Kinect Could Give Microsoft Billion Dollar Revenue Boost, Says Analyst

[Logan Westbrook]

Kinect Could Give Microsoft Billion Dollar Revenue Boost, Says Analyst

Anywhere from 6 - 10 million people will buy Microsoft's new motion controller, says Caris & Company analyst Sandeep Aggarwal.

According to Aggarwal, Kinect [http://www.amazon.com/Kinect-Xbox-360/dp/B002BSA298/ref=sr_1_1?ie=UTF8&s=videogames&qid=1279025639&sr=1-1] could generate $2 billion dollars in revenue in its first year through a combination of hardware, software and services sales, with roughly half of that going back Microsoft itself.

Unsurprisingly, Aggarwal believes that sales of the Kinect hardware will be the biggest single contributor to this amount. He predicts that between 15% and 25% of the Xbox 360 install base will purchase it at a price of $149, which translates to revenues of $900 million - $1.5 billion. The rest will be made up of game sales, an increase in Xbox Live subscriptions, and the sale of around one million additional Xbox 360 consoles.

It's hard to know what to make of Aggarwal's predictions, because although an attach rate of 15% over the course of a year seems quite reasonable, the $149 price tag could be a stumbling point. Much of Kinect's success will depend on how it is marketed and getting people excited about it; if Microsoft can do that, then Aggarwal's predictions may even end up seeming conservative.

Kinect is due to be released on November 4th.

Source: Barrons [http://blogs.barrons.com/techtraderdaily/2010/07/12/microsoft-kinect-could-boost-revs-1b-in-first-yr-caris-says/] via Edge [http://www.next-gen.biz/news/kinect-could-make-microsoft-1-billion-in-year-one---analyst]



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[Hiphophippo]

Yea, it "could" happen. And Microsoft "could" decide to give me the profits from it. Both, in my opinion, are about as likely to happen as the other.

 

[bad rider]

If I guess 1.9 billion, do I get the credit for bieng closest when the kinect comes out?

 

[Banana Phone Man]

I still don't see it happening. If I wanted a motion controller I would go and buy myself a Wii and not bother with any of this exspensive faf.

 

[Danallighieri]

Kinect? 2 billion? hahaha not gonna happen, it's like saying I *may* get killed by a meteor falling to the ground specifically where I was standing at that moment... sure it *may* happen, but the likelihood is not that high

 

[Baby Tea]

I can totally see it happening.
30 million current 360 owners.
Say half of those have friends, family, or spouses who don't really game.
Half of that half buys Kinect for them (I know I'll be buying Kinect for that reason).
That's 7 to 8 million people.

Totally possible.
I just wish Microsoft would come out and say the price 'for sure', instead of these price points.

 

[Jared]

I like the use of the word "Could" which signals to me they are uncertain as to how people will react.

Me, I still dont want it. Happy with my controller!

 

[ark123]

I "could" also invent a flying chair, but neither are going to happen. And with mine you "could" at least sit down while you use it

 

[LawlessSquirrel]

Somehow I doubt that XBL subscriptions will climb much because of Kinect. I'd assume most people that have a 360 and want it already have it; those without a 360 probably arn't going to buy the 360 and Kinect anyway when the Wii is much cheaper; and those who buy the Kinect are probably the same market that's too casual to pay subscription to an online multiplayer service.

Really, can they just release a price tag for the thing? It doesn't matter to me since odds are my parents are going to get one anyway, but until they reveal the price I can't say whether it'll be worth paying for (obviously). And for the games too, because none of what I've seen seems worth the price of a full game.

 

[Dioxide20]

150$ for the Kinect is outrageous. I understand it hasn't been finalized but still, thats a lot of money considering that you also have to (at the moment) purchase and Xbox seperately for 150$. Thats 300$ for the whole Xbox motion controll package while the Wii is ready to go at just 200$.

And the 150$ Xbox is the Arcade console, the one without a hard drive, which in itself is an additional 120$. So assuming you buy everything, thats 450$ without even purchasing a game yet. Thats a pretty big commitment right off the bat.

The Arcade console probably won't be the one that Microsoft suggests people get, as it does not have the dedicated Kinect port. That, so far, is only available in the 300$ Xbox 360 S.

This is definilety going to be hit or miss for Microsoft.

 

[thethingthatlurks]

I could see ~15% of the xbox owners buying that stupid thing, but I can't really see it attracting new customers to the xbox. I just really, really, really, hope that the revenue generated from natal+natal only games is less than the development cost...

 

[Darkstar370]

I remember when people laughed at the Wii.

We'll see if this prediction is right.

 

[bue519]

I can totally see it happening.
30 million current 360 owners.
Say half of those have friends, family, or spouses who don't really game.
Half of that half buys Kinect for them (I know I'll be buying Kinect for that reason).
That's 7 to 8 million people.

Totally possible.
I just wish Microsoft would come out and say the price 'for sure', instead of these price points.

A quarter of the Xbox market is doubtful at best. Even 10% is still relatively high, I mean people don't usually buy a peripheral with only shovelware on it. Besides wouldn't most of these people probably have a Wii already, so an entire new console with a new peripheral would be a bit much.

 

[Baby Tea]

A quarter of the Xbox market is doubtful at best. Even 10% is still relatively high, I mean people don't usually buy a peripheral with only shovelware on it. Besides wouldn't most of these people probably have a Wii already, so an entire new console with a new peripheral would be a bit much.

First of all, it wouldn't be a 'new' console, since everyone I mentioned already owns a 360.

Second, the reason I said 'half of the half' was to account for those who already own Wiis. I think 25% of 360 owners already owning Wiis would be pretty close to what it actually is. I haven't seen numbers, so I obviously can't say for certain, but I don't think 25% is unreasonable (Not too much, not too few).

And Thirdly: You can't say it's 'only shovelware' when you haven't played it, and when there have only been a few games announced for it. You have no idea how much 'shovelware' there is, and neither do I. Besides that, what you might consider shovelware, someone else, who isn't an 'gamer' at heart, might consider genuinely fun. I know plenty of 'core' gamers who would say Wii sports is essentially shovelware. It's extremely simple, there isn't really an 'ending', it's just a mash-up of mini games. But nobody can deny that people did, and do, have a butt-load of fun with it.

People have bought peripherals that only work with one game, or one type of game (Guitar Hero, anyone?), so why not a peripheral that plays a bunch of games? I think Kinect will do well in sales, and I don't think 7 to 8 million units sold is impossible, or even unlikely. Not all on day one, obviously, but so long as MS keeps up the support they've been giving it, I think it will find it's little niche in the market and succeed.

 

[WrcklessIntent]

Hahahahaha... no. I have not heard one of my friends who own an xbox say that they were going to purchase kinect and neither am I. This is just microsofts feble attempt to cash in the casual gaming market and i don't think they really care about any else other than th wii right now. So with that aside i have no idea where they are going to get that much money

 

[Skops]

You know it's funny that if you just rearranged the letters for the word "could" it can also become "Cloud". Point being, stop dreaming Microsoft with all this up in the air could/should living on a cloud bullshit and just let the product sell itself.

The more you push shit around, the more people are going to look into it's flaws. If they really are THAT confident in the technology, let it sell itself on results.

 

[sniperworm]

If I'm going to waste money on a 360 related purchase I'll buy some flame stickers to put on it. That will certainly make it much more fun than Natal (Natal sounds better!) ever could.