2007 is going to be a very interesting year for the console wars. Nintendo is off to a fantastic start with the Wii, and it appears the system built specifically to appeal to non-gamers and broaden the market has done just that—everyone who plays one says it's fun and wants one. That initial enthusiasm doesn't always translate into sales, though, much less extended sales. Once the talk shows 
and morning shows and news updates about the "hot holiday items" wear off, will those non-gaming masses still care? Will the idea of possibly purchasing or trying out this thing even cross their minds? Will Nintendo be able to keep the hot titles flowing fast enough to keep the core gaming demographic interested? After all, Zelda was a huge hit at launch, but nothing else has done very well, and the critical reception for other Wii titles is fairly poor. Nintendo's job throughout 2007 will be to keep the Wii fresh, keep it in the mainstream press as much as possible, and target it toward an expanding market that reaches beyond core gamers. It also has to prove that the sad reputation of the GameCube—only 2 or 3 Nintendo franchise games a year really worth getting for it—won't hold true. Nintendo needs to crank out the Wii hits, and bring forth plenty of great exclusive games from third-party publishers. That's not an easy task.
Sony has its work cut out for it. Despite the company's protests, everybody knows (and sales records have confirmed) that shipments have been below expectation and Sony has to make desperate improvements to increase supply. With a major region launch coming in the Spring (that usually requires stockpiling hundreds of thousands of units), that's going to be tough. The PS3 is at a price disadvantage, and Sony is already taking a big loss on each unit sold. It will be hard for them to reduce the price, but that needs to happen quickly. Many of the hot PS3 exclusives, like Metal Gear Solid 4 and Final Fantasy XIII, are only maybe going to be done in time for a 2007 release. In short, Sony has precious little time to lower the PS3's price, fix all the little software flaws and glitches, add competitive online features to better stack up against Xbox Live, and release totally awesome exclusive games. Sony will be very busy in 2007.
Oddly enough, Microsoft seems to be in the best position moving into 2007. Its approach is less risky than Nintendo's and less reliant on shaking up the buying habits of millions of non-gamers. Thanks in part to some software delays (like Forza Motorsport 2, the lineup of exclusive titles for 2007 looks very good. Even the first six months of the year has several potential blockbusters in store. Thanks in part to Blue Dragon and some other imminent releases, Japan is starting to take notice of the Xbox 360. Sales are still not stellar and it is doubtful that we'll see a huge explosion in Japanese Xbox 360 sales in 2007, but the numbers should climb from "insignificant" to "a meaningful part of the business." And then there's Halo 3, part of a franchise so big that it will probably be responsible for millions of 360 purchases alone. Grand Theft Auto 4 will ship simultaneously on the PlayStation 3 and Xbox 360, taking a very important feather out of Sony's cap. What was once an exclusive to Sony's platform and a big system-seller will now be available on both platforms, and the 360 will be the less expensive of the two ways to jump into the game.
Microsoft is entering the second year of production for the Xbox 360. Costs are already under control, with analysts claiming that Microsoft is already breaking even (or better) on each unit sold. With a move to smaller, cooler, more energy efficient 65 nanometer processors assumed to happen in the first half of 2007, the time is ripe for an Xbox 360 price cut. This is going to be hard for Sony to match with the PlayStation 3. Exciting things are afoot with Xbox Live. Microsoft added a video marketplace this year: Will that expand to music in 2007? Will there be a subscription model? The XNA Game Studio Express program that lets common programmers make Xbox 360 games without buying expensive development kits was just released. In 2007, we should see some sort of method for all Xbox 360 users to sample these homebrew projects. If this takes off, it could be a major point of differentiation between platforms.
Microsoft's main challenge is going to be making sure that launching early doesn't turn around to bite them. It has to remind consumers that the Xbox 360 is every bit as "next-generation" as the PlayStation 3 and convince them that the lower price does not mean inferior graphics or gameplay. The Xbox 360 has to continue to be seen as the "hot new thing" or risk being increasingly pushed aside along with the previous generation PS2, GameCube, and Xbox. It also has to make good on many of its release dates, and avoid pushing big franchises back to 2008.
The big unknowns? What will Microsoft do with the hardware? Will the next iteration of the Xbox 360 be more than just less expensive? Will it be quieter? Will it include built-in Wi-Fi, a bigger hard drive, or an HDMI port?
