NPD August 2007

[ErnstH]

You are correct. I was careful not to argue how far Sony will remain behind (could be close, could be far) or the WW dynamic. MS absolutely sucks in Japan. Sony has the ability to completely wipe out, from a WW perspective, any NA gains MS may have by totally throttling MS in Japan. And there is a high degree of probability that will happen.

I find that more likely than MS overtaking Sony in Japan (740K unit difference, only 15K units a month!)

I'm not really certain how important the Japanese installed base is to Western developers. I'd have to study Media-Create a bit, but I recall only seeing NDS/WII titles in the top10. Mainstream Western titles don't do too well. Therefore, NA (+Europe) installed base might be more important.

Of course, Japanese titles themselves are interesting in their own right (MGS, FF, BD to some).

 

[RobertR1]

Also, I have a hunch that once the PS3 reaches $299 the 360 will have lost the majority of it's price advantage. It seems $299 (or at least $250) is the new mainstream threshold, and below that point MS will not be able to rely *as much* on a lower price to drive sales over Sony.

This is the one part I disagree with. $199 is the golden spot still.

 

[scooby_dooby]

I smell contradiction here

...from the previous generation.

 

[mrcorbo]

mrcobro, that is an amazing post. You well define the concepts of momentum and influence and how particulars need to be framed in such ways. Good job.

Thanks. I'm always amazed at how you can crank out so much, so quickly and still make sense. I was afraid after I finished my post and saw how many posts had happened since I started it that someone would have already hit on those points and made it redundant.

Excellent points. I would also add the peer factor. With online play becoming more important, being in the same console family becomes more imperative to peer interaction. The early start and compelling lead puts increasing pressure on new entries to join the 'camp' that there friends also belong too.

Also a good point. You are even more likely this gen than last to get the system your friends have and this makes it even more important to get those early adopters as they can tip the balance for others.

 

[AlphaWolf]

MS seems to be doing a really good job building up to x-mas. Price cut, madden, Bioshock, then halo with Mass effect and friends for Nov/Dec whether planned or not I think it should make for a really good holiday season for them. I don't see ps3 gaining any ground in NA this year. Most likely Sony will fall back quite a bit, barring a major price cut or a new cheap SKU. If Wii has units to sell I expect they will be just slightly ahead of MS over the next 4 months.

 

[Acert93]

On the other hand, I do have to say Madden sold better on PS3 than I expected. Relative to installed base it sold more than the 360 (897k / 7M < 336k / 2M). So maybe Assassin's Creed will relatively sell more on PS3 as well.

You are right, there are many interesting dynamics.

Sell-through-Rate Madden
PS3: 17%
360: 13%

Sell-through-Rate NCAA
PS3: 8%
360: 6%

There continues to be a strong relationship between NCAA/Madden sales. When looking at Madden, the 360 saw a jump from 397K to 896K when comparing NCAA to Madden, which is a 2.25x increase. Applying that 2.25x factor to the PS3 NCAA numbers (157K), we see ~351K. Which is pretty close to the 336K they sold. Basically about 2.25x as many people buy Madden at launch than NCAA this year on both platforms.

NCAA-to-Madden
360: 397k-896k (2.25x)
PS3: 157k-336k (2.15x)

To compare/contrast from last year, in August 2006 MS had about 2.4M 360 consoles in NA and sold 575K. That is a 24% penetration rate for last August Madden sales. Very impressive... Which underlines an important point: Install base-to-sales rations aren't linear. The 360 NA install base has grown 193% but Madden August sales only increased by 55%. Of the 4.5M new 360 owners in NA, statistically a smaller percentage were Madden consumers. To contrast, PS3's Madden which sold 336K this year with a 2.01M NA install base (17% penetration). What this tells me is that both consoles have a healthy Madden audiance; the 360 has the larger overall Madden audiance right now and when both consoles were in Year 2 with about 2M in sales, the 360 had a higher concentration of Madden owners (24% compared to 17%). I am sure EA is looking at this as well as the fact the 360 passed PS2 August Madden sales this year (and nearly matched last years PS2 August Madden sales). Selling PS2 like software numbers with a mere 7M unit install base is bound to get attention.

Everyone can compare/contrast my Madden predictions from last month. I predicted an increase in 360 Madden sales and a decrease in PS2 sales (based on correlations to NCAA sales from 2006 and 2007). The raw number crunching was close, but the install base benefits Madden more so than NCAA. New console sales & price drop and EA/MS marketing appeared to help a bit above raw expectations (variables 1,2,3, and 4).

 

[Acert93]

Also a good point. You are even more likely this gen than last to get the system your friends have and this makes it even more important to get those early adopters as they can tip the balance for others.

That is important. I think it was Robert mentioned last month in our Madden exchange the relationship between platform ownership and its relationship to how it impacts your friends (Madden being a very social title). I think Live has a lot to do with the 360 software sales, too, and how it impacts what other people get.

