Please note that it is 40% of US households, not 40% of US people. I also agree with Laoldar, that China's penetration will not be 40%. Lets say that one household contain 3-5 people (on average, since 1 family 1 children policy by China government, and possibility that the elderly are living with their son/daughter, unlike US). We are looking at 200 million household, minimum. With 5% penetration, it is a 10 million market. Say Wii got 50% of it, it only add 5 million unit. Your calculation of 400 million is too big.
lets face it population growth isnt going to contribute to the sales a great deal is it, i only made that reply in response to istormy (i think). but if u want to make a point of it japans population is falling and there are serious concerns over it, especially youthful population, read this
i think that the global credit crunch hasnt really been taken in by many people, sure they read warnings about it but atm they can still buy whatever they want on their card, it will be a couple of years down the line, mid generation where the consoles sell the most that it will really start to hit home, the effects on the video game industry are yet to be seen but it can hardly be good.
Yes, China has rapid GDP growth (if the government numbers are to be trusted), but their income levels are still incredibly low. Very few people would be able to afford such a product (sure, that would still be in the millions, but I doubt it would reach 30 million).
I think we're still a long way from China being a big player in the video game market.
@Laoldar,When the wii hit china it has to sell well. Every year china grows about 10%. That's massive for a country with 1billion people. My point is those people who are wealthy are going to buy more entertainment. About 40% of US households have a games console can you imagine that in china's perspective! 400million. Id say our wii stock can be filled by china alone no to mention all the other countries. That's why i think our wii stock is very under priced.
There's no way that Nintendo would push out a new system just for higher margins. They already have the highest margins (by far) of the 3 companies! In fact, their stock is at a record high due to the success of the Wii (coming right after the success of the DS).
Nintendo has never been the first company to push out a new console, and it has always paid off for them (even the Gamecube), so I don't see any reason for the company to radically change its hardware strategy.
@feelmyring, actually even if it does have 35+ by end of 2008 I'm still not confident it can reach >100. I've started shorting these numbers for a while now and I suspect I will continue to do so on the reasoning that the ps2 comparison doesn't stand because ps2 never had 2 systems computationally superior by large margins, and so I expect it will fall off sharp in 2009... say it did 40mil by fall 2008... I don't see it continuing like this for more than 4-5 years, so I don't see how it could sell more than 80mil, the only exception I can see to this is if there's a huge growth in gaming markets in poor countries. I reeaaaally doubt MS and Sony haven't yet realized how how important an cheap & motion control system is to many people and though realizing is not the same as doing I'd be surprised if in 3 years they don't try to answer somehow... they still don't have the nintendo casual media image, but they could convince their users with: "you get your hardcore games on a very powerful system AND your fix of casual/motion/alternative games"... but no, this is not what I think the main competitor will be, I think Nintendo will be phasing out it's Wii with Wii2... though I have yet to make my mind up weather i expect this to happen due to actual sales decrease in 3 years, wanting more multiplatform hardcore games or desire for higher margins...
@apujanata, Actually, DS meets that 35 million almost spot-on. At the end of 2006, their announced shipment number for DS was 35.61 million worldwide. Regional split of 14.43 Japan, 10.18 North America, 11.00 Europe.
So far, Wii is ahead of DS. It'll have to stop doing that by a lot to miss 35 million by the end of 2008. @apujanata, This is true about the PS2 "production shipments", but 70% seems way way too low. No way by the time they'd produced 35 million they had 10 million unsold.
I'm not sure where you're getting your assumptions about population.
Let's assume that last gen sales were 160 million. Let's now look at the populations of the main target territories: USA/Canada - ~333 million European Union - ~495 million Japan - ~127 million
So we have over 950 million people, without even considering emerging territories (Korea, Russia, South Asia, Australia, etc etc). That's a heck of a lot of people. Since these 3 main areas are also the main areas of immigration in the world, there are a lot of new residents each year that are the target gaming age.
Your assumptions about population growth are a bit wonky as well. Japan's growth is just above zero, hardly "falling rapidly". USA is growing at about 1% per year (or 3 million people per year). EU is growing at about .16% per year (or about 800,000 people per year). Even with "minimal" growth, you're looking at millions of new gamers every year in the main areas.
The credit crunch has yet to hit consumer spending. Spending in the US in November was actually up and "high prices" won't affect Wii sales as it's quite a cheap console price wise.
And of course China is primarily PC...no console maker has made a move there yet! Besides, there are many other nations such as Korea. Nintendo started selling (the DS) in Korea this year for the first time...a market of 50 million people. Nintendo is formally launching the Wii in South Korea and China in 2008.
@vGInfidel, I was talking about the affect of other economic factors on the console sales (as you looked only at American economic factors when talking about this). There are many areas where consoles are becoming larger including in some parts of Europe and Asia. Also, the Wii has yet to see a price drop and it still remains the least expensive console and it has remained at good sales even during the current credit crunch and economic times in America. I believe that the effect of the economy will be a bit less on the videogames sector than on other parts of the economy.
IIRC, Sony (and PS2) shipment is "Production shipment", shipped from "manufacturing shop floor" to warehouse (stuffing Sony's own warehouse). Other (Nintendo, Microsoft) is using "retailer shipment", shipped from them to "retailer shop" (stuffing the retailer channel). Therefore, you need to convert that 35 Million "production shipment" into "sold to customer" that were used by feelmyring and me in our discussion. Do you think 70% conversion too high, or too low ?
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Please note that it is 40% of US households, not 40% of US people. I also agree with Laoldar, that China's penetration will not be 40%. Lets say that one household contain 3-5 people (on average, since 1 family 1 children policy by China government, and possibility that the elderly are living with their son/daughter, unlike US). We are looking at 200 million household, minimum. With 5% penetration, it is a 10 million market. Say Wii got 50% of it, it only add 5 million unit. Your calculation of 400 million is too big.