I think the answer to this question lies within the PS2 install base within North America. The Grand Theft Auto series has a greater brand recognition then Brawl. Perhaps only due to the exposure. Needless to say if someone has played and enjoyed Grand Theft Auto, and has never played Smash Brothers. Then for them the high definition consoles will be more attractive. Given the 360s previous library offerings, and the lower price the majority of the attention will go to the 360.
I strongly believe that Smash Brothers is dramatically over estimated and Grand Theft Auto is dramatically unappreciated. I think if Microsoft advertises correctly, provides another price cut it needs to get into the mainstream, and this Grand Theft Auto is highly praised within the press. Then yes this title could thwart Nintendo for a couple months. The only real consideration is whether Microsoft will play their cards perfectly, and whether they will continue high quality delivery in the short term.
I think Microsoft would do well for their console if they also advertised many of their older titles again to strengthen the perception of their library. During Grand Theft Autos launch week. Perception is a strong component of the battle.
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