The Numbers Game 08.18.09: Nintendo In Control
Posted by Rod Oracheski on 08.18.2009
Two publishers rule July's NPD numbers, with Nintendo and EA cleaning up on the software side. The hardware side continues to show decline, with all hardware dropping on year-over-year comparisons - but is a comparison to a record year really accurate?
In The Numbers Game, I bring you a comprehensive breakdown of the NPD numbers and offer insight on trends within the industry. To stave off accusations of inaccuracy, let's be clear that I'm well aware that the NPD Group does not have unlimited access to the retail chain and is forced to estimate the sell-through for several retailers. Despite that, the NPD Group has proven to be the most accurate assessment of the market available and can be treated as a credible source.
June Hardware Sales
Console
Nintendo Wii - 252,200
Xbox 360 - 202,900
PS3 - 121,800
PS2 - 108,000
Portable
Nintendo DS - 538,900
Sony PSP - 121,800
Top 20 Software: July 2009
Wii Sports Resort (Wii)
NCAA Football 10 (Xbox 360)
NCAA Football 10 (PS3)
Wii Fit (Wii)
Mario Kart (Wii)
Mario Kart (DS)
Pokemon Platinum (DS)
Fight Night Round 4 (Xbox 360)
New Super Mario Bros (DS)
EA Sports Active (Wii)
Wii Play (Wii)
Tiger Woods 10 (Wii)
Fight Night Round 4 (PS3)
UFC Undisputed (Xbox 360)
Punch-Out!! (Wii)
Transformers: RotA (DS)
Prototype (Xbox 360)
MLB 2K9 (Xbox 360)
The Legendary Starfy (DS)
NCAA Football 10 (PS2)
July's NPD numbers continued the downward trend, with every manufacturer seeing a year-over-year decline on sales in both the console and handheld markets. Though it's accounted for $8.16 billion in revenue to date, the industry is down 14% overall in year-over-year comparisons, with hardware (-16%) and software (-14%) drops outpacing that of accessories (-9%).
The slump is considerable when put up against 2008's totals, with the first six months of 2008 responsible for more revenue than the first seven of 2009. The industry's prodigious revenue increases in recent years may paint the drop in an exceptionally poor light, however.
Industry revenue doubled between 2005 and 2008, and while 2009's seven-month numbers might trail that of 2008 they compare well to every year prior to that. Total industry revenue may have passed the $8 billion mark in June last year, but it didn't hit that point until September in 2007, November in 2006, and December in 2005.
Individually, the three consoles tell wildly different tales. The Wii is down considerably year-over-year, with sales down over 450,000 units through the first half of 2009. Despite the decline, the Wii continues to lead monthly sales numbers - though July's totals (252,500 units) had the smallest gap to their nearest competitor (the Xbox 360, with 202,900 units sold) since January of 2008.
It's likely Nintendo will make some move to kickstart sales this Christmas buying season, after seeing Microsoft's machine slowly coming closer on monthly sales charts over the last six months. The sub-$200 price tag on the Xbox 360 Arcade has been an attractive price point for recession-wary shoppers, and it's likely Nintendo's machine will drop below that point this year - possibly alongside the release of color options.
Sony continues to struggle to find momentum with the PS3, coming close to being outsold by the decade-old PS2 hardware in the May-July reports after being behind by 50,000 in April. In their response to the July NPD numbers Sony once again cited the value offfered by the PS3, but that message - which consumers have heard before - seems ineffective at retail.
Reports of a PS3 Slim and corresponding price drop have continued to circulate, expected to be announced at Sony's GamesCom conference on August 18th, and that seems to be the only way Sony, with sales down 30% year over year, can possibly come close to their prediction of increased sales on the fiscal year.
Sony remains in a difficult financial position, with the company as a whole incurring large losses that may make the idea of a price cut - and subsequent further losses - unappealing. It's undeniable that the console needs a price drop if they want to see increased sales, however.
The release of high-profile games like Killzone 2, Resistance 2, and LittleBigPlanet didn't create noticeable spikes in console sales. Only Metal Gear Solid 4 managed that, albeit for just a single month, though that was also the final month to offer backwards-compatible units for sale which may also have spiked demand considerably.
If Sony's Christmas plans don't include a sizable price drop on the PS3, the company can be seen as 'giving up' on gaining market share and trying to bankroll their next console through the rest of this generation.
Riding the tailing edge of last year's price drop, the Xbox 360 saw only a 1% drop (202,900 versus 205,000 in 2008) year-over-year in July, and year-to-date sales are up approximately 280,000 units - the only console with a year-over-year increase in sales.
With clear indicators the Xbox 360 Elite SKU is dropping to $299 by the end of the month, Microsoft's timing on the residual effect of their previous price drop proved almost perfect. The console's year-over-year drop is the first since September, with the exception of the industry-wide April-May slump that saw it drop 6% and 7%, respectively. That same two-month period saw PS3 sales drop over 30% each month, while Wii sales declined over 50% in each reporting period.
The price drop also helped Microsoft accelerate Xbox 360 sales through the last 12 months on the market, increasing from an average of 325,000 units sold per month in the first 33 months to 411,000 sold per month in the last year. With a price drop in the cards, it's possible hardware sales could continue to grow into the next year.
It will be interesting to see what Microsoft's reaction is to Sony's anticipated price drop. Having seen the sales potential that a $100+ difference can mean, it's unlikely Microsoft will want to have the Elite SKU sitting at the same price as the 80 GB PS3 - and Microsoft unquestionably has more breathing room available on the price point. Microsoft's ability to cut hardware pricing is also supported by strong third-party sales, with over $100 million in third-party software sold in July.
The Top 10
Two publishers owned the top 10 software: Nintendo and EA. Nintendo published six of the seven Wii/DS titles on the list, with EA publishing the final title - the EA Sports Active Bundle.
Nintendo's platforms continue to move software, but there appears to be little room for third-party developers in Nintendo's pool. There are only two third-party titles, EA's previously mentioned offering and the Transformers DS game from Activision Blizzard, on the top 20 list. Meanwhile the Xbox 360 has five games in the top 20, all third-party, while the PS3 has two - both from EA.
Nintendo's userbase has historically been difficult to tap for third-party developers, and the Wii appears no different. Highly touted title The Conduit didn't hit the top 20, having sold under 120,000 copies in the two months it's been on the market. Madworld, another 'core' game, has sold even fewer copies.
It's interesting to note that NCAA Football 10 debuted with fewer sales than last year's edition, despite userbase increases and positive review scores. It could be an early negative indicator for Madden sales, but it's just as likely that recession-wary game buyers were holding out for Madden, having decided to pick up only one football title this year. August's numbers will shed more light on that.
