In a research brief entitled "Flirting with Disaster: The Trilogy, Updating Our 2006 Video Game Software Sales Forecast, Yet Again," Michael Pachter of Wedbush Morgan Securities has updated his estimates for Sony PS3 sales after today's bombshell that Sony would be cutting European and other territories out of their "global" 2006 launch plans.
Pachter writes, "There will undoubtedly be some 'substitution effect' from lower PS3 shipments, with a portion of the shortfall offset by higher sales of PS2, Xbox 360 and Wii hardware and software. We have not adjusted our model to reflect this substitution, as it is difficult to quantify, but we suspect that 25 – 50% of the shortfall in PS3 software sales (an estimated $124 million in Europe) will be offset by sales of software for the other platforms."
Pachter's comment suggests that one way for Sony to make up for their European pullback would be to aggressively promote the PS2 (price cuts, bundles, advertising) so that Nintendo and Microsoft have a harder time selling their consoles in that territory prior to PS3 launch. Are European gamers in for another PS2 price reduction?
