Nintendo's Wii is still holding the top spot in its home country, but Sony's PlayStation 3 is gaining ground on the low-cost console. According to Japanese game magazine publisher Enterbrain, Nintendo sold 245,653 Wii consoles during the four weeks ending August 26. Sony sold 81,541 units of the PS3 during that same period.
Those figures translate to the Wii outselling the PS3 three to one in Japan. Nintendo's market lead is slowly but surely slipping. The ratio of Wii to PS3 sales was four to one in Nintendo's favor in July and six to one in June.
Sony is not the only game in town. Microsoft's Xbox 360 is also selling in Japan, but the Wii is also outselling the Xbox. Microsoft sold 11,288 Xbox 360s in Japan in August, Enterbrain reported.
Yankee Group analyst Mike Goodman called the console competition in Japan a two horse race. "First of all, Microsoft has never been much of a player in Japan and I don't anticipate that it will be. Secondly, the PS3 is just too expensive," Goodman said. "Sony has to make some moves it if wants to compete with Nintendo in Japan."
Can Sony Make a Comeback?
One of the most obvious competitive advantages the Wii boasts is its $249 price tag. That's about half the price of a PS3. By Goodman's estimates, Sony needs to slash the price of its next-generation console by between $150 and $200 if it wants to find its place in Japan's mass market.
Sony is plagued by another competitive disadvantage, mostly at Microsoft's hand. While more titles are now available for the PS3, Goodman noted, Sony does not have runaway hits for its platform. Nintendo has its Wii Sports, among other classic titles, and Microsoft's Xbox 360 boasts hits like Halo 3.
"Even when the base game is available across all platforms, the additional products that help drive sales are exclusive to another platform. In every case, Sony is not the content provider that's getting the exclusives on the best games," Goodman said. "This is a true role reversal. If you think back to PS2, Sony had the best and most exclusive titles."
Sony's Pricing Dilemma
Getting Sony back on track in Japan and in other markets might sound simple: Drop the price and secure some hot titles. But Sony's console life is complicated by Blu-ray. Sony already is taking a $150 loss on each unit thanks to its decision to add Blu-ray capabilities into its gaming system, Goodman noted. If Sony shaves $150 off the PS3's price, it would amount to a $300 loss on each unit.
There doesn't seem to be a good solution for Sony. The company might have boosted the number of Blu-ray-capable devices on the market and succeeded in driving down manufacturing costs for the DVD player, but that might turn out to have been a fatal mistake.
"The reality is two studios decided to drop Blu-ray last week. You have to ask if this is the right decision," Goodman said. "It may be that in two or three years it's a different story. The book still has to be written. But the early chapters are not very pretty for Sony."