Apple’s iTunes is by far the dominant player today in digital downloads, not just for music but increasingly for video and other media. It’s widely accepted that the tight integration of the iTunes service with Apple’s range of digital media devices has been critical to the company’s market leadership. But Strategy Analytics research suggests that even with its current dominance, Apple cannot afford to rest on its laurels. In our UK broadband user survey, people are still more likely to choose Amazon as the place to visit for digital media downloads. Even for digital music, 26% of broadband users say they would prefer Amazon to iTunes. The gap is wider in video (Amazon 16%, iTunes, 11%) and games (Amazon 16%, iTunes 5%). These findings demonstrate that leadership in the early stages of a market do not guarantee long term dominance. Amazon is clearly a much more powerful retailer than Apple and if it executes successfully in its online media strategy it should become a serious challenger for the number one position. Twitter: twitter.com/dmercer15 Client Reading: Digital Media Survey: United Kingdom - Country Profile

Pioneer’s plasma TV business is the latest casualty of the recession. The company announced today that it is ceasing TV development immediately, and will close its TV business altogether by March 2010. So it looks like Panasonic will be the only major Japanese vendor left holding the plasma baby in 2010, as I discussed 18 months ago. Koreans Samsung and LG will help to keep plasma going, but are increasingly focused on LCD and well behind Panasonic in the race for PDP market share. Pioneer tried in vain to hold the line on premium, high quality TVs. In fairness it was always going to be difficult even in good economic times. Pioneer’s TVs were generally regarded as some of the best on the market and served as an aspiration for those who could “only” afford a Sony or a Samsung. But the gap between the “mass market” and Pioneer was undoubtedly getting narrower, and Pioneer was going to get caught in the squeeze sooner or later. When Amazon is offering Toshiba 42” 1080p LCD TVs for £499, it becomes harder than ever to justify paying four times the price for a similar sized Pioneer, especially when most retail stores are simply not capable of, or interested in, demonstrating the differences in picture quality. The severe downturn in consumer electronics has accelerated the impact of plasma’s relative decline on Pioneer. What is left of the company’s display technology expertise now resides with Panasonic, and even in this downturn that huge company should be powerful enough to keep plasma alive for a few more years. It will be a long and lonely struggle. Client Reading: Digital Media Devices Global Market Report

Strategy Analytics has just published its analysis of a survey of console and PC gamers in the US. The ability to download content to games consoles is a relatively recent innovation but is now a feature of all the major systems – Wii, Xbox 360 and PS3. Our survey found that nearly a third of gamers in the US claim to buy and download games to a video games console. 21% are doing so on a monthly basis or more frequently. This compares to 35% of gamers who claim to buy games from a retail store at least on a monthly basis, or 28% who are ordering packaged games online for home delivery. Buying from retail stores is still the number one choice for less frequent games buyers. We also found, perhaps not surprisingly, that the games console brands (Wii, Xbox, PS3) are the first choice when it comes to buying games online. 27% of gamers willing to buy games online would choose the games console brand, compared to 19% who would go to the games publisher and less than 15% who would visit an online games specialist or general online retailer like Amazon. Microsoft’s recent revamp of its Xbox 360 interface was intended in part to encourage greater participation in online activities and paid-for downloads. It seems as though many console users are indeed ready and willing to make the most of online services and games downloads. While there is a clear opportunity for console platforms to develop new revenue streams, the outlook for bricks and mortar retailers appears to be less rosy. The study comes from Strategy Analytics' Digital Media Survey, conducted between April and June 2008 sampling 3,526 age 15+ broadband users across Germany, France, Italy, Spain, UK and the US. The US sample was 1000 broadband users. Twitter: www.twitter.com/dmercer15 Client Reading: Digital Media Survey: An analysis of US Gamers

Widespread rumours of Xbox console price cuts in Europe were confirmed today. The entry level SKU, Arcade, will fall to GBP159.99. The mid-range Pro will sell at GBP199.99 and the Elite at GBP259.99. Euro prices have fallen to equivalent levels. Amazon.co.uk is already selling the consoles with additional discounts to the new recommended prices. Microsoft's Chris Lewis, who heads up Xbox in EMEA, told us that the Xbox was now entering the "mass market space" with these new price points, opening up a "much broader range of consumers". Clearly the fact that the Arcade is now the cheapest console of the current generation will help to bring it to the attention of a wave of customers that have previously dismissed the current range of products as too expensive. While the Wii remains difficult to find at its recommended GBP180, Nintendo will be watching carefully for any signs that potential Wii buyers opt for the Arcade because of its wider availability or lower price point. Yes, the buyer segments for Wii and Xbox have been very different so far, but for price-sensitive customers the new prices may make all the difference. The PS3 is now left once again as the most expensive console. Sony will be nervous that the PS3's recent sales surge may fizzle out now that the best Xbox 360 is £40 cheaper, and the cheapest one is nearly half the price of a PS3. Sony too will be scrutinising the daily sales reports, but will probably try to hold out until later in the year before making its next price move. We asked Lewis to address the question of the impact of the price cuts on Microsoft's profitability. He indicated that the company's Entertainment and Devices division has moved into "overall sustainable profitability" in the last few months, and claims that the new console price points will not significantly change this position as it continues to drive cost out of console manufacturing.

Given that Sony released the news of the $499 60GB console two days before E3 opens, we can expect further significant announcements at the press conference tomorrow. Rumours of a video download service are probably not far from the mark. Reports of the impact of the price "cut" (a $499 20GB PS3 was available at launch but few were sold) vary from the "hardly anything" to "new market leader emerges", with Sony optimists pointing to the fact that Amazon's lists put the PS3 now as the number one console. Bearing in mind it comes packaged with a free Blu-ray remote and five free BD titles, this certainly seems like a rather appealing deal. Europeans are awaiting confirmation of the scale of the price cut in their part of the world, but I would guess £350 for the UK. The new price was inevitable and necessary and will go some way towards clearing the inventory that has built up between what Sony says it has shipped and what has sold through to consumers. High definition fans will not have failed to notice that the 60GB PS3 is now retailing at the same price as Sony's BDP-S300 BD player, which also comes with the five-disc offer. Industry debate continues over how much profit, if any, Sony is making on PS3, but even if it isn't, the S300 margin must be a lot healthier than the PS3's. One way or another, PS3 and BD component costs are plummeting, as expected, so this will be the first in a series of downward price moves over the next couple of years.