NPD January 2009

[fearsomepirate]

Wii Sports isn't a product of its own merit. Its appeal its ability to show off the strength of the Wii, which is ultimately what sold Wii Sport and the Wii.

People buy consoles to get to the games, not the other way around. Wii Sports is a fun game that people liked, and people bought consoles to play it. Thus, it did indeed have its own merit.

The whole console lifecycle since the PS1 was introduced has been based on losing money early to make money late.

Only for Sony. Nintendo's strategy has always been to make money, and I'm not sure how big "making money" even is in Microsoft's strategy. It isn't a big part of the strategy for a lot of products, where the strategy is "Keep losing money until we've managed to run off any competitors, then, maybe, just maybe, start making money."

X360 had a lot of content going for it. Everyone knew Halo 3 was coming. Call of Duty 2 impressed a lot of people. Tom Clancy games were stunning compared to what you could get on the PS2. Also, note that its non-Christmas weekly sales rate is only a few percent higher than Xbox 1's. It's had some stupendous Christmases, though. Anyway, it's selling faster, but it's not like it's doubled its adoption rate. At this point, it's ~20% higher in the US than Xbox 1 was at the same time in the USA. It's nowhere near where the PS2 was.

Here's a question: is the market for "traditional" consoles, defined in terms of an upgrade in power and complexity over the previous generation, shrinking in North America? In January 2004, just over 3 years past the PS2 launch, PS2 + Xbox + Gamecube = 45m. In January 2009, just over 3 years past the X360 launch, X360 + PS3 is around what, 22, 23m?

 

[mrcorbo]

Only for Sony. Nintendo's strategy has always been to make money

And in the prior two generations, Sony's strategy was significantly more successful than Nintendo's at making money. Nintendo's strategy was borne as much if not more out of necessity (they are no where near as large a company as MS or Sony) as preference, IMO. If they had the resources, maybe they would have attempted to apply the PS1/2 model with the GC. There's no way to know, because it was never an option for them. The Sega example showed pretty clearly that you need deep pockets to play the game by Sony's rules. So they instead aimed for and achieved their moderate success with the GC and in developing the Wii figured out a way to play the game by their rules *and* be spectacularly successful, probably more so than even they expected.

 

[Carl B]

The dollar strengthen due to the fact that a bunch of money went into bonds because of the failing markets and the yen strengthen due to belief that Japan would weather the storm better than others and recover first. However, the flooding of US treasury bonds will further weaken the dollar by providing more supply than demand and now that the market looks like its bottoming the market is becoming more attractive to investors.

I don't want to derail the thread on tangents that soak up ~75% of the daily RPSC post volume, but Japan is a bond/debt monster as well.

The Halo2 phenemenom is directly attributable to Halo1. Its not like Halo2 appeared out of no where to sell millions of copies within a day. Furthermore, the Xbox went on to have its two worst years of sales after the release of Halo2 even though Halo2 give MS its best holiday season.

Halo 2 is certainly attributable to Halo 1, but it went to another level. Indeed Halo 1 sales got a decent boost based on Halo 2, and the lines and 'mania' Halo 2 caused put into motion such fundamental changes in culture such that like, news anchors would refer to "Xbox" when they wouldn't before.

Console sales of course would have trailed after that, since the 360 launched the next year, and Microsoft had ceased XBox production in an immediate fashion thereafter. Such was the game though that we all know how seriously MS viewed B/C efforts with regard to it.

Wii Sports isn't a product of its own merit.

I'm going to assert that without the existence of Wii Sports (or its suitable equivalent), the Wii sales volume in NA would be slashed by at least a third. I mean it's a random shot in the dark, but so singular has been the appeal/draw of that title among the "older" non-gaming demographics.

That the point. Its a really bad ideal to allow the "playstation" brand to degrade to the point that has no more influence on the market then the "Xbox" brand did at the launch of the 360. Thats like Toyota allowing its brand to degrade to point that is about as well respected as Hyundai. Hyundai is no where near as bad as it was 15 years ago but you would need to be shot if you as Toyota's management allowed Toyota current brand image to fall any where near where Hyundai is right now.

I don't think anyone's going to disagree with you here.

Sony can survive a lot worse than the current situation. Its not like S&P or Moody has degraded Sony to junk bond status which would happen if Sony was in really bad shape.

Sony will survive, but they do have extreme pressure on them to not be overly cashflow negative. Any need for new debt issuance in this environment can bring the reaper's gaze to bare down. When Stringer and Kaz are on the phone with each other, I don't think PS3 marketshare is what Stringer is most concerned with.

