U.S. video game industry sales plunged in October, dropping 19 percent from a year earlier, and 16.4 percent from September, according to data released Thursday by the NPD Group.
But with the tremendous, record-breaking, out-of-the-gate performance of Activision's Call of Duty: Modern Warfare 2 and the coming holiday season, NPD is bullish on the industry's fortunes for November.
Still, the $1.07 billion in total sales turned in by the industry in October were paltry, compared with $1.32 billion in October 2008 and $1.28 billion in September 2009. NPD analyst Anita Frazier tried to soften the blow a little bit in her monthly report, noting that while sales were down precipitously in October, it was still the third-best October sales report turned in by the video game industry.
"The continued economic turmoil, and in particular the troubling unemployment rate, is undoubtedly impacting industry sales," Frazier wrote in a statement. "Our latest Economy Tracker indicated that although consumers' general opinion about the economy is improving, their outlook on their own personal situation is worsening. If consumers' personal outlook continues to erode, they could very well be much more conservative with their holiday shopping this year."
That last sentence is no doubt one of the most chilling group of words imaginable to the honchos at companies like Microsoft, Sony, Nintendo, Electronic Arts, Activision, and many others involved in putting video game hardware and software in consumers' hands, especially as their most important sales months of the year are now at hand.
As always, regardless of the monthly results, the big console makers each had some things to celebrate in the NPD numbers.
For Nintendo, which has seen sales of its once-high-flying Wii dip and perceptions that the console's days of seeming infallible may be over, the numbers had some hope: in October, the Wii took back first place among the consoles--respectively the Wii, Microsoft's Xbox 360, and Sony's PlayStation 3. In October, Nintendo moved 506,900 Wiis, beating out the PS3 (320,600) and the Xbox (249,700).
Sony was coming off the first month the PS3 won since being launched in the fall of 2006, but while the console was beaten out by the Wii, there must certainly be some measure of gratification in having the PS3 come out ahead of Microsoft's console offering.
"In October, we saw continued momentum [for the] PS3, with nearly 70 percent growth, when compared to last October," Peter Dille, Sony Computer Entertainment of America's senior vice president of marketing, said in a statement. It was "the only console to see any growth year over year."
NPD itself touted Microsoft's chief bragging point for October: "Across all categories, the Xbox 360 platform contributed the greatest portion of total industry sales, representing 27 percent of total industry sales for the month," Frazier wrote.
Yet despite the record-smashing first-day sales posted this week by Call of Duty: Modern Warfare 2, the video game industry as a whole is facing a very painful reality: If sales don't improve quickly, there will be layoffs, slashed budgets, canceled games, and more.
Electronic Arts, for example, announced this week that it is planning to lay off 1,500 people as part of a major restructuring--the company's latest--and as a way to stave off growing losses.
And while the industry may have hoped that console sales--especially with prices for next-generation hardware now at their lowest levels ever--would help it rebound, Frazier did not offer much hope.
"Year to date, the hardware category has experienced the sharpest decline in the industry, with unit sales down 10 percent compared to the same time period last year," Frazier wrote. "Recent price cuts helped spur a one- to two-month increase in unit sales, and this month's Wii sales reflect that boost, but the other platforms have not sustained the sales momentum [after] price reduction."
People always talk about dog years, or cat years, but what about video game console years?
It's hard to know what that math is, but one thing is certain: Sony's PlayStation 2 turned 9 years old Wednesday, and it sure feels like the best-selling video game console of all time has been around a whole lot longer than that.
Yet even though we're already more than three years into the PlayStation 3/Xbox 360/Wii console generation, the PS2 is still going strong. Routinely, month after month, its sales are in six figures--146,000 in September in the United States alone, according to The NPD Group--and there's no reason to think the 485 (and counting) developers who have made games for the platform are going to stop any time soon.
The PS2 turned 9 on Wednesday. What's that in video game years, if dog and cat years are equal to 7 human years?
(Credit: Sony)In large part, that's because there are millions of people for whom the world-beating processing power of the PS3 and the Xbox 360, and the graphics-so-good-you-can-see-beads-of-sweat-on-sports-players'-bodies aren't worth paying several hundred dollars for. For $100, they say, you can get one heck of a good video game playing experience with a PS2.
