No Pretty Dimples
I wanted to believe that May was going to be at least a temporary reprieve
from whatís been a lengthening cycle of poor sales for the console video game
industry. I had faith that Max Payne 3 would outpace L.A. Noire from last year.
I believed that the PlayStation Vita would gain just a bit of strength based on
retailer promotions. I thought that the Xbox 360 had another month of 200,000
units ahead, as a result of the double-whammy of Max Payne 3 and Ghost Recon: Future Soldier.
I was trying to be positive. Unfortunately, that was the wrong play.
The numbers are out for May 2012 from NPD, and the slide not only continues
for the console gaming sector... but itís deepening and thereís no end in sight.
Itís possible to argue that strong sales of Diablo III played some role in the
poor performance of the console sector, but this is a continuation of the slump
that we saw beginning in December of 2011 and it look to continue at least until
Q4, if not beyond.
Console unit sales dove 39% versus a year ago. The best-selling hardware
platform, which was the Xbox 360, only managed to move 160,000 units last month.
The PlayStation 3 couldnít even manage 130,000 units. Unit sales of the Wii sank
by 70% YOY. The news was bleak almost everywhere, save for the 3DS, which
managed a 17% jump versus a year ago.
Letís start with Microsoft. Itís getting to the point where being #1 isnít
really as important as we move forward. Yes, the Xbox 360 is still on top, but
YOY sales are down significantly and weíre still at least 12-16 months away from
Microsoftís new console. The decision to go the subsidy route instead of a more
sweeping price cut could turn out badly here. Itís been years since the Xbox 360
had a significant price cut, and that was understandable throughout 2011 as
sales were riding high. Something needs to happen to carry Microsoft the rest of
the way here, especially if Sony blinks first and initiates a drop to $200 for
the PlayStation 3. Itís obvious that the games are coming, but consumers are
being more selective about which games that they buy... and the Xbox 360 is
heading into the saturation zone. Weíll see how long Microsoft plays chicken
with these negative sales trends.
The PlayStation 3 has been unable to cash in on the Xbox 360 slowdown.
Console exclusives have not been enough to drum up interest. Starhawk was a poor
sales performer in May, which doesnít help matters. The only positive for the
PlayStation 3 is that sales of this hardware are slowing at a slower rate than
that of the Xbox 360, but the PlayStation 3 hasnít set the bar very high for
itself. Even though YOY comparisons arenít as severe, the 2011 numbers that itís
being measured against simply werenít that impressive to begin with. The rest of
2012 could be a tough go for the PlayStation 3, as well. PlayStation All-Stars
Battle Royale is the major exclusive that Sony will go to for this holiday
season, and I donít think thatís enough to derail Halo 4 for the Xbox 360 or
Nintendoís Wii U lineup for November. The long year will continue, and the ďYear
of the PlayStation 3Ē continues to be elusive, if non-existent.
The 3DS may be doing well in Japan, but itís laboring to move 30,000 units a
week here in the United States. Mario Tennis Open, which sold less than 42,000
units, got a tepid reception at retail, and the next prominent new games are
still weeks away. With another price drop seemingly out of the question,
Nintendo is faced with a stiff challenge in the rising mobile gaming market.
Donít be fooled by the YOY growth; after the poor first few months that the 3DS
posted in 2011, thereís no reason why 150,000+ isnít a reasonable and consistent
expectation for the handheld aside from mobile gaming eating into Nintendoís
formerly iron-clad grip on the portable market. The future isnít completely
dire. Once more new software starts filling retail channels, itís possible that
consumers start buying the hardware again. Right now, there simply isnít any
impetus for people to buy. Hopefully that changes.
I have to talk about the Wii because itís still Nintendoís only console in
the channel. Iím not sure what Nintendo is waiting for in terms of getting these
units out of inventory to prepare for Wii U in 5 months. Drop the price to $100
and clear them out. Thereís still a fair amount of software on store shelves,
much of which is discounted in some way, so itís possible for Wii to sell at
least somewhat better than 70,000 units per month. Unless Nintendo figures this
out and implements some price cuts, though, the Wii U is a long way off.
Finally, we come to the Vita. That number you see there isnít a misprint:
50,000 for the entire month. Itís an average of 13,000 units per week, which is
similar to the same sales trends that weíve been so critical of in Japan. I
understand that $250 for such a device seemed like a great deal a year ago, but
the market has changed since then. $250 is perceived as expensive, and then
consumers have to add memory card and game costs. Itís not a solid value
proposition except to the most core gaming consumer, and even then, the IPs on
the Vita donít measure up to Nintendoís stable of franchises. Nintendo has
Mario. Sony has... Uncharted? No,
not really, because sales were awful. Mortal Kombat? Sales didnít clear 50,000
units last month. Gravity Rush? Maybe.
The fact is that Vita will continue to struggle until either the price drops
(which wonít happen until the holiday season at the earliest) or until more
prevalent software releases hit with consistency to convince consumers that the
money spent is a wise investment. That second condition is far from a certainty.
Sony failed to key on Vita enough at E3 and hasnít demonstrated a solid enough
commitment to the device to convince me or any other analyst that the future is
bright. I will continue to be bearish on my outlook for this platformís sales
going forward until I am convinced that itís the wrong stance.
Console software sales were also down significantly versus a year ago,
although the 32% decline was a bit less severe than on the hardware side of the
sector. Part of the problem was a poor showing at retail for
Max Payne 3, which was projected to
move over a million units in May. Instead, the game didnít even manage half that
number, and performed far below what we saw from L.A. Noire a year ago. Tom
Clancyís Ghost Recon: Future Soldier for the Xbox 360 was actually the
best-selling individual SKU of the month, outpacing Max Payne 3 for the 360 by
73,000 units. In fact, although Max Payne 3 did take the top spot for combined
console software sales last month, its gap over Future Soldier was a mere 35,000
Special nods go to Sniper Elite V2 (7th) and Dragonís Dogma (9th) for
debuting on the combined Top 10 chart in May. Sniper Elite V2 for the 360
actually outsold Call of Duty: Modern Warfare 3 on the 360 in terms of
Overall, thereís going to be some concern when analysts review these
numbers... and there should be. Itís a trend that shows no sign of changing and,
with Gen4 consoles still months or even over a year off, there isnít any kind of
quick fix to show investors that console gaming is still as viable as it once
Itís going to be a very long and challenging summer.
NPDís Top Hardware Sales in May
1. Xbox 360: 160,000 units sold**, -41% YOY
2. PlayStation 3: Less than
130,000 units sold, -26% YOY
3. Nintendo 3DS: Between 110,000 - 120,000 units
sold, +17% YOY
4. Nintendo Wii: Between 70,000 - 75,000 units sold, -70% YOY
5. PlayStation Vita: Between 50,000 - 55,000 units sold
** - Data supplied by Microsoft via press release
Other data courtesy of extrapolations and trusted posts from NeoGAF, which
are verified per NPD Snapshot Data for May, 2012.
NPDís Top Ten Combined Software Sales in
01. Diablo III (PC)
02. Max Payne 3 (360, PS3, PC)
03. Tom Clancyís
Ghost Recon: Future Soldier (360, PS3)
04. Prototype 2 (360, PS3)
2K12 (360, PS3, Wii, PSP, PS2, PC)
06. Call of Duty: Modern Warfare 3 (360,
PS3, Wii, PC)
07. Sniper Elite V2 (360, PS3)
08. Battlefield 3 (360, PS3,
09. Dragonís Dogma (360, PS3)
10. Just Dance 3 (Wii, 360, PS3)