Kinect will sell 25 million by 2014
Analysts also predict a 74m 360 base.
Do analysts believe Kinect can do the business for Microsoft? Yes - by the end of 2014 they say Kinect will have sold 25 million units.
Another way of looking at that is one in three Xbox 360 owners will have bought Kinect by then, because they also believe the total console installed base will be 74 million.
That forecast was made to Eurogamer by Screen Digest analyst Piers Harding-Rolls, and his peer Colin Sebastian from Lazard Capital Markets reckons that makes sense.
"That seems like a reasonable estimate," Sebastian told Eurogamer. "Assuming that Microsoft offers price reductions over time to drive demand, and that the Xbox 360 continues to sell.
"The other key variable will be the availability of quality software, and whether third-party publishers can bring to market compelling applications for Kinect."
Wedbush Morgan analyst Michael Pachter dived deeper into those numbers. "There are 40 million Xbox 360s out there. Presumably, Microsoft will sell around 8 million a year for the next few years, so they could get up to 70 - 75 million by the end of 2014," he calculated.
But Pachter was less keen to forecast numbers overall, calling it "foolish" without information on bundles and pricing.
"Let's say that the device costs the $56 it was estimated to cost and that the cost comes down to around $30 with volume manufacture. What happens if Microsoft decides to include one with every console?" he reasoned. "Then they will sell 32 million, plus whatever they sell before the bundle. What if they cut the price to $30 and include a free game? Then they'll sell 70 million.
"It's simply too early for me to guess on Kinect," concluded Pachter. "I'll go with the 74 million Xbox 360 estimate, as that presumes sales at a constant rate the next four years, which is not a particularly bold prediction."
Microsoft is spending a fortune on Kinect advertising.
Microsoft will spend an alleged $500 million advertising Kinect this Christmas, and has already splurged some of that cash hiring out New York's Times Square for an entire evening's festivities.
So far Kinect is off to a good start, having shifted one million units in 10 days - a pace that's capable of reaching the target of five million sales by the end of 2010. Providing stocks last.
Piers Harding-Rolls lowers that Kinect estimate to 4.5 million. What's more, he reckons Sony's understated motion rival PlayStation Move will sell a "similar" amount.
"On a worldwide basis I think this makes sense," agreed Colin Sebastian. "In Japan, Move has a huge advantage, but in western markets I would give Kinect the edge."
PlayStation Move arrived a month and a half earlier in Western markets than Kinect. Japan welcomed Kinect in late October.
Michael Pachter has a radical idea. "If Sony management is smart (sometimes they are really smart, trust me), they'll bundle Move with the PS3 for free and keep the price at $299," he said.
"I can't believe that Move costs more than $40 to make (it's just a controller and a camera), and think it's probably more like $20 - $25 to manufacture. They're due for a price cut, and bundling it with the PS3 would be absolute genius.
"Of course," he added, "I thought of it and am telling you this now, just like I told you and others that Nintendo should release an HD Wii - and look where that got us."
Nintendo ropes celebrities in to advertise Wii.
What of Nintendo's Wii? It's easy to see doom and gloom when Satoru Iwata uncharacteristically jumps to the defence of Wii sales publicly on the internet but, in truth, it's the original motion-sensing console that still sets the pace - and will do even in the face of Kinect and Move this Christmas.
That's what Piers Harding-Rolls believes. "There is, of course, overlap between the types of consumer targeted by Wii and Kinect, but at this early adoption stage for Kinect many users are existing 360 owners so the impact on Wii's current decline is relatively limited," he said. "Competition between Wii and Kinect will grow over time."
"This Christmas I still expect Wii to outsell the other consoles, although significantly down on last year's record-breaking holiday period, and next year the opportunity to cut the price of the Wii could help its competitive performance."
Nintendo has famously never lowered the price of Wii. In Europe, the price even temporarily rose to offset a weak pound. Wii sales may have slumped compared to their own record-breaking past, but simply nudging the price downwards could give Nintendo the momentum it needs to compete with Kinect and Move throughout 2011.
"Hardware price cuts always stimulate demand, and I think all three platforms would benefit from a price reduction next year," Colin Sebastian advised, before recognising that "there is more urgency on the Wii given the softer selling trends this year".
"Last year, Wal-Mart drove sales of the Wii up 50 per cent in December with a $50 gift-card promotion. I'd say that a $50 price cut for the current Wii bundle would have that kind of impact on sales," Michael Pachter pondered.
"Nintendo could get back to 300,000 - 350,000 units per month in the US if they cut price by $50 (talking non-holiday months)."
What Sony's PlayStation Move can do.
Piers Harding-Rolls concluded that the "real crunch" for Kinect comes next year. By then, the initial novelty will have worn off and the success of the sensor will rely on high-quality games and experiences. And the same can be said for PlayStation Move.
At the moment, Kinect sells for a considerable £130, which includes bundled game Kinect Adventures. You can get better value for money purchasing the 4GB Xbox 360 S console with Kinect and Kinect Adventures for £250.