 

[Carl B]

With all the discussion about Sony focusing on profitability I haven't really seen anyone point out that this is only taking into account short-term profitability. To what degree is the decision to not be more aggressive on pricing affecting their long term profit potential?

What is the long-term horizon in your mind then? People need to really grasp that the losses of the PS3 gen have almost wiped out the *entirety* of the profits of the preceding two; the PS1 and PS2 eras. I think if they were to ignore short-term profitability, it would effect their long term potential for existence!

As for the 360, it won't be profitable this gen on its own terms either, let alone make back even one cent of what the XBox brand-building effort cost.

 

[eastmen]

Are you saying it's not? Do you know how much it cost? Maybe they made a profit, in which case yes, they're better off than when they started. Did EA intend LOTR:Conquest to be a bad game with a bad demo? We don't know, we're the peanut gallery. If it happens that PS3 ports are canceled for lower-profile games, it's not altogether surprising. But let's not start pretending like we have insider information, because that's BS.

and if ports are canceled it will only hurt sony and their ability to sell more systems.

Its the small titles that help build and flesh out a library of games , its what helped make hte ps2 so sucesfull and opened it up to a larger market. If you can't afford to put out the smaller titles on a platform you put them on the ones that do.

we already know of a handfull of games that were canceled for the ps3 like command and conquer red alert 2 . Who knows how many we haven't heard about or how many more that might get scrapped if sales don't go up

 

[eastmen]

I've been thinking about the SF4 proximity as well honestly. The thing is, February may have trumped the match-ups (SF4 and the obviously positioned Halo Wars). They'd have to go out to April in order to clear the field entirely of prominent games (resident Evil 5 in March), and I'm expecting that they're looking for KZ2 related numbers to tout in their financials for year-end and to consider when planning midterm strategy.

I could see and make arguments either way, which is why we just have to wait and see how it goes - the die is cast. But, with the reviews things, I don't know... I felt that was a mistake.

To be perfectly frank from all the gamestops in my area that i know managers in (and its a fair number ) Killzone 2 reserve wise under SF4 , Halo wars and slightly above RE 5.

Now of course preorders are really more towars the core gamer and i'm sure alot of people will buy the game that never preordered.

I think Halo wars will sell better than killzone 2 in their first months , but killzone will have very long legs. Its going to be the biggest thing on the system this year unless GOW3 comes out this year.

I think street fighter 4 will put up monster numbers in febuary and spill over in march but then die out. The hardcore is going to soak it like water.

I know i canceled on killzone 2 because i'm buying halo wars , sf4 , the $150 stick and re5. all within a month. I couldn't justify another $60 bucks to my gf or my wallet.

I'm sure alot of people are going ot have to choose between these titles.

 

[DuckThor Evil]

And this matters how? Bundled copies are still copies sold, and Meida Molecule still makes money off of bundled copies.

Unless you are somehow trying to suggest that now, the number of copies sold is all of the sudden irrelevant because of the sales price? Does the buck stop at the sales, and now DLC doesn't exist? Do you think MM made no money on it?

Please, tell me why in the world the price of the game is relevent to the number of copies sold, when the retailer still bought it from the publisher, and the publisher (sony) still made their money (and Media Molecule theirs, of course).

...Must try to err... stay polite...

You know the normal retail price for a game in the UK is about 40£ and now they sell Little Big Planet for 17£ and that's not some remaining stock throwaway either, I've seen places go out of stock and few days later when stock has arrived the same or cheaper price is still available, so rest assured retailers are making profit with that price.

How much profit do you think the retailers make per game in normal 40£ circumstances if you think that Sony or Media Molecule hasn't taken a hit with this lower price !?!?

If you bundle a game the money it generates is zero or less to Sony and much MUCH less to Media molecule than what a 40£ retail sell would generate, granted it will still probably make some money for the developer and the huge increase in volume the game is getting that way might in the end be substantial, but it is in no way comparable to similar volume of full retail price sales.

 

[liolio]

Gamasutra has a clean chart for the top20:
http://www.gamasutra.com/php-bin/news_index.php?story=22308

it goes like this:
Wii 9 titles
360 8 titles
PS3 1 title (CoD WaW)

(the two titles left are for the NDS).

