Xbox 360 to be the top-selling console this fall (exclusive)

Will the Xbox One or the PlayStation 4 dominate sales this fall? Answer: neither. The Xbox 360 is going to be the king of the hill when it comes to unit sales this fall, according to market researcher Newzoo.

That’s because the Xbox 360 will likely be a bargain at $199 or lower, particularly with holiday promotions and bundle deals coming. It will be a reminder of the fact that, during the last console transition, the Sony PlayStation 2 outsold the PlayStation 3 for three years. Newzoo believes that both the Xbox 360 and the PS3 are going to figure very prominently in the long-term strategy of both Microsoft and Sony in the battle for the mass market.

“Considering all the moves that Microsoft is making to back up the Xbox 360, I have no doubt in my mind that in terms of unit sales, it will be the top-selling console this season, killing the Nintendo Wii and Wii U on its path,” said Peter Warman, the chief executive at Newzoo. “The current focus in the press on presale figures of next-generation consoles provides a very limited picture of the business. We should all make sure that investors and other decision makers outside our industry see the bigger picture.”

The Xbox One will debut at a hefty $500 on Nov. 30, while the PS4 will go on sale for $400 on Nov. 15. That will be out of reach of the budgets of many consumers. Warman believes that Microsoft will outperform Sony in the holiday season even though it is lagging in the next-generation presale charts.

Back in 2005 and 2006, Microsoft and Sony had very different approaches to the transition. Microsoft had sold 24 million Xbox units by 2006, but it was losing money on every one of them. It wanted to stop selling those boxes and move on the Xbox 360 as soon as possible. The PS2, however, was profitable. Sony kept on selling, pushing unit sales past 150 million units.

In light of those facts, Microsoft is pushing the Xbox 360 quite heavily. Newzoo believes the Xbox 360’s price will fall to $99 with promotions. And Microsoft has a number of Xbox 360 exclusives coming, including Wargaming’s World of Tanks and Crytek’s Warface.

Warman acknowledges that Sony could be aggressive with the PS 3 as well. But he said that Microsoft has made the Xbox 360 an “integral part of its next-gen launch strategy” by redesigning a new version of the Xbox 360, having lots of good games, and a very attractive price.

“The strategy is aimed at maximizing the total reach of gamers, staying ahead of PlayStation, and settling for a more gradual transition to their next-gen console,” Warman said. “All in all, the message is that Microsoft is in a completely different situation than last time round and need not to worry about possibly lagging behind PS 4 in next-gen sales expectations.”

He added, “Considering all the press about next-gen sales, we feel the market needs to keep a broader view and not forget that current gen consoles will probably outsell next-gen for the coming year or even two.”

Newzoo estimates that the U.S. has about 24 million hardcore game players who will likely rush to buy the new consoles. A big share of this group will buy both machines. Another 64 million noncore players in the U.S. will likely stick with titles on Xbox 360, PS2, PS3, Wii, and Wii U.

“These gamers are in no hurry to transition towards next-gen, but the Xbox 360 could charm anyone who still wants something new to play with,” Newzoo said. “The ‘core’ gamers also have slightly less incentive to buy a next-generation console this time as the leap in game experience is smaller than last time.”

Right now, roughly 60 million Americans play on the Xbox 360, compared with 46 million on the PS3. Less than 10 million Americans still use the original Xbox, but the PS2 still has a large user base. In fact, the number of PS3 gamers surpassed the number of PS2 gamers only one year ago.