Nintendo seems ready to resume its dominance over its video game console competitors, Microsoft and Sony, and to shake off several tepid months of sales, an analyst suggested Monday.
Those comments came after Nintendo put out a press release boasting that it had sold 550,000 Wiis in the U.S. during Thanksgiving week, leading Wedbush Morgan analyst Michael Pachter to estimate that the company may have sold about 1.1 million of the consoles for all of November.
Analyst Michael Pachter thinks the Wii is ready to resume its dominance over its rivals.
(Credit: Nintendo)Last November, Nintendo moved 2.04 million Wiis, so if Pachter is correct about this month's data--his estimate was based on a formula in which November sales numbers are equal to roughly double the Thanksgiving week sales figures--the company sold only a little more than half the units it did a year ago. Still, Pachter estimated that Microsoft and Sony will have sold about 700,000 Xbox 360s and PlayStations, respectively, during November.
A Microsoft representative said that, while the company doesn't provide internal sales numbers, Black Friday week Xbox sales were the best of the year and at least two times the previous week. A Sony representative said that the PS3 had a banner Thanksgiving week, and that 440,000 of the consoles were sold during the week. Nintendo did not respond to a request for sales numbers for Thanksgiving week a year ago.
Using Pachter's formula, the PS3 sales numbers would mean that about 880,000 of the consoles were sold for all of November.
Since the true beginning of the so-called next-generation console wars in November 2006--when both the PS3 and the Wii were released, joining the Xbox 360, which hit store shelves a year before that--the Wii has been the dominant player, routinely outselling its competitors.
Now the prices for all three consoles are within $100--the Wii and the lowest-priced Xbox are $199, while the PS3 is $299. That has led to an increase in sales for Nintendo's peers, especially for the PS3, which in September won its first month ever for U.S. sales, according to industry analyst the NPD Group.
Indeed, even Nintendo has acknowledged it had lost some of its steam. Last month, the company's president, Satoru Iwata, said, "The Wii has stalled."
But Pachter suggested that the Thanksgiving week numbers show that Nintendo has simply been a victim of its own success, and that the sales of the Wii--and its handheld game machines, the DS and DSi--are still very impressive.
"You can't really criticize Nintendo for" past success, Pachter said. "They're definitely going to be very solid and dominant this holiday season, but last year, they were so large and dramatic, (those numbers) are going to be hard to compare to."
For the Thanksgiving week, Nintendo said it sold more than 1.5 million devices, meaning that it sold almost 1 million of the DS and DSi. And to Pachter, that might be the most impressive data point of all.
After all, he said, the DS first came out in 2004. "When is this thing going to get old?" he said. "It never dies. It's amazing to me, but people just keep buying them."
Still, Nintendo's biggest advantage--over the PS3, at least--is that the Wii costs $100 less. And if Sony ever drops the PS3's sticker under $200, that could mean big trouble for the Wii, Pachter said. Such a move would force Nintendo to do something dramatic to keep up.
While he didn't say that Nintendo would need an entirely new console at that point, he did say that a sub-$200 PS3 would force Nintendo to do something like add a processor and graphics card similar to what is available on the PS3 and the Xbox. And that, among other things, means high-definition.
"I think consumers need that," Pachter said.
Updated at 5:10 p.m. with comment from Microsoft, and at 7:55 p.m. with comment from Sony.
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."
In a stark reversal of the trend on display just a few short months ago--when general retail sales were plummeting even as the video games industry was still showing growth--cautious optimism in retail is now being offset by many losing months in video games.
In July, according to industry analyst the NPD Group, video game sales fell for the fifth straight month, and the year-over-year numbers are striking: In July, the video games business posted sales of $848.9 million, down 29 percent from $1.1 billion a year earlier. Year-to-date sales, reported NPD, were at $8.16 billion, down 14 percent from the same time period a year ago.
And things are only getting worse. While the industry's June numbers were down a full 31 percent from a year earlier, they still topped nine figures, coming in at $1.17 billion in June. But that means that in July, sales were down 27.4 percent from just a month earlier.
It wasn't that long ago that many people were making the argument that video games--because of their relatively low cost and many hours of entertainment value--were seen as close to recession-proof. But now, it would be hard for anyone to make that case.
Indeed, NPD analyst Anita Frazier wrote in a report Thursday that, "In order for the industry to come in flat or slightly up for the total year, the back five months of the year have to come in 11 percent (or more) higher than the last five months of last year."
That would seem to be a near impossible task, given the recent trend. But Frazier did throw the industry a bone: "While year-to-date results are weak, there are some big titles set to be released over the next several months, including Madden (10, from Electronic Arts) this month, which should help spur sales. The worst...should be behind us, and looking beyond August, we have The Beatles: Rock Band, Halo 3: ODST, and of course, Call of Duty: Modern Warfare 2 to look forward to."
