Movie studios will decide next-gen console winner - Pachter

Hollywood movie studios and the ongoing battle between the Blu-ray and HD-DVD formats will ultimately decide which next-generation home console becomes the most successful, according to Wedbush Morgan's Michael Pachter.

While Pachter believes that the PlayStation 3's success will just peak above Microsoft's Xbox 360, it will be the choice of technical formats that will win the battle for home entertainment in the living room.

"Notwithstanding the efforts of the three console manufacturers to deliver compelling, exclusive content, we expect the ultimate outcome of the console wars to be decided by the motion picture studios," said Pachter.

"We expect the dominant console at the end of the next cycle to be the PlayStation 3, primarily due to our assessment that Sony will win the high-definition DVD format wars."

However, Pachter's definition of 'winning' a war is loose, with the analyst admitting that all three console manufacturers are likely to enjoy considerable success in the market.

"Ultimately, we see Sony 'winning' the console war with 36 per cent of the market, with Nintendo capturing second place at 34 per cent and Microsoft finishing third at 30 per cent."

"We believe that this is essentially a dead heat, and each manufacturer will have sufficient market share to generate significant profits."

Pachter points out that Sony has traditionally been well supported by exclusive titles from third-party developers (citing the 40 million unit-selling GTA franchise which launched on the PS2), but this generation he expects the company to focus more on its internal studios to develop its blockbuster hits.

If there's one factor that's difficult to assess for Wedbush Morgan, it's software exclusivity for home consoles. As the company notes, all three format holders have a good history of exclusive brands, but it does see Nintendo having the ultimate advantage.

"We believe that a wildcard for next-generation console sales will be the hardware manufacturers' ability either to develop content internally or to secure third-party commitment for software designed exclusively for a single platform," said the company.

"In the upcoming cycle, we expect the playing field between Sony and Microsoft to be more level, and think that Nintendo will have the largest library of exclusives," said Pachter.