It "still holds a place in my heart--there's so many great games with huge amounts of replay value," said Michael Steavenson, a public relations professional who bought his PS2 around 2001. "I'm not so interested in blazingly fast processing speeds, graphics that make games look like a movie, or uber-cutting-edge hardware stats. If the game is well-designed, fun to play, and provides me with a good emotional connection, I'll play it forever."
According to Sony, one out of every three U.S. households owns a PS2, and, worldwide, almost 140 million people have one. To date, Americans have bought more than half a billion PS2 games, and all told, nearly 10,000 titles have been released for the platform. Not bad for a machine that has earned the right to be living out its golden years sitting on a porch somewhere, smoking a cigar and grumbling about kids these days.
... Read more
The PS3 Slim, the newest iteration of the PlayStation 3, comes with the lowest price ever for the PS3: $299. Because of the price cut, the PS3's sales rose in August and September, and many people see signs of a resurgence for the console.
(Credit: Sony)Is Sony's PlayStation 3 at long last ready to stop being its rivals' punching bag?
With its first-place finish in September in number of units sold, Sony finally has a tangible response to persistent criticism that its PS3 can't keep up with its next-generation video game console competitors, Microsoft's Xbox 360 and Nintendo's Wii.
For the month, according to video game analysts at the NPD Group, Sony sold 491,800 PS3s in the United States, while Nintendo moved 462,800 Wiis and consumers bought 352,600 of Microsoft's Xbox 360s. It was the first time since the next-generation console wars began in earnest nearly three years ago that the PS3 finished a month on top.
Yet, as everyone knows, a single positive piece of data does not a trend make--something Sony's competitors are quick to point out--especially when the existing trend is so contradictory. So, on the heels of those rosy-at-long-last September numbers, and the August price cut and launch of the new PS3 Slim that preceded them, can Sony finally demonstrate conclusively to its detractors that it is through being badly outmaneuvered?
According to a group of experts interviewed for this article, the answer appears to be yes. No one will yet predict that Sony is ready to grab hold of the leadership position it enjoyed in previous console generations. However, there does seem to be widespread agreement that for the first time since its November 2006 launch, the PS3 is ready to seriously compete for that role.
"I think that the fact that they did introduce a new footprint for the PS3 (the Slim) and a lower price point, coupled with some of the really high-demand games" coming out for the platform, "could really prime the pump for Sony to have a resurgence for the PS3," said Brian Crecente, editor of the popular video game blog Kotaku.
"I do think that we are probably going to see, if not it topping the charts leading into the holiday, it...doing better than it has in (the recent) past," he said.
Beginning a comeback in a hole
There's no doubt, however, that Sony is beginning any PS3 resurgence in a rather sizable hole. Since the start of the current console generation (in November 2006 for the PS3 and the Wii, and November 2005 for the Xbox 360), Sony has sold 25.26 million PS3s worldwide and 9.76 million in the U.S, according to VGChartz, a Web site that aggregates video game sales data. By comparison, the Wii has moved 54.19 million units worldwide, of which 25.05 million were in the U.S., and Microsoft--with its one-year head-start--has sold 32.51 million Xboxes, including 18.66 million in the U.S.
By those measures, the PS3 has a minimum of a 2-1 disadvantage, in the U.S. at least, when it comes to the PS3 install base. That fact puts pressure on third-party developers working on games for the console because they know that there are at least twice as many Xbox buyers in the U.S. as there are for the PS3.
That dynamic, in turn, has led to one of the biggest complaints over the years about the PS3: that the software lineup has paled in comparison to that of the Xbox. To be sure, Sony has always disputed that notion.
Hard to prognosticate
Over the last three years, this space has been home to multiple arguments that the PS3 would one day emerge as the clear-cut winner of the next-gen console wars. But there's also been plenty of room here for the theory that Sony's flagship video game device was doomed to languish behind the Xbox and the Wii.
Clearly, prognostication about the PS3's fortunes has been difficult. And with the state of the economy in flux, supply chains always hard to analyze, and consumers' whims ever-changing, there's no way to know for sure how the console wars will go from here on out.
But Sony definitely feels like it's finally in the driver's seat.