1. Achievements are addictive. And your friends need to get the same game to compete.
2. If your friend plays a game online, you need to get it to play with him. Friends play with friends afterall.
3. Demos. I know a lot of people who never had interest in a game and then bought after a demo. You like the demo, you tell your friends to try the demo.

The 360 in many ways should be called the Xbox Live, not the Xbox 360.

 

[expletive]

You are right, there are many interesting dynamics.

Sell-through-Rate Madden
PS3: 17%
360: 13%

Sell-through-Rate NCAA
PS3: 8%
360: 6%

What i think might be happening here is that, for every console, there is a portion of hard-core gamers that buy nearly ALL the big titles and then there's the rest that variably buy based on reviews and personal preference.

Early on in the console's lifecycle, and more importantly at a consoles higher average price, its user base has a much higher ratio of hardcore to semi-hard core (or semi-casual) users. This should be the case as only hardcore gamers generally buy a console early in its life and at its highest average prices.

As time goes on, and price goes down, that hardcore market becomes fully tapped and more of the 'semi-*' market becomes part of a given consoles userbase.

So for example, lets say that at the moment the 360 has 10% of their users who are hardcore, they buy 80% of the "marquis" titles. Then there's the other 90% of users, which buy 20% of those titles.

On the PS3, since it is priced the way it is, ONLY the more hardcore have entered the market and those users comprise, say, 30% of its userbase.

If i'm right here, the PS3 should be selling better relatively to its installed base because that installed base, almost by definition, is hard core and put more of their disposable income towards gaming.

As time goes on, relatively less and less of the PS3 userbase will be those hardcore users. Subsequently, their sales relative to their installed base will drop over time.

Am I making (good) sense here?

 

[patsu]

On the PS3, since it is priced the way it is, ONLY the more hardcore have entered the market and those users comprise, say, 30% of its userbase.

If i'm right here, the PS3 should be selling better relatively to its installed base because that installed base, almost by definition, is hard core and put more of their disposable income towards gaming.

As time goes on, relatively less and less of the PS3 userbase will be those hardcore users. Subsequently, their sales relative to their installed base will drop over time.

Am I making (good) sense here?

Hmm... I am not really hardcore (Didn't buy any of the sports titles too).
There are many people who bought PS3 as Blu-ray players only (plus may be a little gaming). It's a little hard to read PS3 now because the marketing is somewhat muddled.

 

[AlphaWolf]

Hmm... I am not really hardcore (Didn't buy any of the sports titles too).
There are many people who bought PS3 as Blu-ray players only (plus may be a little gaming). It's a little hard to read PS3 now because the marketing is somewhat muddled.

Every rule has exceptions. The fact is that people who are willing to pay more for a product are generally willing to pay more to maintain the use of that product. And keep in mind even with a super high adoption rate, we're talking about 1 in 6 people bought madden for the ps3 (meaning 5 out of 6 didn't).

A person who could afford the ps3 at $600 can probably afford to buy a few more games than the guy who is waiting to pick it up for $250.

 

[patsu]

Every rule has exceptions. The fact is that people who are willing to pay more for a product are generally willing to pay more to maintain the use of that product. And keep in mind even with a super high adoption rate, we're talking about 1 in 6 people bought madden for the ps3 (meaning 5 out of 6 didn't).

Sure, but it may not be accurate to brand PS3 owners as hardcore gamers at this point. They may not be. As I mentioned, many bought PS3 as Blu-ray players only (casual gamers at best).

expletive's thinking may not be wrong, but the numbers need to be adjusted because we are sharing the space with the Blu-ray people. And yes, there may be more than one factors at work.

I'm trying to look for Peter Moore's parting words regarding "casual gamers". I believe it's key to this gen. Anyone has that quote ?

 

[scooby_dooby]

Sure, but it may not be accurate to brand PS3 owners as hardcore gamers at this point. They may not be. As I mentioned, many bought PS3 as Blu-ray players only (casual gamers at best).

By many, what do you mean, 10%? Certainly not the majority, or BR software sales would be much higher than they currently are.

I think it's totally accurate to brand people willing to spend $500-600 on a console as 'hardcore', and expletive is probably right on with his theory.

It's the same thing that propelled Madden 07 sales on the 360 to 24% ratio, and made million sellers of COD2, FN3 and Dead Rising. That new-console urge to buy games, and the predominant hardcore/early adopter audience.

 

[Scott_Arm]

Pretty much all games are niche games! I've said it before and no doubt I'll say it again. Only the top few titles sell to lots of millions. In the list of PS2's best selling titles (NOTE : This website appears to be virusified. Make sure your antivirus is running!), if your game is out of the top ten you're selling less then 5 million. Out of 190 listed games, some 170 are selling under 3 million. You can't rely on one game to sell you tens of millions of consoles! You need a mix of pullers. You need one game to attract 3 million buyers, and a different game to attract a different 3 million, and another franchise to get you 2 million, and altogether they add up

If all PS2 had was Madden, GTA and GT, they'd have software to appeal to...what? 30 million gamers? Assuming those 30 million are willing to buy a console for one or two games only. Sony wouldn't have sold any consoles on the weight of Guitar Hero (2 million), EyeToy Play (3.9 million), God of War (3 million) etc. (though of course, these games in themselves aren't enough to sell an entire console. Each 'must have' title that sells n million copies only attracts a smaller percentage of new console buyers on average. A game that sells 6 million doesn't get you 6 million new console owners!)

