[vc_row][vc_column][vc_column_text]If you read that there was a 9% year-over-year sales increase for the video game industry in January of 2013, it’s a great example of how data without proper context can be spun to reflect a certain point of view. If you add the proper context, you’ll find that sales were higher because the NPD reporting period for January was five weeks – as opposed to four weeks in January of 2012. The reason for this extra week is a “leap week”, as explained in this GamesIndustry.biz piece. If you level the playing field and normalize sales for the four-week period, YOY comparisons actually fell for the 14th consecutive month. Having said that, this month’s analysis is also going to reflect the YOY increases and comparisons, in spite of the extra week. As we are not privy to week-by-week breakdowns of sales in hardware, it’s impossible to determine what the normalized number would be without the extra week of sales added in.
Overall, hardware sales dollars were up 4% over January of last year to $205 million, thanks to YOY increases in sales for Xbox 360 and PlayStation 3 hardware. Each platform was up by about 4% in terms of unit sales, and further gains were made in sales dollars thanks to average sales dollars per unit for PS3 being higher.
Analyst note: The data provided in this Armchair Analysis article is taken from the monthly NPD public release, Microsoft, and reliable sources within NeoGAF and its monthly NPD Sales thread. Please note that all data aside from Microsoft’s Xbox 360 numbers are estimates, based on extrapolations, observations, and related chatter. These estimates are not necessarily exact and are used as guidelines for analysis and trend exploration, as well as entertainment purposes only.
Microsoft was the only company to go on record publicly with its Xbox 360 hardware unit sales data. 281,000 Xbox 360 units sold in January, which is 11,000 more units than last year. That number was good enough to take the top spot in the hardware sales rankings once again, and there’s no sign that anyone is going to stop Microsoft’s reign – at least in the near-term. Releases of Dead Space 3 and Crysis 3 this month should help Microsoft to move units. Metal Gear Rising: Revengeance also hits this month, but I believe that will be a stronger release for the PlayStation 3 platform, much like DmC was last month. Moving forward, the one thing that could trip Microsoft up might be the unveiling of its hardware platform follow-up to the Xbox 360. Once the hype machine kicks in, consumers could begin to gradually shy away from the 360 and take spots on the fence, waiting to see how the new console race shapes up. In addition, the 3DS has a fairly potent software lineup as 2013 matures, so look for the possibility of a minor shakeup as the transition to the next generation begins for Microsoft.
Sony, as usual, did not release its sales data for January 2013. Estimates from reliable sources put PlayStation 3 sales at 200,000 units or slightly better. That’s roughly 10,000 units better than last year. This number is actually a pretty good start for Sony as 2013 begins, and with a new PlayStation Meeting on February 20th, anything goes… including a potential price cut for the PS3. This cut, if it occurs, likely wouldn’t help Sony overtake Microsoft; however, it very well could strengthen Sony’s grip on the second-place slot in the rankings. Like we’ll see with Microsoft, it will be interesting to observe consumer buying trends once Sony unveils its own next-gen platform. If consumers start saving money and putting this “Longest Generation” behind them, we could see a steady decline. Consumers may also react positively to a price cut to $200, given the on-board Blu-ray player in the PS3 and Sony’s free (though somewhat maligned) online service.
Nintendo also refused to share its sales data for January, which is usually an excellent indicator that sales were not good – and estimates point to negative news. Sources indicate that the 3DS sold slightly less than 150,000 units for the month, which is about 25,000 units fewer than a year ago. Lack of new software hurt the 3DS, plus Paper Mario: Sticker Star wasn’t the evergreen title that Mario Kart 7 was at this point in 2012.
The 3DS registered its seventh consecutive month of YOY sales declines, which continues to signal weakness for the platform. Worse yet, no major new releases for the 3DS in February likely means that another lower month is in store. Notable new software finally hits in March, such as Pokémon Mystery Dungeon, Luigi’s Mansion: Dark Moon, and Monster Hunter 3 Ultimate. That will hopefully break this extended losing streak. Until then, however, slow sales lie ahead.
Fourth and fifth place on the hardware chart, according to estimates, belong to the Wii and Nintendo DS platforms. Lower prices at retail, combined with cheap and expansive software libraries, continue to make these platforms reasonably attractive to budget-minded consumers. Unit sales for the Wii were somewhere around 100,000 units, which would be about 50,000 units lower than last year or a drop of 34%. Nintendo DS unit sales are projected to have been somewhere close to 70,000 units, which is a decline of about 6,000 units or about 8%. It can be argued that these legacy platforms may be cannibalizing potential sales of the Wii U and 3DS respectively, but Nintendo is still making money on these legacy sales. That makes it a bit more difficult to simply pull the plug and try to force consumers forward.