"Overall, we're just hitting a stride that just (reasserts) what we knew all along--that there's tremendous value under the (PS3's) hood," said Julie Han, Sony PlayStation spokesperson.
That's a notion that video game industry analysts agree with. Yet when talking about Sony's laudable September numbers, they also point, first and foremost, to the fact that there were a lot of consumers sitting on the sidelines, just waiting for the company to lower the PS3's price. In August, with the release of the $299 PS3 Slim, Sony did just that.
"It's really a combination of pent-up demand and (the point) where value and pricing meet," said Jesse Divnich, an analyst with Electronic Entertainment Design and Research. "The (thing) about the PS3 was, it was really a system ahead of its time. Developers didn't really have the capabilities to take advantage of all the power in the PS3, and at the same time you had systems like the Wii, which just had perfect timing. But now, (the PS3) has caught up."
That means, Divnich continued, that the time has finally come where the PS3's jam-packed collection of a powerful video game console, a Blu-ray player, and built-in Wi-Fi met consumers' needs, even as the price dropped to where large numbers of people feel they can afford it. The lowest-priced Xbox costs $199, while the Wii runs $249.
Finally hitting a 'sweet spot'
Divnich said that at $299, the PS3 has finally hit its "sweet spot." And he said while it's likely the initial boost of sales that came as a result of the August price cut will slow down, "Long term, into 2010 and 2011, I don't think the PS3 is going to be in last place to the degree it was before. The gap between the systems will be much smaller."
For his part, Wedbush Morgan analyst Michael Pachter said he expects the PS3 to outsell the Xbox during the holiday season because of the perceived value of the $299 PS3, loaded as it is with the Blu-ray player and Wi-Fi. He and others do, however, still think that Nintendo will sell more Wiis because of the broader general appeal of that device and the fact that it is seen as a better Christmas present.
"Is Sony back? Yeah," said Pachter. "Are they back as the leader? Probably not. Are they back in second? Probably."
Another analyst, Lazard Capital Markets Senior Vice President Colin Sebastian, also attributed the September PS3 sales boost to the "pent-up" demand for a lower price, and said that there would have been serious trouble for the console if the results had not been so good.
"If they had not shown the uptick with the price cut," Sebastian said, "then we'd all be putting a nail in the coffin for (the PS3). But what we're seeing is that there's still life left for the PS3, and that's an encouraging data point (for Sony)."
Still, as Pachter put it, "Microsoft is not the type of company that's going to stay (down) for a long time. They don't like it."
That's why, Pachter said, if the PS3 can keep pace with the Xbox for the next few months, there's a good chance that Microsoft will drop the price of its console another $50 sometime early next year, a move he doesn't think Sony would be able to match.
To be sure, Microsoft wouldn't easily cut the Xbox's price--"they're certainly not going to give money away just for the hell of it," Pachter said--but it is an arrow in their quiver.
Sebastian said he, too, could see an Xbox price cut next year, as well as one for the Wii. Would Sony follow suit if its rivals did so?
"They could do it," Sebastian said. "It's just a matter of what their tolerance is for absorbing less revenue on the hardware side, and whether they can make up that revenue on the software side."
According to Xbox spokesman David Dennis, a price cut is just one of many things Microsoft would consider as a way to keep pace with the market. He said other possibilities include different hardware and software bundles. "There's a lot of different levers you can pull," Dennis said.
Not surprisingly, Dennis is dismissive of the PS3's sales boost. He agreed that there were a lot of people waiting to buy the console at a lower price, but said that the impressive initial jump in units sold came as a result of early leaks of pictures and information about the PS3 Slim, and so there were "months of pent-up demand."
Further, he predicted that Sony would not see a sustained resurgence for its console and that even in September, when the PS3 outsold the Xbox and the Wii, Microsoft brought in more revenue for the entire Xbox ecosystem--including accessories, software, and fees for online services--than did Sony.
The two halves of 2010
In the end, most people seem to agree that the overall fortunes of the consoles have as much to do with software as price. That's why each of the analysts talked to for this story pointed to a bright future for Sony: They see a lot of strength in the PS3's coming games lineup, which includes titles like God of War III and Gran Turismo 5. And then there's also Sony's PlayStation Motion Controller, which could bring the PS3 more Wii-like functionality.