Not to mention Guitar Hero 5.
One thing was also made clear in NPD's July report: sales weaknesses in the industry are being seen across the board. However, hardware led the charge, with a drop in sales of 37 percent ($280.94 million in July, 2009, as opposed to $447.71 million a year earlier). Software and accessories were down 26 percent and 12 percent, respectively.
Microsoft was quick to jump on what may have been the only bright spot in NPD's report: that its Xbox 360 was the only console to deliver growth over a year earlier. In its own report, trumpeting NPD's numbers, Microsoft pointed out that the Xbox has turned in 17 percent growth for the year over the same period in 2008.
And while Nintendo's Wii still leads the pack among the big three consoles (the Xbox, Sony's PlayStation 3, and the Wii), its lead has shrunk considerably. In July, consumers bought 252,200 Wiis, versus 202,900 Xboxes and 121,800 PS3s.
All in all, it's hard to be optimistic about the industry's prospects, though, as Frazier pointed out, there are a slew of big titles coming down the pike that could drive big sales. Still, the same is true every year, and as a result, there are few who could argue at this point that the video game business is facing what may be its biggest crisis in years.
For the second straight month, video game industry sales tumbled nearly 17 percent year over year, a downward trend for a market segment that had previously seemed resistant to the economic pressures of the recession.
In April, according to industry analyst NPD Group, the industry posted revenue of $1.03 billion, down 16.9 percent from the $1.24 billion it recorded in April 2008. Sales for the month were also down 30 percent from $1.43 billion in March.
NPD analyst Anita Frazier cautioned in a report that it's hard to reach the conclusion that the industry has begun to soften, noting that "it's important to remember that April (2009) is being compared against a month--April 2008--that realized nearly 50 percent growth over April 2007."
Frazier also noted that the industry's performance last month was its second-best April on record, and that unit sales across the board were down just 5 percent, with the rest of the revenue decline coming as a result of reduced "average selling prices."
Still, there's little doubt that the trend line is heading down, both broadly and rapidly. March's numbers were already down 2.7 percent from February's $1.47 billion, and in April, each of the three major video game consoles--Microsoft's Xbox 360, Nintendo's Wii, and Sony's PlayStation 3--saw sizable sales drops. Xbox sales were off 47 percent, while the Wii and PS3 were down 43.4 percent and 41.7 percent, respectively.
The only bright spot, on the hardware side of things at least, was the newest generation of Nintendo's DS handheld gaming device, the DSi, which launched during the month. In April, Nintendo sold 1.04 million handhelds, up 84.7 percent for the month.
Perhaps most interesting in those numbers is the steep decline in sales of the Wii, which has been dominating console sales for some time. The Wii did still lead the pack in April, but there have been rumblings about its strength softening in recent months, despite the console now being easy to buy. Earlier in the year, and especially during the holiday season, it was nearly impossible to find a Wii for sale at retail. These days, they are readily available at many stores.
But Frazier, again trying to soften the blow of the April numbers, noted that the Wii's 52.4 percent year-over-year sales drop (Nintendo moved 714,000 Wiis in April 2008) was partly attributable to the fact that a year ago the console's fortunes had been driven by the launch of two "huge new titles: Super Smash Bros. Brawl and Mario Kart."
On June 22, Geek Gestalt will kick off Road Trip 2009. After driving more than 12,000 miles in the Pacific Northwest, the Southwest, and the Southeast over the last three years, I'll be looking for the best in technology, science, military, nature, aviation and more in Colorado, Utah, Idaho, Wyoming, Montana, and South and North Dakota. If you have a suggestion for someplace to visit, drop me a line. And in the meantime, join the Road Trip 2009 Facebook page and follow my Twitter feed.
March revenues for the video game industry dropped 17 percent from a year ago, the NPD Group reported Thursday, the first time in the current recession that the business has seen sales fall.
For the month, the analyst firm reported that the industry turned in total sales of $1.43 billion, down 17 percent from $1.72 billion a year earlier. Hardware sales were down 18 percent, while software was down 17 percent.
But while the numbers look poor, NPD analyst Anita Frazier said she attributed some of the drop to the vagaries of the calendar.
"While it might be tempting to jump to the conclusion that the sky is starting to fall on the video games industry given this month's results, it's important to remember that two very big things are different this year than last," Frazier wrote in a note accompanying NPD's report. "First, Easter fell in March last year whereas it fell in April this year, and last March included the release of Super Small Bros.: Brawl, which went on to become the fourth best-selling game in 2008."
Perhaps, but one game's fortunes are unlikely to be enough to turn around an entire industry, especially given that hardware sales dropped about the same as overall revenues.