Nintendo’s big trouble spot continues to be the Wii U. Unit sales were estimated to be a paltry 57,000 units in January, which is inexcusably poor for a new platform. Supply is not a problem, as Wii U hardware is very easy to find. Factors for Wii U sales weakness potentially include perceived high pricing, lack of new software, poor consumer education, and the inability to attract fence-sitters who are waiting to see what all of the generation’s consoles will have to offer before committing to a specific one. The pricing is a problem, some 20-40% higher than the Wii launch back in 2006. Some of the most popular games for the Wii U, such as New Super Mario Bros. U, ZombiU, and Call of Duty: Black Ops II are also 20% higher than they comparatively were in the previous generation. Nintendo had managed to attract consumers by keeping prices lower than the competition with the Wii, but changed course with the Wii U and it shows. The software drought for Wii U is a concern, with notable games since launch being few and far between. As with the 3DS, March is the next month where significant new releases arrive at retail. LEGO City: Undercover and Monster Hunter 3 will be in the spotlight, but it remains to be seen if either will have significant pull, considering the trend of poor third-party game sales on Nintendo platforms.
The lack of consumer education is apparent at retail. Many people don’t know what a Wii U is, assuming that it’s a type of add-on for their current Wii. Nintendo desperately needs better and more consistent marketing to fix this problem. Finally, with a growing number of consumers aware that Sony and Microsoft are set to announce their new platforms, there’s a tendency to hold off on buying a new, full-priced console until they have seen all three choices and can make a more informed decision. Add the high price of the hardware and software and a dearth of new and significant game releases, and it’s easy to see why Wii U has fallen flat out of the starting gate.
Bringing up the rear once again on this month’s chart is the PlayStation Vita. Estimates point to about 35,000 units sold in January, or a mere 7,000 per week. There’s really not much to say here. Perhaps a rumored price drop will help to resurrect this platform, but high price is only part of the problem in this market. Software continues to be slow in coming, and this is despite the Vita celebrating its one-year anniversary here in the United States this month. Vita also has to compete with the 3DS, which is handily beating the Vita every month in spite of its own struggles.
The larger elephant in the room – and one that brings out vitriol and venom from core gamers everywhere – is the continued growth of the mobile sector and its negative effect on the handheld market in this territory. Despite the core complaints of “no real controllers” and games being “time wasters” or “too shallow”, these games are 75-95% less expensive than many handheld retail releases. They’re good enough for many mainstream consumers, despite claims to the contrary by core players. Smartphones and tablets render handhelds redundant for many, and that money can be better spent elsewhere unless there’s a very compelling argument to the contrary. Perhaps Nintendo’s big guns, especially from June onwards, can make that argument… but, as of right now, Sony simply cannot. Until it can, even with a price drop allegedly in the offing, Vita sales will continue to face a severely uphill climb.
Armchair Analysis no longer covers software sales in-depth, due to NPD not being able to include digital sales specifics when it shares its software results. In fact, half of the software sold in January was digitally distributed. This absence of data specifics makes anything other than surface analysis next to impossible. Still, the NPD’s Top 10 list of software sales is listed below, for your reference.
NPD’s Top Hardware Sales in January (Units Sold)
01. Xbox 360 (281,000 units)
02. PlayStation 3 (200,000 units)
03. 3DS (150,000 units)
04. Wii (100,000 units)
05. DS (70,000 units)
06. Wii U (57,000 units)
07. Vita (35,000 units)
NPD’s Top Ten Software Sales in January (Platforms by sales amount):
01. Call of Duty: Black Ops II (360, PS3, Wii U, PC)
02. Far Cry 3 (360, PS3, PC)
03. Just Dance 4 (Wii, 360, PS3, Wii U)
04. NBA 2K13 (360, PS3, Wii, Vita, Wii U)
05. Madden NFL 13 (360, PS3, Wii, Vita, Wii U)
06. DMC: Devil May Cry (PS3, 360)
07. Halo 4 (360)
08. Assassin’s Creed III (360, PS3, Wii U, PC)
09. Skylanders Giants (Wii, 360, PS3, 3DS, Wii U)
10. FIFA Soccer 13 (PS3, 360, Vita, Wii, Wii U, 3DS, PSP)