 

[tuna]

If you bundle a game the money it generates is zero or less to Sony and much MUCH less to Media molecule than what a 40£ retail sell would generate, granted it will still probably make some money for the developer and the huge increase in volume the game is getting that way might in the end be substantial, but it is in no way comparable to similar volume of full retail price sales.

How do you know how the contract between Media Molecule and Sony is set up?

 

[Shifty Geezer]

it should be more worrying to sony that games are not selling on the ps3 even its exclusive holiday titles did poorly.

If i was a dev looking at the situation would a ps3 port really make sense still if so few games are charting ?

Charts follow relative sales. PS3 install base is half the size of XB360's in NA. Thus the number one selling title on PS3 could be less than the number 5 selling title on XB360, not to mention Wii's runaway domination skewing results considerably! IIRC we've seen relative numbers given, sales per unit installation, and PS3 sales track XB360's pretty similarly, so you'd expect about a 33% increase in your market if you produce a PS3 version than if you don't.

 

[Shifty Geezer]

i think releasing KZ2 close to SF4 (for ps3) is a big mistake, i am willing to bet SF4 will overshadow it...people have been buying the arcade sticks like hot cakes just to play SF4, but of course this is just my observation and opinion on the matter

Street Fighter hasn't sold big numbers since the SNES days, and as KZ2 already has 1.1 million preorders in Europe alone, I'll be very surprised if SF4 suddenly makes a huge comeback to its glory-days!

 

[Silent_Buddha]

Charts follow relative sales. PS3 install base is half the size of XB360's in NA. Thus the number one selling title on PS3 could be less than the number 5 selling title on XB360, not to mention Wii's runaway domination skewing results considerably! IIRC we've seen relative numbers given, sales per unit installation, and PS3 sales track XB360's pretty similarly, so you'd expect about a 33% increase in your market if you produce a PS3 version than if you don't.

Even still when you consider the spread of numbers sold between the number 1 title and number 20 title, there "should" be a lot more than 1 PS3 title on the chart just due to existing install base of consoles.

Heck if X360 has a 2:1 advantage in the US. Shouldn't at least 1 or more PS3 titles have sold at least half as much as the top 3 X360 titles? Yet only 1 title is close (CoD:WaW) and it's not even half of the top 2 X360 titles and maybe not even half of the 3rd (Skate 2 at 199k)

But the fact is people just aren't buying a lot of games for PS3 in relation to its install base. ESPECIALLY if it's an exclusive. And that's a rather large problem.

Multiplatform games are generally close to the installed base. So what does that say? It basically says that people find multiplatform games more compelling on PS3 than Exclusives. With the exception of a few rare games (MGS4 being one example).

Contrast that to X360 where exclusives generally do well and sell in volume.

I don't know, maybe Sony is just having a harder time finding exclusives that resonate as well with US buyers as they have in the past.

Maybe there is some small truth to the rumor that many people bought PS3 as just a cheap blue-ray player and rarely buy games. (Although to be fair I have a friend who just recently bought a X360 to ONLY stream Netflix videos ).

Sony just has a lot of problems with PS3 this generation that can't just be pinned to one source. Sure price is a problem. But lack of compelling mass market exclusives is also still a rather large problem. And both are combining to make the situation harder.

And I'm not saying those exclusives aren't good. But the fact is, they aren't resonating enough with the mass market to sell as well compared to either Wii or X360 (in proporation to their install base).

Regards,
SB

 

[liolio]

Well we would need more detailed data to be affirmative but my feel (based mostly on my memory and of some data shown once in a while) is that only big multi platform games sell accordingly to ps3 instal base.
The volume fall very quickly as you go down the chart and some ps3 renditions of multiplatform are nowhere to be seen in the top20.

I think we will see a shift soon in editors decision, mostly in favour to the Wii 4 of the 9 wii games in the top 20 are for from third party editors. The pressure on game budget due the the actual crisis will also help this shift as the budget for a wii game is likely lower than for its HD sisters.
I see also Ms get some benefit from the situation if ps3 continue to stall/fall I don't question the choice to push AAA games on both platforms but for games with lesser budgets... well we will see anyway.

 

[Shifty Geezer]

But the fact is people just aren't buying a lot of games for PS3 in relation to its install base.

Attach ratios say otherwise. We've seen attach ratios for PS3 and XB360 tracking similarly, about 5-6 over a year. I saw this link just now on the forum, but can't recall where!

As for PS3 WAW at less than Skate even, half of XB360's 235k WAW's is ~115k. Through in a bit of market variation, PS3 shooter fans having perhaps just bought R2 or saving for KZ2, and this doesn't look particularly removed from what I'd expect.