Overall sales were also down 2.7 percent from February's $1.47 billion, and each of the six hardware platforms NPD tracks--Sony's PlayStation 3, PS2 and PSP, Microsoft's Xbox 360 and Nintendo's Wii and DS--had lower sales in March than in February. The PS3 and Wii led the drops, with 21.0 percent and 20.2 percent lower sales, respectively.
By comparison, the Xbox saw its sales fall between February and March, but less than the PS3 and Wii, and Frazier reported that Microsoft's console was the only one with good year-over-year news.
"While it's not unusual for March hardware sales to be lower than February," Frazier wrote, "I thought we'd see higher unit sales on most platforms. The Xbox 360 was the only platform to achieve a year-over-year sales increase."
Frazier also said Nintendo's numbers were noteworthy, given the effect of Super Smash Bros.: Brawl on the company's March 2008 sales.
"Wii and NDS hardware sales remained brisk, taking the top two spots for (March 2009) in hardware unit sales," she wrote. 'It's important to keep in mind that the (game's) effect from last year impacted hardware sales as well, so while the year-over-year comps are down for the Wii, the sales are still impressive."
Still, the Wii--the darling of the video game industry media since its surprise success became almost institutionalized--has seen some negative press recently.
In March, for the first time, the PS3 outsold the Wii in Japan, and many observers wondered if that milestone indicated that Nintendo's console's dominance had finally come to an end.
The video games industry continued to defy general economic realities in February, posting a 10 percent year-over-year sales increase and a 10.5 percent boost over January.
For the month of February, the industry recorded sales of $1.47 billion, up from $1.34 billion a year earlier, according to numbers released Thursday by industry analyst NPD Group. And the February numbers also outpaced January's $1.33 billion. In February, software accounted for $733.5 million in sales, while hardware and accessories came in at $532.7 million and $207.1 million, respectively.
According to NPD, Microsoft's Xbox 360 had its second best non-holiday-season sales month since its launch, with 391,000 units sold. But once again, it was Nintendo that had the best overall performance. It sold 753,000 Wii consoles, as well as 588,000 DS handheld systems. Those numbers were up 10.8 percent and 15.1 percent, respectively, over January.
Sony's PlayStation 3 and PlayStation 2 didn't have quite as successful a February. The PS3 moved 276,000 units, while just 131,000 PS2s were sold. However, those figures did represent a 35.8 percent and a 29.4 percent jump over January. In February, Sony's PSP sold 199,000 units.
Nintendo also dominated the software sales side of things. Six of the top 10 best-selling titles in February were for either the Wii or the DS, including the repeat No. 1 performer, Nintendo's "Wii Fit.
NPD analyst Anita Frazier said March looks good for the industry as well, despite the recession, because of titles such as Halo Wars, Grand Theft Auto: Chinatown Wars, Resident Evil 5, and more.
"The sheer quantity of great content coming to market early in the year should keep industry sales humming throughout 2009," Frazier said in a statement.
Video game industry sales grew 9 percent, year-over-year, in December, and were up 19 percent for the year, according to the latest figures from analyst firm, the NPD Group.
Overall, the industry saw sales of $5.29 billion in December, the first time it had ever cleared the $5 billion mark in a single month, according to NPD analyst Anita Frazier.
And once again, the video game industry far outpaced general retail sales, which were down 2.7 percent from November. By contrast, video games were up 81.8 percent over November's $2.91 billion.
Leading the way again was Nintendo, which sold 2.15 million Wii consoles and 3.04 million DS handhelds. Microsoft moved 1.44 million Xbox 360s, and Sony, once again, lagged behind, selling just 726,000 PlayStation 3s, 410,000 PS2s, and 1.02 million PSPs.
It was the first time, NPD said, that any video game machine--the Nintendo DS--had topped 3 million units in a single month, evidence perhaps of consumers wanting a good bargain at a time when resources are tight.
For the year, NPD said that the industry totaled $21.33 billion in sales, up 19 percent from the $17.97 billion it recorded in 2007.
All told, the numbers provided further evidence that video games may be one of the very few economic segments that are, more or less, recession-proof.
Of course, the industry's success isn't universal, and there have been a large number of layoffs at video game companies, just as has been seen across the economy as a whole.
"We get asked a lot why there are so many layoffs and studio closings occurring in the industry when it has just realized another record-breaking year," said Frazier in NPD's release of its December numbers. "This is not a case of the rising tide lifting all boats. The increases are not being enjoyed equally by all manufacturers and publishers."
As always, when video game industry research firm The NPD Group puts out its monthly numbers, each of the big hardware companies--Nintendo, Microsoft, and Sony--find their own unique positive spin, regardless what the numbers show.
