Analyst: PS2 may be on its way out, EA may lower holiday prices

Following the NPD Group’s report for September, Deutsche Bank analyst Jeetil Patel believes that it may be the beginning of the end for Sony‘s PlayStation 2. According to the report, software sales for the console fell at a faster rate than was first seen last month.

Patel describes the PS2‘s decline as inevitable but it’s unclear whether the decline (which came sooner than expected) was due to “consumer transition to next-gen software or weak spending patterns amongst the low-end consumer.” This may be a wrench in the gears for Sony which plans to commit to the console’s 10-year lifespan.

“Needless to say, with tougher comps ahead for PS2 software sales, we think that the PS2 may finally be on its way out of the industry for good” says Patel. Although software sales may be down it remains that the PS2 console continues to sell, and continues to be one of the most played consoles despite the presence of the next-gens.

The decline in software sales may be explained partially by the lack of backwards compatibility for the new PlayStation 3 consoles, which was once explained to also boost PS3 games by limiting the console to only play that format. Perhaps the backlash of the absence of backwards compatibility is that sales for PS2 games suffered.

Patel also observes the underperformance of two of Electronic Arts’ franchises: NCAA 08 (PS3, Xbox 360, PS2) and Madden 08 (PC, Xbox 360, PS2, PS3, PSP, Nintendo Wii, and DS). He believes that – in the light of a very “competitive environment” with competition such as Activision, Ubisoft, Microsoft, Sony, and Nintendo during the holidays – EA may introduce a price cut in November if the games continue to underperform.

Following the NPD Group’s report for September, Deutsche Bank analyst Jeetil Patel believes that it may be the beginning of the end for Sony‘s PlayStation 2. According to the report, software sales for the console fell at a faster rate than was first seen last month.

Patel describes the PS2‘s decline as inevitable but it’s unclear whether the decline (which came sooner than expected) was due to “consumer transition to next-gen software or weak spending patterns amongst the low-end consumer.” This may be a wrench in the gears for Sony which plans to commit to the console’s 10-year lifespan.

“Needless to say, with tougher comps ahead for PS2 software sales, we think that the PS2 may finally be on its way out of the industry for good” says Patel. Although software sales may be down it remains that the PS2 console continues to sell, and continues to be one of the most played consoles despite the presence of the next-gens.

The decline in software sales may be explained partially by the lack of backwards compatibility for the new PlayStation 3 consoles, which was once explained to also boost PS3 games by limiting the console to only play that format. Perhaps the backlash of the absence of backwards compatibility is that sales for PS2 games suffered.

Patel also observes the underperformance of two of Electronic Arts’ franchises: NCAA 08 (PS3, Xbox 360, PS2) and Madden 08 (PC, Xbox 360, PS2, PS3, PSP, Nintendo Wii, and DS). He believes that – in the light of a very “competitive environment” with competition such as Activision, Ubisoft, Microsoft, Sony, and Nintendo during the holidays – EA may introduce a price cut in November if the games continue to underperform.