That's why Divnich said he thinks that the PS3 is likely to dominate the first half of 2010.
But he also expects that Microsoft will release its highly anticipated Project Natal motion-sensitive controller in the second half of 2010, a move that could stir up the console pot anew. Indeed, Divnich said he thinks that the Xbox will once again overtake the PS3 at that point.
And after that? It's anybody's guess.
For the first time, the Sony PlayStation 3 was the monthly top-selling video game console, a mark that has been nearly three years in the making for the much-maligned platform.
According to video game analyst NPD, Sony sold 491,800 PS3s in September, beating out Nintendo's Wii--which moved 462,800 units--and Microsoft's Xbox 360, which came in last at 352,600 units sold for the month.
The PS3, the newest iteration of Sony's next-generation video game console, finally won the top slot in a monthly sales report, thanks to the platform's lowest price ever.
(Credit: Sony)For Sony, the news seemed to prove that many would-be PS3 buyers had been waiting for nearly three years to get one of the consoles at a price more in line with what Nintendo and Microsoft charge for their devices.
In August, Sony unveiled the $299 PS3 Slim, which got the platform under the $300 level for the first time. The Wii currently runs for $199, and the lowest-price Xbox goes for the same.
Based on the PS3 price cut, some analysts had been predicting that the console would finally come out on top when NPD released its September numbers. Indeed, Wedbush Morgan Securities analyst Michael Pachter was proven right when he suggested that price cuts for all three consoles would most benefit Sony. He even said that he thought it is possible that the PS3 will outsell the Xbox for the rest of the year, which, if true, would be a major blow to Microsoft's video games group.
Sony would do well to temper any crowing. Its first one-month victory came after nearly three years, and clearly demonstrates that many buyers felt the console was too expensive previously. The PS3 was originally released with a top price of $599.
Still, the September results are big news for Sony and could be a sign that things are finally turning around for the beleaguered PS3. ... Read more
Sony announced it was working on a new motion controller at E3 last June in Los Angeles.
(Credit: Daniel Terdiman/CNET)Sony announced late Wednesday night from the Tokyo Game Show that it plans to release a new motion-sensitive controller for its PlayStation 3 video game console sometime during spring of 2010. The news came just hours after Nintendo's own announcement that it was cutting the price of its Wii console from $250 to $200.
The company originally announced that it was working on a new controller at E3 last June. That news seemed, at the time, to indicate that Sony was aiming at taking on the Nintendo Wii and its intuitive Wii-mote. Microsoft, too, unveiled a hot new controller system, code-named Natal, but revealed no substantial details about how it would be used, what it would cost or when it would be available.
As for Sony, it didn't say last June when its new device would hit the market. So Wednesday night's announcement marks the first time it has given any specificity about the date.
"The newly announced Motion Controller is equipped with two motion sensors, three axes gyroscope and three axes accelerometer that can detect the controller's angle and movement held in the user's hand," Sony said in a release. "Together with the PlayStation Eye camera for PS3 which can accurately track the absolute position of the controller, the controller can detect the natural and intuitive movement of the hand and reflect the precise movement on to the game."
Earlier Wednesday evening, Nintendo said it was slashing the price of the Wii from $250 to $200. Although both announcements were made during the Tokyo Game Show, the timing is notable given that with Sony's announcement, PS3 users and fans now have a better sense of when their favorite console will take on some additional Wii-like functionality. Nintendo may well have decided it couldn't waste any time in making its own move to protect its console.
Is this the new PS3 Slim? Rumors have it Sony may unveil such a device at the Gamescom show in Germany Tuesday. On the other hand, it may all be fanboy-driven fervor with no substance. Either way, to CNET News reporter Daniel Terdiman, the excitement is unlikely to be matched by the reality of anything Sony may introduce.
While all new technology product rumors have to be taken with a grain of salt, you can sometimes tell--often by the volume of online chatter about a particular morsel--that one is more likely to turn out to be true.
That seems to be the case with the so-called "PS3 Slim," a rumored new PlayStation 3 form factor that could well be on the horizon. And if the latest slew of blog and forum posts are right, there's a pretty good chance Sony will formally announce the new console Tuesday at the Gamescom conference in Cologne, Germany.