But with the July numbers, which were released Thursday, there's little question that Nintendo gets the biggest bragging rights.
That's because, according to NPD, Nintendo's DS handheld gaming machine and its Wii console far outsold any competition from Sony or Microsoft.
NPD reported that the DS sold 608,400 units in July, while the Wii moved 555,000 machines. No other gaming device even made it to 300,000.
These days, however, it's no surprise when the Wii leaves its competitors in the dust. Microsoft and Sony both find ways to claim next-generation console supremacy, but more and more you hear them taking the position that the Wii is not in the same category of machine as the Xbox 360 and PlayStation 3.
Which, in all honesty, is probably a fair thing to say. But since both Microsoft and Sony originally lumped the Wii in with their own machines, it's a little disingenuous when they do make the argument.
For its part, Sony gets to spend at least a month crowing that the PS3 outsold the Xbox. According to NPD, the PS3 sold 224,900 units in July, while the Xbox did 204,800 sales.
It may not put the PS3 on the same level for lifetime sales as the Xbox--which is far ahead--but it provides Sony executives reason to believe that things could really be turning around for their beleaguered console.
Microsoft, on the other hand, took the opportunity of the NPD numbers release to tout some numbers it considers brag-worthy.
In a press release issued Thursday afternoon, Microsoft said that since the November 2005 launch of the Xbox 360, gamers have plopped down $10.4 billion on the platform in the United States, a 49 percent total share of what I assume it means is the next-generation console market for hardware and software.
Additionally, it said that the Xbox has achieved a record-setting attach rate of 7.9 games per console sold.
Still, Microsoft, which said last month at E3 that it was "declaring" that it would win the console wars, must be wondering what it means to watch the PS3 start to outsell it.
The video game industry had better thank its lucky stars that hard-core gamers do what they do.
According to a report issued Monday morning by industry analyst firm, The NPD Group, the most active group of players, which it termed "extreme gamers," devote more than a full-time job's work week to their avocation. But they don't get insurance benefits for their efforts.
Rather, NPD's "Games Segmentation 2008" report explained, extreme gamers put in an average of 45 hours a week playing games, and, even better--for the video game industry's coffers--bought a whopping 24 titles in the last three months.
True, these committed gamers make up just 3 percent of the 174 million that NPD said play on PCs or Macs or dedicated video game machines. Still, that means 5.22 million people out there are putting in serious amounts of time gaming away. And if you stop and think about the dollars they're spending, if they're buying 24 games every three months, it's kind of breathtaking.
The NPD report identified seven different segments of gamers, including our extreme friends. The others include 9 percent who are "avid PC gamers," 17 percent who are console gamers, 14 percent who are online PC gamers, 15 percent who are offline PC gamers, 22 percent who are "young heavy gamers" and 20 percent who are "secondary" gamers.
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Nintendo's Wii is now said to be the top-selling next-generation video game console in the United States, having reached 10.9 million units sold during the month of June.
(Credit: CNET Networks)On Monday morning in Los Angeles, attendees at Microsoft's E3 press conference heard Xbox head Don Mattrick "declare" that that video game console would win the so-called next-generation console war.
But if the latest sales data put out by NPD mean anything, Microsoft's road to victory could be a little harder. That's because, according to Nintendo, the Wii in June surpassed the Xbox 360 to become the best-selling next-generation console in the United States.
According to Nintendo, NPD's numbers show that during June, the Wii hit 10.9 million units sold in the U.S.
In May, Microsoft announced the Xbox had hit 10 million units sold first, a milestone the company said has historically been reached by each console generation's eventual winner. And in its quarterly earnings release Thursday, Microsoft said it had sold 1.3 million Xboxes during the last quarter. But it's been clear for some time that the Wii is outselling both the Xbox and Sony's PlayStation 3 on a monthly basis. And given that the Xbox has been out a full year longer than the Wii or the PS3, Nintendo's news is all the more noteworthy.
Of course, in an interview Tuesday, Shane Kim, Microsoft's corporate vice president of strategy and business development for Microsoft's interactive entertainment business unit, told me that Mattrick's declaration applied only to the battle between the Xbox and the PS3. Mattrick himself didn't make any such clarifications during the press conference.
And in Kim's defense, it's true that most people think of the Xbox and the PS3 as being in a different category of video game console than the Wii, despite all three often being lumped together.
Additionally, Microsoft and Sony both surely have their own positive spins on NPD's numbers, though I haven't gotten those missives yet. Nintendo wins this round, at least, for quickest NPD-related press release (that I got, at least).
Either way, you have to tip your hat to Nintendo for the success of the Wii, and for the console's having reached the top spot in the U.S. For now, at least. Who knows what the next press release will say.
