In a 92-page report initiating its coverage of the video game industry, UBS Investment Research outlined its views on the sector and provided forecasts for the big three console makers.
Analyst Benjamin A. Schachter said that ultimately, it's all about the games. It obviously sounds simple, "but history is rife with examples showing just how difficult this seemingly simple goal can be to achieve," he said. Now that the three new consoles have been on the market for a while, what it comes down to is providing great content to drive the respective platforms. This is especially key to Sony's PlayStation 3, which has had a bumpy ride in its early life.
Schachter is concerned that if things don't shape up for the PS3 in the near future, that it could hurt the top publishers and retailers in the sector. "The weak launch of the PS3 may be rectified by price cuts and new drive titles, but there is no guarantee. If PS3 continues to disappoint, it could impact the entire group," he said. "We think Sony needs not only to make a price cut, but also buy or develop 'must have' exclusive content in order to drive hardware sales."