During Activision's recent earnings call, CEO Bobby Kotick warned that the Xbox 720 and PlayStation 4 might suffer slow sales, much like the Wii U has been experiencing since its launch last November. Kotick adds that new competition from smartphones and tablets could play into customer demand.
We continue to face the uncertainties of the console transition. There are still many unknown factors, such as pricing, launch dates and quantities, the level of first-party support and, importantly, consumer purchase intent in a world where consoles are no longer just competing with each other, but also with new platforms, such as smartphones and tablets.
In addition, the newest console, the Wii U, has had a very slow start. All of these factors further heighten our concerns heading into the back half of the year, particularly during the very competitive fourth quarter.
It's worth noting that NVIDIA's upcoming Tegra 4 is capable of running games with graphics similar to those that the Xbox 360 and PlayStation 3 launched with. And with NVIDIA's Grid technology, those graphics can be improved to levels higher than the next-generation consoles are believed to be capable of.
Ultimately, the consoles' success depends on launch games and customer reception. Sony and Microsoft need to provide features that aren't available on alternatives at a price where consumers don't have to think too much about their budget.