@ CES: DoubleFusion’s Epstein: Don’t Count Sony Out Of The Console Wars Just Yet

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@ CES: DoubleFusion’s Epstein: Don’t Count Sony Out Of The Console Wars Just Yet

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News that pre-holiday sales of Sony’s PS3 console slipped year-over-year (in contrast to marked growth for the Nintendo Wii and Microsoft’s Xbox 360) led some analysts to conclude that the PS3 is all but defeated in the next-gen console wars. Well, some big brand advertisers don’t think so, according to Jonathan Epstein, CEO of DoubleFusion, one of the largest in-game advertising agencies. He told me that in-game ad campaigns for the PS3 were in high demand, and that the company had “sold every impression we have on the console.” (DoubleFusion also brokers ads on Nintendo’s Wii, among other consoles.)

Double Fusion serves ads in titles from THQ (NSDQ: THQI) and Eidos, among others, as part of a deal it brokered with Sony (NYSE: SNE) last year, while rival IGA Worldwide places ads in EA and Activision (NSDQ: ATVI) Blizzard’s PS3 titles. Still, the PS3 lags behind the Xbox 360 even when it comes to advertising—as Microsoft (NSDQ: MSFT) opened up its console to advertisers back in 2006 (and gobbled up in-game ad firm Massive in the process).

More after the jump ...

The rest of our coverage is on our CES 2009 channel

Then, there’s the pricing problem, which the WSJ highlights as a likely “key factor” behind the decline in sales. The cheapest PS3 still costs about $150 more than either the Wii or the entry-level Xbox 360. Sony brass continue to argue that the console’s technology warrants the higher price, but you have to wonder if they’re stuck keeping the price tag high because they’ve just come close to breaking even on the manufacturing costs (and because Sony’s electronic sales are tanking overall).

But Epstein said that some of the hype about the PS3’s demise is a little short-sighted: “People also said that the Wii was a fad when it first came out and was going to go away—and look at how successful it continues to be. From what I understand, the PS3 was designed to have a longer life-cycle than other consoles. The PS3 is a seven- to 10-year product—not a three- to five-year product.” Maybe the market could have supported long-term investments in expensive hardware a few years ago, but with little to no growth forecast for electronics purchases in 2009, Sony may have to revise its strategy if it wants the PS3 to really thrive.

By Tameka Kee