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Can Sony and Microsoft Replicate Wii's Success?

Given the success Nintendo has had with the revolutionary controller for the Wii, it was really only a matter of time before Microsoft and Sony followed the same path.

Wii
AP
Wii

Both companies have spent millions of dollars developing their own motion control systems—and both have high hopes and expectations for their success.

The rest of the industry, however, is a bit more skeptical. Both Microsoft’s Kinect for Xbox 360 and Sony’s PlayStation Move controller had good, but not great, showings at the E3expo this year, leaving people with more questions than answers.

For Kinect, the question was price. While Microsoft announced the gesture-recognition controller would hit shelves Nov. 4, it didn’t reveal the cost. Retailers and a pre-order page on Microsoft’s own site indicate a $150 price tag though, which has brought about a lot of criticism.

Microsoft says the price is a placeholder and not official. And the company is still telling publishing partners it expects to sell five million Kinect devices before the close of its fiscal year.

Analysts, though, say the pricing rumors sound a lot like a controlled leak—and if they prove true, there’s no chance Microsoft will hit that number.

“I think they’re still really struggling on what they’re going to charge,” says Michael Pachter, managing director of equity research for Wedbush Securities. “At $150, they’re not selling 5 million [Kinect devices] They think they are, but I think they’re doomed.”

Pachter believes the company will sell just one million Kinects if it does price at $150. Lazard Capital Markets’ Colin Sebastian said in a note to investors that he’s expecting shipments of three million worldwide during calendar year 2010.

Pricing concerns don’t stop with Microsoft. For people to get a complete PlayStation Move controller set, which consists of the primary controller, a secondary (but often essential) navigation controller and a camera, they’ll have to spend $130.

That’s a big investment, especially for the casual audience that both companies are actively courting with these devices. And some publishers fear Microsoft and Sony may be shooting themselves in the foot with high pricing.

“For me, the key thing is keeping the price of peripherals under $100,” says Graham Hopper, executive vice president and general manager of Disney Interactive Studios . “Beyond that, it’s going to make it much more difficult to get a decent installed base...I think the key advice we have for console manufactures is ‘Don’t price this the way you traditionally price consoles."

"You need to price this for the mass market from day one,” Hopper adds.

Beyond pricing, the launch lineup for both Kinect and Move has not inspired a lot of confidence. Of the initial (playable) titles shown, only “Dance Central” from Viacom’s Harmonix studio, for Kinect, got a serious reaction from both core and casual gamers. Sony’s Move games have failed to generate momentum.

Both Kinect and Move will have 15 titles supporting them at launch—which won’t be a big incentive for people who don’t own an Xbox 360 or PlayStation 3 to pick one up.

That’s causing most independent game publishers to take a cautious stance towards the devices for now. Electronic Arts is porting its latest “EA Sports Active” game to Kinect and the “Tiger Woods” franchise to Move. Several smaller publishers are working on titles as well. But many other big game makers, like Activision are sitting on the sidelines until the devices have notable installed bases.

If Move and Kinect do prove to be immediate successes, a couple of game makers are well positioned to take advantage of that. Viacom, as mentioned above, would be the likely big winner, but Ubisoft has a few titles in the works as well, including “Your Shape: Fitness Evolved” and “Michael Jackson: The Game”. And Take Two Interactive Software’s hit sports franchise “NBA 2K” will be playable on Move.

Still, analysts say, it could be a while before Microsoft and Sony know how their high-profile bets play out. And, as bets go, this is anything but a sure one.