No doubt the initial Kinect pricing is intended to boost Xbox 360 sales, then. Does that mean a price drop for Kinect on its own is coming? "No, and they will only consider a price drop if it doesn't sell and not before the end of next year," declared Harding-Rolls. "More likely they will make attractive hardware and software bundles to drive adoption."
Colin Sebastian said Kinect demand is strong enough to hold a price-drop at bay - for now. "At this point it appears that demand for Kinect is strong enough that a price cut won't come until 2011," he said.
"We do believe that Microsoft has room to lower the price from a cost standpoint."
Kinect launched earlier this month around the world. Eurogamer reviewed the Kinect hardware as well as launch games Kinect Adventures, Kinectimals, Dance Central, Kinect Joy Ride, Kinect Sports, Fighters Uncaged and Your Shape: Fitness Evolved.
PlayStation Move arrived here in mid-September and was dissected by Digital Foundry. So far Eurogamer has appraised Start the Party, Sports Champions, Tumble, The Fight and SingStar Dance.
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Comments (70) Latest comment 2 years ago
Comments for this article are now closed, but please feel free to continue chatting on the forum!
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and seriously, do these guys actually get paid for coming up with these meaningless crystal ball predictions? Where do I sign up?
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With a bit of luck all consoles will end up with similar numbers by 2014. Would be a good start for a big next gen battle. Good for us.
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Come on EG, be honest, you made that name up!!!
Anyways, i guess the 2014 prediction means that Kinect will be compatible with the next xbox too.........cant helping thinking that Kinect 2 would be on the agenda though?
/ Jumps the gun
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The next XBox will probably launch with an updated Kinect sensor packed in. That makes sense. Depending on what publishers or indies come up with, MS will improve certain aspects of the sensor before the next gen launches.
>20 dollars per unit on advertising, if they don't spend any more than the original 500 million dollar budget in the next 3 years....bargain.
You assume nobody buys Kinect games? A lot of Kinect people I know bought 2-3 games with the hardware.
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It was longer than I expected.
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Kinect is released tomorrow in Japan...
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You assumed I mentioned profit and loss margins....Here's a hint...I didn't. If you have an advertising budget of 500 million for a product and you sell 25 million units, its an advertising outlay of 20 bucks per unit...no matter how much you games you sell along with it.
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If only
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Still, I love my kinect
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I assumed you were trying to point out something other than 500 divided by 25 equals 20. Anyway... thx for the err... "statement".
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Yes.. he needs more time to guess properly...and still be wrong...
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Although if Sony do not make a complete hash of their next gen launch I may end up going back to them
Either way move and Kinect need to stay optional I dont want to pay extra for something I don't want or have any interest in
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Last place this time round could mean withdraw from the games industry in their shareholders eyes (imo). Microsoft are already a shadow of their former self from 15 years ago, and the problems look like they will get worse while they fight battles on too many fronts.
Google in the online space; Apple & Linux in the O/S & Office tools space; Apple/Nokia/SE/Google in the Mobile phone space; and Nintendo/Sony in the waggle and core gaming space.
They are only really winning in one of those spaces, and Apple have their sales momentum for the home PC market now and are growing, while Windows market share is declining.
When you consider they already scrapped a lot of their internal dev teams in the economic downturn, it is no surprise that big noises like Molenyux are now saying they have been influenced by Ico and respect Playstation. I still think Microsoft are on the fence about whether they will do a 360 replacement ever.
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I think I'll become an analyst as apparently the only qualification is spouting off some future numbers and crossing your fingers.
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Seriously though, I've been through numerous Xbox 360s including five brand new ones, one of which failed after an hour, and two repairs (I currently own the new Xbox 360 S) and I would imagine that those five new units all count as separate sales. Does anyone know?
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That should read 'But i didn't think better of it, and still posted it anyway, because i'm a right spastic'
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The main distinction between the two companies for me, is that Sony still own a large content of Music, film and TV, as well as patents for physical devices and audio/video professional processing algorithms that make them important as a content and technology provider in the multimedia future.
If all PC needs are largely converged in to a handled phone or PDA in the coming years (that use a Cloud for additional services). I think it is logical that the company that produces the most popular handheld devices(in the phone space) will hold all the aces, in the same way the operating system was the key for the last 20 years to Microsoft's worldwide success.
So even with Microsoft invested in Cloud technology the landscape is going to change rapidly over the next decade and they need to choose their battles quite carefully (imo).
The console market could still be a big win for them, but I suspect they were expecting to repeat Sony's successful transition with Playstation, and as yet that hasn't happened and there is no indication that it will happen either.
MS Office file editing through hotmail, is already a sign of the changes and a potential £350 of lost revenue per laptop/PC, and a reaction to fend off the increased use of OpenOffice (which is free).
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Paul the Octopus. He's dead now. Never trust a dead octopus!
[link url=http://www.guardian.co.uk/football/2010/oct/26/paul-octopus-dead-psychic-world
]http://www.guardian.co.uk/football/2010/...[/link]
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Are there really that many people with living rooms large enough to cope? We struggle with having to clear out space in a 16X16 room and then still have to play at a diagonal.