I think people who hang around gaming forums get so much coverage of the hyped titles that they forget the market's far bigger than that, and the impact of titles are often far smaller than they expect.

I totally agree with you, and that's why I find it kind of funny that someone would suggest LBP, Eye of Judgement and Singstar would turn the PS3 into a bigger seller. There are few games that will really move systems, if any.

I think the biggest points in selling a system is having a lot of quality titles and an affordable price. The PS3 has neither of those. The 360 is getting to be pretty solid on both fronts. Wii has one, and is some way from getting the other.

 

[Scott_Arm]

...
And as a result of this it is not really going to be possible to predict how much impact a big release like MGS4 or FFXII is going to have on hardware sales based on prior iterations because the effect they had didn't occur in a vacuum. It was partially a product of the environment that existed at the time of their release. If Sony hasn't done enough in the interim to create the proper environment for those titles to have a big impact on sales then they are not going to. No matter the quality of the titles themselves. They will undoubtedly have an impact, though, even if it doesn't translate into immediate sales.
...

Great post, especially the part I quoted.

 

[Scott_Arm]

I'd like to throw this out there:

MS stands little chance in Japan. The Japanese are very loyal to Japanese companies and Japanese products. Even if the 360 was somehow measurably better than the PS, it would probably stay in 2nd.

This is something I've been told from some Japanese friends, and people who have traveled extensively in Japan. These conversations didn't relate to consoles directly, but just industry in general. Except pop culture. They love American pop culture.

 

[g35er]

The next MS console needs to be co-branded with Sega for the Japanese market. Mega Drive X? Or Toshiba or any of the big Japanese electronics firms.

BTW, if there is a lot of people buying a PS3 just to play Blu-Rays, Sony is in a lot of trouble. They would need to sell many more movies per buyer than games per buyer just to get their money back on the loss per console.

 

[AlphaWolf]

The next MS console needs to be co-branded with Sega for the Japanese market. Mega Drive X? Or Toshiba or any of the big Japanese electronics firms.

something like "Happy Bunny Mega Fun 2000" would actually probably be better for Japan. <edit> although that might already be taken

 

[liolio]

I just want to add even if it's likely that Sony do very well in Japan, Japan is still a tinny market in regard to Europe and north america.
So far we can't say that Sony will make up for the loss in north america, by selling really well in Japan, no matter how hard some here try to spin it Sony is actually in a sitaution where they can loss a lot of market share in US.
And so far it's hard t to track sales in Europe BUT we we know that both MS and Nintendo are actually widening the gap in UK witch is a third of the european market.
No matter what, sony will have enough market share to be profitable, BUT without a huge shift, witch is REALLY up to speculations, Sony won't make up for the loss in Us by perform better in Japan.

All the talk here rely on quiet huge bet a change in tendance in both Europe (as MS do better here than expect) and Us (even less likely).

We're not speaking about wishful thinking... something really big has to happen to change the trend in US, and Europe is far from a given for Sony.

 

[Vic]

I just want to add even if it's likely that Sony do very well in Japan, Japan is still a tinny market in regard to Europe and north america.
So far we can't say that Sony will make up for the loss in north america, by selling really well in Japan, no matter how hard some here try to spin it Sony is actually in a sitaution where they can loss a lot of market share in US.
And so far it's hard t to track sales in Europe BUT we we know that both MS and Nintendo are actually widening the gap in UK witch is a third of the european market.
No matter what, sony will have enough market share to be profitable, BUT without a huge shift, witch is REALLY up to speculations, Sony won't make up for the loss in Us by perform better in Japan.

All the talk here rely on quiet huge bet a change in tendance in both Europe (as MS do better here than expect) and Us (even less likely).
We're not speaking about wishful thinking... something really big has to happen to change the trend in US, and Europe is far from a given for Sony.

Compared to 360 last year, PS3 is selling slightly worse in the US, and slightly better in Japan and Europe, so I dont know why you keep on continually posting about how "Sony is teh doomed".

Wait and see is my advice when it comes to 'definite' predictions.

 

[Zaphod]

You are right, there are many interesting dynamics.

We talked a bit about this in the July thread and in DemoCoder's Wii 'review thread'.

I tend to mostly agree with you in your lengthy analyses , but the 'fanboy' perspective may also hold some merit. The attach ratio difference might to some degree stem from those buying the PS3 in the anticipation that it would be as dominant as the PS2. This thread alone should be enough evidence that such people exist...

The rest (most of it?) can be attributed to the Xbox 360 users being a more diversified user group than PS3 owners (which in the long run, IMO, should be a good thing for MS).