That may be true, and, of course, it may not. But what I want to know is why so many people seem to be so excited about this as-yet-unseen console? After all, the PS3--once thought by many to be the most likely winner of the next-generation console wars between Sony, Microsoft (with its Xbox 360), and Nintendo (with its Wii)--has lagged far behind its competitors.
... Read moreUpdate at 2:10 p.m. PDT: This story now reflects Nintendo's response to a request for comment.
If there's one thing that's sure to get video gamers talking, it's a rumor that there could be a new Wii, Xbox, or PlayStation console on the horizon.
Well, the hot topic of discussion du jour is that there could be a new Wii by 2011, according to a post on the blog What They Play.
(Credit:
Nintendo)
That site "has heard from multiple sources in the game development and publishing community that Nintendo is currently showing early presentations of its next home console hardware. Apparently set to hit the market 'by 2011,' the device is said to be the true 'next generation' Nintendo console, and far more than a simple refresh of the current (Wii) hardware."
The post continued, asserting that this rumored new device could have high-definition capabilities, as well as a "greater emphasis on digitally distributed and backwardly compatible content."
For its part, Nintendo said it does not comment on rumors.
It could be mere coincidence (because odds are that even if the rumors are true, Nintendo wouldn't want to confirm them for quite some time), but on Thursday, the company is hosting its annual media day here in San Francisco. And I'd been told that it would "have news" it would be releasing at the event. Until now, I'd assumed the news would be something only minimally consequential, but of course, announcing a new Wii development project would make a few headlines, I would think.
More likely, the news that Nintendo will put out Thursday will be about a new multimedia DS handheld device, such as the one the video game blog Joystiq says could be unveiled at a separate press event in Japan Wednesday night.
... Read moreOne of the the biggest selling points of Nintendo's Wii video game console since its launch nearly two years ago has been that it was the lowest-priced of the trio of next-generation machines, which also includes Microsoft's Xbox 360 and Sony's PlayStation 3.
To date, the Wii costs $249, while the lowest-priced Xbox, the so-called "Arcade," retails currently for $279. An 80GB PS3 sells for $400.
But Microsoft said Wednesday that it will drop the price of the Arcade on Friday to $199, breaking through what some have said is the all-important psychological price level of $200. At that price, industry observers say, the market opens up to mass levels of consumers.
Microsoft will also drop the price of its 60GB Xbox to $299 and its "Xbox Elite," which has a 120GB hard drive, to $399.
"The fact that the Xbox 360 is now cheaper than the Wii is definitely a big shift in the market," said Aaron Greenberg, director of product management for Xbox 360.
The news has been rumored for some time and was first reported as fact Wednesday by BusinessWeek.
For Microsoft, this is a crucial step along its path toward winning the next-gen console wars. At E3 in July, the company said in no uncertain terms that it will win the battle, at least with Sony. It hedged its bets on out-selling the Wii, which has been dominant over the last several months, according to industry analyst NPD Group.
In fact, BusinessWeek reported that Don Mattrick, senior vice president of Microsoft's interactive entertainment business unit (and the person who had been on-stage at E3 and committed to winning the generation), said that he doubted the Xbox could catch up to the Wii at this point.
... Read moreSony on Tuesday announced that it is opening up its PlayStation Store--an online source of downloadable games and other content--to PC users. No longer will the store be the exclusive province of owners of Sony's top-end video game console, the PlayStation 3.
PlayStation Portable users will now be able to download games via Sony's PlayStation store.
(Credit: CNET Networks)The company said that the move means that PlayStation Portable users will now be able to download games via the store. Those games include "classic" PlayStation games, as well as a series of new PSP games available only through the PlayStation store. Existing PSP games will also be available.
Among the store PSP exclusives are Syphon Filter: Combat Ops and Beats, both of which cost $9.99 on the store.
The move is probably a good one for Sony, since it means that PSP users will be able to get access to games without having to go to a store to buy them. And for the company's video games unit, which is in strong need of a boost come this holiday season, any expansion of its market is a plus.
However, there's no way to know how much additional revenue the move will produce, and even then, how it will be offset by any overhead costs associated with the expansion of the store to a new medium.
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