No Deserted Paradise

“It could have been worse.”

That’s what I told myself when I looked over the NPD sales data for June 2012. I had predicted some pretty low numbers for hardware sales, and really didn’t have much confidence after May was so disappointing. June had less optimism, in my opinion, as notable new releases were fewer than in 2011 and since my prediction trends continued to be much higher than actual numbers. Hardware sales wound up bearing out stronger than my predictions, which isn’t a bad thing.

That’s not to say that the overall picture is overly positive. Hardware sales continued their swan dive from 2011, as June 2012 saw a 45% decline versus June 2011. As with last month, the 3DS was the only platform to post any growth YOY, but legacy Nintendo DS hardware came within 5,000 units of matching 3DS sales for the month. Software sales were also down sharply from 2011, showing a 29% decline in revenue. There are multiple factors and explanations for the continued declines, which have now spanned seven consecutive months. Economic uncertainty, the anomalous length of this console generation, some market migration to mobile or social gaming, and other issues can all be cited.

Let’s start this month’s analysis with Microsoft, which continues to lead the hardware sales sector. Another 257,000 Xbox 360 units sold in June, which was higher than I expected. It’s a 50% decline from June 2011 and a 43% decline from June 2010. This number is more reflective of June sales from 2009 (241,000) and 2008 (220,000). The inflated June sales in 2010 came from the release of the Xbox 360 Slim, and this momentum carried on for about 16 months. It’s projected that the Xbox 360 will cross the 35 million sold mark in October or November. At the halfway point of 2012, the Xbox 360 has sold 1.72 million units. That’s a 29% decline from a year ago.

The PlayStation 3 moved more than 185,000 units in June, which was good enough for second place overall. The 32% YOY decline was the steepest that we’ve seen for Sony in some time, and the gap between the Xbox 360 and PlayStation 3 widened even further as a result. As with the Xbox 360, we’re seeing a regression to sales patterns typical of 2008 (189,000) and 2009 (165,000) for the PS3. The biggest issue with this parallel is that the Xbox 360 showed explosive growth in the second half of 2010 and through most of 2011, while the PS3 showed a slower growth pattern. By the end of 2012, the PS3 should cross the 22 million mark in units sold. At the halfway point of this year, more than 1.3 million PlayStation 3 units have sold, which is about a 19% decline versus a year ago. The PlayStation 3 is the best YOY performer for console hardware (not handheld).

OK, 3DS fans. I will admit that I was too bearish with 3DS numbers. I’m not quite convinced that a huge turnaround is at hand, but the near-term does look a lot brighter for the handheld. The 157,000 units sold in June was a 10% jump from last June, and about 18% higher than I thought. That’s good news. Even more positive to me was that legacy DS hardware combined for another 152,000 units sold. That’s 309,000 handheld units. Even if you throw out the weak combined YOY comparison (-42%), I think it indicates that there’s some building interest in the handheld sector. With New Super Mario Bros. 2 and the 3DS XL launch in August, and then with Pokémon Black & White 2 due soon after, I think that Nintendo’s handhelds are positioned for a more positive second half of 2012. 3DS unit sales crossed the 5 million mark in June, and over a million of those have sold in 2012. 3DS unit sales are up YOY so far in 2012 by 27% and I expect this number to stay positive for the balance of the year. As for legacy DS hardware, nearly 650,000 units have sold so far this year, which is a 69% decline from June 2011.

When I saw that the Wii moved another 95,000 units, I was a bit surprised. Interestingly enough, the release of LEGO Batman 2 may have been a catalyst for Wii sales in June. LEGO Batman 2 on the Wii sold over 100,000 copies in June, good enough for fifth place on the individual SKU sales list. Just Dance 3 for the Wii also made that list, charting in 10th place. There is some Wii interest out there, but it’s obviously in the closing stages of its life cycle. The 95,000 units sold marked a plunge of over 65% from a year ago. I maintain my assertion that Nintendo should lower the Wii price to $99.99 and start to clear inventory ahead of the release of the Wii U. If that happens, I can see one more sales spike this year before the Wii gives way completely to its successor. Overall, more than 800,000 Wii units have sold so far in 2012, which is a 54% drop from a year ago. I do expect the Wii to cross 40 million units cumulatively sold later this year, probably by October.

Finally, let’s talk about Vita. 75,000 units sold is 1.5 times better than May’s results. That’s good. The fact that June was a five-week month dilutes the improvement a little bit, though. The weekly average of 15,000 units sold in June is only about 2,000 units better per week than May’s average, and this is for a still-new handheld platform. What will it take for Vita to start turning the corner, especially with 3DS about to start accelerating once again? New and more prominent game releases will help, but the Vita price point and the negative perception of that price point will continue to be inhibiting factors. So far in 2012, the PlayStation Vita has sold over 630,000 units. I expect that sales will cross a million units during the holiday season.

Look for a special Armchair Analysis column later this month that will look ahead to this second half of 2012 and try to forecast when -  or if -  this losing streak ends anytime soon. In the meantime, here are your complete sales rankings for June 2012:

NPD’s Top Hardware Sales in June

01. Xbox 360 (257,000 units, -50% YOY) *
02. PlayStation 3 (>185,000 units, approximately -19% YOY) **
03. Nintendo 3DS (157,000 units, +10% YOY) *
04. Nintendo DS (152,000 units, -61% YOY) *
05. Nintendo Wii (95,000 units, -65% YOY) *
06. PlayStation Vita (~75,000 units, N/A YOY) **

* - Sourced by PR from respective hardware company and verified via NPD snapshot data
** - Sourced from NeoGAF and verified via raw NPD snapshot data

NPD’s Top Ten Combined Software Sales in June

01. LEGO Batman 2: DC Super Heroes (360, Wii, PS3, NDS, 3DS, Vita, PC)
02. Tom Clancy’s Ghost Recon: Future Soldier (360, PS3, PC)
03. Diablo III (PC)
04. Max Payne 3 (360, PS3, PC)
05. NBA 2K12 (360, PS3, Wii, PSP, PS2, PC)
06. Batman: Arkham City (360, PS3, PC)
07. Pokémon Conquest (Nintendo DS)
08. Call of Duty: Modern Warfare 3 (360, PS3, Wii, PC)
09. Battlefield 3 (360, PS3, PC)
10. The Amazing Spider-Man (360, PS3, 3DS, NDS, Wii)