Sony Computer Entertainment is poised to lose a large chunk of its market share to Microsoft and Nintendo in the battle for the next generation of video game consoles, according to a report published on Tuesday by the European Leisure Software Publishers\' Association.
Although Sony\'s PlayStation 2 console will be the best-selling piece of games hardware in Europe, Japan and the US by 2005, the study, compiled by media analysts Screen Digest, predicts that the new machine will not enjoy the market dominance of the original PlayStation console.
The Sony PlayStation brand accounts for about 66 per cent of consoles installed in homes worldwide. But the Elspa study forecasts that by the end of 2004 Sony\'s PlayStation 2 will account for just 47 per cent of next-generation consoles in European homes (15.65m units), 37 per cent of those in US homes (18.1m units) and 45 per cent (12.3m units) of those in Japanese homes.
Microsoft\'s new Xbox console is forecast to become the second most popular next-generation console in Europe, accounting for 33 per cent of all next-generation consoles installed in European homes (10.85m units) by the end of 2004.
It will fare less well in the US and Japan, where it will have less of the market than both PlayStation 2 and Nintendo\'s Gamecube, achieving a 31 per cent share of the next-generation market in the US (15m units) by the end of 2004, and about 20 per cent (5.3m units) market share in Japan.
Sony has already launched the PS2 console worldwide and has sold more than 10m units. Microsoft, which has allocated $500m to marketing the Xbox, and Nintendo are both set to launch their consoles this autumn.
The Elspa report suggests that, for the first time in the history of the $20bn video games industry, there will be room for more than two manufacturers in the marketplace. Nintendo\'s announcement of a US launch price of $199 - drastically undercutting the competition - has helped, but the key element has been the software: its line-up of games has been universally well received by reviewers.
"However, we do believe that the company is showing every indication of being content with concentrating on the kids\' demographic segment of the market that it has always dominated," said Ben Keen, author of the report.
"Our current view is that, in most territories, Sony will maintain a lead over its rivals through to 2004, when it will attempt to press home its advantage with the launch of PlayStation 3," Mr Keen said