No Pretty Details

OUCH.

That would be the best way to summarize what the NPD sales data for April 2012 means for the videogame industry that has been made available for public consumption, and it's not good news. There may be reasons for the decline, which we’ll get to, but when you see severely negative YOY comparison numbers like -32% for hardware and -42% for software... it’s not a pretty picture.

What’s more telling is that, likely due to these poor numbers, there’s a lot of silence from the industry’s major players when it comes to sharing the details. Microsoft, never the shy one, has happily shared its NPD specifics with the public, noting that 236,000 Xbox 360 units sold in April, making it (so they say) the best-selling hardware platform for the month. Nintendo refused comment, which is rare, and Sony offered vague PR reaction containing buzzwords like “PlayStation ecosystem” and “momentum” without adding any specific data sharing or references.

Thankfully, the NPD sales rankings have been leaked via a credible source on the reliable NeoGAF. Specific unit sales data - with the exception of the Xbox 360, which saw its number shared publicly - has been omitted as only Microsoft has offered (at the time of this writing) any significant comment and shared data. As you might have expcted, Sony declined to share specifics and Nintendo declined to comment on the data.

All told, as mentioned above, hardware sales plummeted 32% versus a year ago. It’s the fifth straight month of such declines. There’s hope that price cuts will be coming for both the PlayStation 3 and the Xbox 360 in the near term, possibly as soon as next month. Price cuts typically stimulate sales for a short period, but it’s hard to say with confidence that they’ll have much effect given the extended duration of this console generation. Saturation is likely becoming a real issue here, especially for the Xbox 360. I expect this trend of YOY hardware declines to continue for most of the rest of 2012, if not all of it.

Portable hardware sales seem distressed. While Nintendo's 3DS is selling pretty well in Japan, sales here in the US have slowed considerably in 2012. Less than 900,000 units have sold here so far this year, versus over 1.5 million units in Japan. In April, Japanese sales were just about double what US sales were. The momentum is clearly paused, but Nintendo is probably hoping that Mario Tennis this month and a 'new' New Super Mario game in August will help to turn the tide.

As for Sony's PS Vita, a quick drop below 100,000 units compounds the problems that the struggling handheld is having in other territories. It will be very interesting to see what steps Sony takes during E3 to combat tepid sales. New software announcements will help, but only do so much in the short term.

There is simply no impetus for consumers to buy Vita in strong numbers right now. Some analysts believe that a price cut will help, but it's also true that more games are needed, and soon. Additionally, if Sony follows the 3DS timeline and cuts Vita pricing so soon after launch, what will they offer to consumers who bought Vita already? Will there be an “Ambassador” type program, or will Sony just continue to push forward? Price cuts within the first six months of a platform’s launch can send mixed messages to consumers, and lead to fewer early adopters for new platform launches. We’ll see what happens.

Turning to software, the 42% decline from last April is at least partially explainable. Last year, we saw two new significant software releases in Mortal Kombat and Portal 2. Mortal Kombat moved over a million units alone, while Portal 2 sold about 637,000 units. Call of Duty: Black Ops was still strong at the time, as well. There wasn’t a Mortal Kombat this year. There wasn’t even a Portal 2, either. In fact, the best-selling title of April 2012 sold fewer units than the top seven titles last year; that means that Prototype 2 moved less than 236,000 units.

NPD’s Anita Frazier noted that, in terms of individual SKUs, Kid Icarus: Uprising (3DS) was in the Top 10 in that category. With NPD’s current method of disclosing combined sales instead of by platform/SKU, the individual rankings are not made public.

I think there’s some surprise that Kinect Star Wars didn’t fare better, based on the strength of the Star Wars brand. These rankings aren’t even close to what PiperJaffray projected last week, as it was thought that the highly-publicized Kinect exclusive didn’t even crack the Top 10. The absence of Xenoblade Chronicles from the rankings has been the subject of some controversy. There’s been speculation that the sales weren’t tracked because of its exclusive status with GameStop, but NPD has not commented on this.

It’s hard not to expect severe YOY declines when a month is relatively weak in terms of software releases, and that only compounds the concerns that we’ve seen from slowing hardware sales. We’re certainly not seeing the whole picture in terms of software sales, however. Digital sales are unaccounted for, so successes like Trials Evolution on Xbox LIVE Arcade aren’t counted. I think that consumers were buying more games than the NPD data leads us to believe, although the total revenue amount would still be lower YOY with digital factored in. This lack of digital sales tracking will be even more apparent this month, as I suspect a large number of digital sales of Diablo III to complement retail sales.

May sales data needs to be better, especially in software. Considering that L.A. Noire sold slightly less than 900,000 units last May, Diablo III and Max Payne 3 should each eclipse that benchmark. There are other, less significant titles like Ghost Recon: Future Soldier and Dragon’s Dogma due in May as well. Mario Tennis Open for the 3DS could surprise on the portable front. It’s a promising lineup of games, but will they be enough to make consumers spend enough money?

We’ll evaluate that question - and a few others - with May 2012 sales projections in the coming weeks.

NPD’s Top Hardware Sales in April

01. Xbox 360 (236,000 units sold, down 20.5% from April 2011)
02. PlayStation 3 (less than 200,000 units sold, down from April 2011)
03. Nintendo 3DS (less than 150,000 units sold)
04. Nintendo Wii (less than 100,000 units sold, down by at least 40% from April 2011)
05. PlayStation Vita (less than 100,000 units sold and fewer units sold than Wii)

NPD’s Top Ten Combined Software Sales in April

01. Prototype 2 (X360, PS3)
02. Kinect Star Wars (X360)
03. Call of Duty: Modern Warfare 3 (X360, PS3, PC, Wii, DS)
04. Tiger Woods PGA Tour 13 (X360, PS3)
05. NBA 2K12 (X360, PS3, Wii, PSP, PS2, PC)
06. The Witcher 2: Assassin of Kings (X360, PC)
07. Mario Party 9 (Wii)
08. Mass Effect 3 (X360, PS3, PC)
09. Just Dance 3 (Wii, X360, PS3)
10. MLB 12: The Show (PS3, Vita)