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Space will be an issue and those mainstream buyers who won't have done their homework will just think "Kinect doesn't work!" For me to enjoy Kinect to its full potential I would have to consider altering my living space to the extent of getting rid of my 3 grand designer corner unit.
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For example, there is something like 23m households in the UK but the number of DVD players that have been sold will be much greater than that, as consumers get rid of their old systems. So to calculate the installed base they will have to account for duplicates and replacements otherwise you would have a household penetration rate (or installed base) of over 100% (when it is probably something like 80-90%)
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Nice bit of fiction you've come up with. Makes no sense.
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By bringing out great games that is, right Nick?
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From the other side of the coin did you not think that of Sony who have gone from being the global games console leader for two generations to playing catch up with the new boy may be asked by their shareholders to abandon the console market and focus on being a publisher? Why haven't Sony abandoned the music player market after Apple pinched it from them?
We didn't see Nintendo beat a hasty retreat after the Gamecube to focus on pachinko machines and one-armed bandits.
Organisations will not easily abandon markets, even if they are not doing as well as planned, as doing so generally makes it far more difficult to re-enter. All organisations are fighting off competition on all fronts, that in itself is the nature of business to compete, innovate and dominate.
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Nice bit of fiction you've come up with. Makes no sense.
You beat me to it Noble6, I was thinking the same thing.
25 million Kinects sold by 2014? Not a chance. I'm guessing 10 million. People will be tired of the fad that is Kinect in a year or two and sales
Deja vu!! Haven't we heard this same story told at the beginning of this generation when the Wii hit the market. As always, armchair forum poster never seem to understand that they have no clue how the general gaming public works.
@Sabreman64: Totally agree. There's no way in hell that it's going to sell that many in that time. It would most likely be another eyetoy in another year or two from now.
The difference is that MS is putting in the money to market their eyetoy like Nintendo marketed the Wii. Maybe if Sony had the same kind of commitment to the eyetoy it would have sold better especially if they put more effort in getting developers to develop for it. Comparing Kinect to the eyetoy show just how much you do not understand the difference in how both technologies are handled by the two different companies. You are making assumptions on what you like instead of looking at the conditions that constitute such analyst.
There seem to be a lot of conditions that is helping MS sell kinect to the public and it's not based on what the vocal minority feel are winning conditions. So far it appears that MS is hitting all the right marketing steps. I have no clue and will make no predictions on how well Kinect will sell over the next few years but reaching that 25 mill number probably is not that far fetch as many would think. Hell I never thought the Wii would sell as much as it did and I was totally wrong when I predicted it success. Kinect enters a market I do not fully understand but it's still a wide open market that isn't fully tapped.
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How many add-on's/peripherals do you see succeeding later on down the road? Not too many. That's what Sabreman64 is talking about.
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Wiiboard
Hype helps, Marketing also helps. How many peripheral gets a 500 million ad budget. How many peripheral make it to big time casual TV talk shows like Kinect. In other words, there are more conditions to look at for Kinect then the surface. To expect it to fail because you do not like it is way to narrow of a mind set.
The key is that MS isn't treating Kinect like a peripheral which means that they might have a greater chance of greater sells if they throw their weight behind the device.
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- Kinect will sell shit loads and make the 360 replace the Wii and hand the casual crowd to Microsoft and also shift MS's focus on gaming.
- MS will ignore its bread and butter and only 3rd party publishers will support the platforms real gamers.
- Wii 2 will not be as popular as the Wii but will always have core Nintendo support.
- Sony will release some AAA games to make the PS3 the hardcore gamers platform of choice.
- Move will be shipped with the PS3 and will never really receive any casual appeal.
I've most likely got it all wrong but everyone else is at it and I'm bored watching children in need 'cos the missus wants me to watch it with her.
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Actually, you might be right... MS dropping full support for core gamers could be a real option if they keep their eye off the ball long enough with this motion stuff.
That would be a great shame, as MS really nailed the core gaming market with the 360 line up to date. If Sony could somehow move in on the Western core games market, they might start to get some real success. Remember MS/Sony, to a huge number of gamers who spend A LOT, we want good, hard solid adult game experiences.
Film, music, motion devices, SKY, BBC iplayer etc etc are just flim-flam. Give us what we want!!! We have money!!!!
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in fact have just dropped their overpriced live component as well for the free playstation live...so there you go microsoft your price rise worked!
maybe if it was 50 dollars...maybe...or not...could buy a game for 50...
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so what are your thoughts on how well sony is doing.
@SwitchBladeUK
i agree 100% a new console every 5 years would be perfect.
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How to be an analyst:
1. Say something completely stupid and shocking, which you know will please/upset fanboys
2. Post said thing to every single website
3. ???
4. Profit!
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Not exactly success of the year eh M$?
Looks likeM$ have the next Tony Hawk skateboard peripheral on their hands!
teehee