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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F1sTDaCuffS

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the new era has arrived. next gen, about time.....

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goat2001

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I think these guys are some of the few analysts who actually know what they're talking about. There definately won't be a clear winner this generation and Nintendo will definately start to make a comeback. (I wish the Revolution would have stayed the Revolution... not Wii)

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DiscGuru101

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"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." -Yes there is. I am worried PS3 games are going to compare poorly to XBOX360 for a year.

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xbox_gamer1

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I cant wait to see new videos of Gears of War and Halo3 over Xbox live. Hopefully Nintendo can make their first great Donkey Kong game since Donkey Kong 64, I wont be getting a Wii but it will be nice to see a DK game.

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Odin897

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thisll be an interesting year

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jbrittain

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I think the analysts are wrong about the PS3 not having a price point or playable games at E3. That would be deadly for Sony, and they would never recover from Microsofts lead if that were the case. On a side note, why would anyone care about Killzone 2? The first game was a huge flop, and I really dont expect much for the second one. I think that they were right about Microsoft showing HD-DVD support for the 360, and I also think that we'll see a larger hard drive for the 360 at E3 as well. Not to mention that they're going to show a ton of games like Halo 3, Gears of War, Ninety Nine Nights, Project Assassins, etc. I think that the analysts were pretty much right on as far as the Wii goes. I believe that it's going to gain a much larger portion of the market share this time around. Nintendo just has too many good things going for it right now. It's virtual console, matched with full backwards compatibility for Gamecube titles, as well as it's amazing controller. I'm sure it wont be long before we see some kind of connectivity between the DS and the Wii as well. Red Steel looks like a great start for Nintendo to get away from its kiddie image and make people realize that they make games for everyone. I can't wait for E3 this year, I think it's going to be the best one in about 5 years.

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dillon_o4

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I would bet alot of money on there atleast being some news about Halo3 whether it was just a screenshot 2 a teaser video, there will be something.

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rgsniper1

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Reading that convinces me a could be an analyst. Before I even read the first line I quickly ran through my head more than probably 80% of what they just regurgitated from reading somewhere else. And honestly I'm willing to be more than half the people on these forums would have done the same thing. Good job guys /pats wonderful anaylyst on the back

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Tsunami18

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They didn't really predict anything that anyone with common sense wouldn't know. Pointless article.

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vyrizzle

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SO all of a sudden analysts are putting thier money on nintendo. After bashing them all through last year saying that thier next gen console was scetchy, everyone is now throwing thier money on em. And the fact that they have fallen into saying that thier new name Wii is childlike, makes a further point of how stuck on the fact that people think nintendo is for children. People need to get off thier high horses and realise that nintendo has always been in this and they always will be. Analysts know nothing of the gaming market. that is all. VIVA LA WII!!!

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jcloverboy

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I still think that if Wii stumbles out of a gate it will suffer because that controller will turn off the casual gamer - a poor start will result in diminishing 3rd party support. And we're back to Gamecube situation all over again. They need a Mario platformer at launch and Zelda needs to arrive within the first year of launch. Also needs to solidify some type of online strategy. Just having the Playstation name should be enough for Sony to take over within 2 years of launch. I will own all 3 systems so I'll want all to do well but I don't expect much to happen in terms of the balance of power. I think Microsoft may gain some ground on Sony and increase it's hold over Nintendo in North America but it won't be anything significant.

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tbolt_88

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cant wait to see wut goes down at the biggest gaming show of the year

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Imavnas

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This so called analysis has come completely off the wall expectations. Absolutely ZERO playable PS3 games? Are they NUTS? I dont think Sony would be stupid enough to offer so little in the way of their PS3 when gamers are expecting so much more. Lack of a price tag is another major issue with gamers. Without at least an approximation, or at the very least, a maximum possible price tag for the PS3 announced at E3, frustrated gamers will just go purchase a system with a set price and a solid fall lineup (i.e. the 360). Do these analysts expect Sony to just hand the reigns over to Microsoft? At least their right about Nintendo. Then again it does depend entirely on the Wii controller. That controller and its playability will singlehandedly determine the Wii's ultimate success or failure.

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Enterprise-E

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Ok.

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pat360xb

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i agree wit them on everything! weird huh

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dillon_o4

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Would anyone be surprised if sony said PS3 is delayed once again?

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decebal

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Analysts waste too much time in school (if they have any), and not enough time playing games. Clearly this E3 will be a Sony and a Nintendo show. In terms of games... there are way too many promising games to be stuck with red steal, killzone and halo. There are tons of good games for each platform. So these analysts maybe should get into the cookie business. They could analyze some different vanila flavours... They might be better at that.

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nichtnicht

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Have these analysts seen any of the games? I don't think so.

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tuff_gong92

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what if Killzone 2 is playable at E3? :shock:

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timts

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interesting to see the HDDVD/BD war, isnt HDDVD out already? but I dont see it widely on street.

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AnimeMasters

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All I want is the universal announcement that all NTSC-J to NTSC games feature dual audio!

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PopTopHero

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Viva la Wii

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gersh100

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WIIIIIIIIIIIIIIIIIII

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Raptor2155

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There maybe no playable games or a price annoucement for the PS3? That doesn't sound good.

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MrBurns

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They really dindn't say anything that I hadn't heard somewhere beore.

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Ericvon71

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Looking forward to E3, it is going to be pretty interesting.

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Schillinger

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Analysts know nothing.

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da_real_deal

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so it means the games they expect to see the biggest impact out of are red steel, killzone and halo...well i wouldnt think any of those would be right, id say twilight princess for wii, unreal 07 (or maybe warhawk) for ps3, and gears or war for 360

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kmatras69

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Who cares what they say for the most part. Just bring on E3 already!

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mbmariogc3s

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sounds good

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Thermonuke23

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hooray for E3! Lots of good games to come...

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bluedevl420

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neat, E3 is going to be sooo good this year

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Kahones

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Awesome, this sounds good.

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gertish

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that is interesting

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JTyetti

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Clearly