok, so this guys are sayng nothing, they only sayd that any of the 3 companies can win the race if they do theyr best,

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psycomantis_32

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I just cant wiat for them to show off Red Steel. That game's gonna rock your socks off.

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easy33

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The future will be interesting for all of gaming.

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masiisam

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Puhhh... Whatever E3 is just a few days away. We will find the facts then, but for the tools that criticize the analyst with there own opinion. That

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decebal

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I thought about it... and they may be right about the PS3. They may not have general public access to their games... There is a video on the net, showing MSG4 in real time, while the person controlls it.... So... something like that, may be possible, to show everybody they are not fooling around when they say their videos are real time. However, acctual public access, to games... it's unlikely. Microsoft didn't have it last year.... Nintendo, doesn't have it this year.... I mean it's way to early. Maybe fatal inertia. My friend works for Koei, and he said, they are pretty much done with the game.

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psycomantis_32

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well, i disagree for now, but you never know, once i actually use one i might end up loving it.

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BTBAM127

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true but change is good

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BTBAM127

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the ps3 controller isent all big and bulky its small and looks confortible

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psycomantis_32

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I just think they should stick with the Dual Shock. That's all.

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FuguNabe

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Nothing new said here. Most of the more unbias gamers realised the likelyhood of this outcome at the show. Analyst often speak the obvious but some are a little more critical than others. These guys seems to be guessing the short-term obvious. They are right though that this gen could be dominated by anyone depending the reception at E3 and various other circumstances. Hard to predict I'll say to even the best analyst.

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BTBAM127

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whats bad about the ps3 controllers?

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psycomantis_32

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Sure..... and the original Xbox controllers were just plain awesome.....NOT

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BTBAM127

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the controller looks fine! ihope they keep it

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psycomantis_32

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maybe sony will announce that they canned the "batrang" controller. that'd be cool.

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REVOLUTIONfreak

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eh...im not big on analyst predictions, most are too favorable to a certain company, and i think that alters their judgement a bit. Otherwise I predict some of this stuff to be fairly accurate

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Blazer88

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Wow,..pretty good calls.I wouldn't think Sony would show up empty handed,...no games?No real hardware?No price?that seems like a disaster to me.but then this whole lead up to launch hads been pretty sloppy anyways,so then again,.maybe it wouldn't surprise me much if they stumbled some more.there right on with the Wii name,..it's is goofy but wonlt hurt it at all because the name doesn't matter.

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Khimarhi

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This is my favorite time of year. Nothing else comes close. Let's see a good show E3!!!

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GSyyskylinedude05yyGS

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cool

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Omega-Ing

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I can't wait to see some Wii games!!!

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cyrax05

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This is either the first or second time I've seen an analysts not go w/the all-to-popular: "Xbox360 will lead for 2yrs, then PS3 will come into #1 place. *Nintendo what?*"

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pop4

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ps3 is right on the track now.

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drakanguard

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Funny how everyone bashes all the other analyst, but when these two talk and dont mention any winners, and say something good about Nintendo, everyone's like wow these analyst must be right and they must know something. We still have to remember that gaming analyst have a really bad track record, and we shouldnt start believing them now.

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sabru8

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sweet

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ebonyflame

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With the exception of the PS3 not being playable, I actually agree with the analysts this time.