Yankee Group Finds Sony will Hold off Microsoft and Nintendo in Video Game Console Sales; Third-Generation Consoles Emerge as a Significant Channel for Digital Content Distribution

Business Wire, August 16, 2006

BOSTON -- Yankee Group today revealed that despite intense competition from Microsoft and Nintendo, the Sony PlayStation 3 will lead sales in North America - though by a narrow margin. As a result of video game consoles' emergence as platforms for digital distribution, Microsoft and Sony are engaged in a bruising battle for market dominance. Microsoft is off to a fast start, launching the Xbox 360 nearly 12 months before the PlayStation 3. However, by the time third-generation consoles reach market maturity in 2011, the PlayStation 3 will once again be the market leader.

According to the Yankee Group DecisionNote(SM), Can Sony Hold Off Microsoft as Video Game Consoles Emerge as a Platform for Digital Distribution?, published today, by 2011 the PlaySation 3 will have sold about 30 million units and account for 44% of cumulative third-generation console sales in North America. Comparatively, Microsoft will have sold nearly 27 million units by 2011, accounting for 40% of the market and Nintendo will have sold just over 11 million units, accounting for 16% of the market.

"With a growing installed base of connected consoles, content owners are beginning to recognize the potential video game consoles offer as a distribution channel," said Michael Goodman, Yankee Group Media & Entertainment Strategies Senior Analyst. "Additionally, these platforms will serve as a strong medium for advertising, validating the growing market for in-game and around game advertising."

Additional findings in this Yankee Group DecisionNote include:

--Overall, fewer consoles will be sold this generation. Yankee Group anticipates that as a result of higher console prices, overall unit sales will lag the previous generation of consoles (i.e., PS2, Xbox and GameCube).

--Microsoft will put significant price pressure on Sony during the PS3's lifecycle. In addition to starting at a lower price than the PS3, Microsoft is well positioned to make a large price cut in the spring of 2007 and each year thereafter--putting significant price pressure on Sony.

NOTE TO EDITORS

For interviews contact:

--Michael Goodman, Senior Analyst, 617-880-0317, mgoodman@yankeegroup.com

--Christina Oh, Yankee Group Public Relations, 617-880-0238, coh@yankeegroup.com

YANKEE GROUP (www.yankeegroup.com)

Yankee Group is the expert in navigating the global connectivity revolution. For more than 35 years, Yankee Group's strategic vision, research and analysis, quantified market intelligence and credible advice have been guiding innovation and empowering our clients to make critical business decisions. Yankee Group is headquartered in Boston with presence throughout North America, Europe, the Middle East, Africa, Latin America and Asia-Pacific.