ESPECIALLY if it's an exclusive. And that's a rather large problem.

Depends on the exclusive, surely? Not every exclusive sells well on any platform. The real problem would be if a cross-latform title sells far, far better on another platform. eg. If Valykiria Chronicles wasn't exclusive and sold relatively 5x as many on XB360, that'd point to PS3 being a weaker platform for this game. But as it is, we can't look at VC on PS3 and say 'PS3 owners aren't buying exclusives' when it's just as likely that the reason is gamers regardless of platform just aren't buying this game. I point to Okami as an example. An exclusive onPS2 it didn't sell well, and neither has it sold well on Wii.

As long as relative figures are about right, which they generally have been the past year or so AFAIK, PS3 represents a respectable 33% increase in potential market in NA, and more in the rest of the world, which is why developers continue to produce cross-platform titles.

 

[woundingchaney]

Street Fighter hasn't sold big numbers since the SNES days, and as KZ2 already has 1.1 million preorders in Europe alone, I'll be very surprised if SF4 suddenly makes a huge comeback to its glory-days!

I believe those are retail orders not individual/consumer preorders. The term pre-order doesnt inherently have a definition. If these were consumer pre-orders then this statement would be coming from a specific retailer or at the very least associated with a retailer and the not generalized way it is here. Sony has no specific knowledge of consumer "pre-orders" through retailers, unless of course, they are told so. The statement seems like more like a line of misleading PR than any accurate consumer demand.

 

[Shifty Geezer]

That's true. Though I hope the retailers have managed to gauge consumer interest with some sort of accuracy for their sakes!

 

[woundingchaney]

That's true. Though I hope the retailers have managed to gauge consumer interest with some sort of accuracy for their sakes!

I dont doubt that retailers are reasonably aware of consumer interest (though they have been very wrong in the past). My main issue with the statement is that it is read suggesting that these are "pre-orders" which often reflect day one or launch window sales. What this most likely is, is simply retailer orders of the title which only reflects the stock available for consumer purchase upon release. The two scenarios are different when gauging consumer interest and do not necessarily directly correlate with one another.

 

[Refreshment]

The "Playstation" brand has been severely degraded with the lack luster sales of the PS3. But focusing on short term profitability at the expense of further degradation of the brand by allowing the PS3 sales to plummet to sub 100K will have long term implications that will affect the PS4.

Im surprised someone could think that way. There's no such thing as "short term profitability" when you talk about the PS3, even when the machine was conceived.

Like its has been said a million times after the latest cost reduction and price drop of the PS3, with this same scenario there's no point of a price drop because (among other things):
a)It wont allow Sony to reach the so called "mass market price."
b)Sony still wont price match the competition.
c)In case they do price match, the competition has more pricing flexibility and could easily respond with a price drop of their own.
d)This price would probably follow the same pattern, a 1-2 month bump in sales, at the expense of increased cost losses.
e)Every company has been hit hard by the crisis, and Sony has the most expensive product in its hands.

Adding the fact that they have what could potentially be its biggest game in North America and maybe Europe too just a few weeks from release. And there you have some solid reasons why Sony shouldn't price drop the PS3 right now.

 

[DuckThor Evil]

How do you know how the contract between Media Molecule and Sony is set up?

I don't, but it's not necessary to know it to make logical conclusions. Bundling a game could be an ok deal to the developer, but if you think Media Molecule is making the same profit per copy as they would with full price retail sell, then you are just flat out crazy.

 

[Shifty Geezer]

What this most likely is, is simply retailer orders of the title which only reflects the stock available for consumer purchase upon release. The two scenarios are different when gauging consumer interest and do not necessarily directly correlate with one another.

Again true, but I don't think that changes the nature of the argument. I don't think interest in SF4 is threatening to overshadow KZ2.

I don't, but it's not necessary to know it to make logical conclusions. Bundling a game could be an ok deal to the developer, but if you think Media Molecule is making the same profit per copy as they would with full price retail sell, then you are just flat out crazy.

I think 'flat out crazy' is a bit extreme. We know how much emphasis Sony have placed on LBP. We also know it's probably the best download revenue stream for any game. There could well be a specially good deal for MM here. We don't know, but we can't rule it out out-of-hand. Consider also that the developer only gets a small cut. A big chunk of the stand alone price goes to retailers and the publisher. The amount MM would have to be paid per bundle wouldn't need to be extravagant to match retail takings.