NPD October 2007

[fireshot]

I think it is time to get up, move on and accept that PS3 is not going to be very popular in NA. It has to take a miracle like the iPod redesign/revolution* for Sony to regain their glory days in american soil. FWIW Sony needs to stay relevant for NA third parties' support and no longer fight for dominance.

* remember the first iPod, ugly and clunky interface.

 

[Nesh]

For starters, the marketing/sales discussion is the most ridiculous thing I've read in a very long time. I have never been in any company where the Marketing Department has any influence on pricing.

Marketing's job is to promote the product as best as they can with the constraints placed upon them by sales, which is in turn reflective of the relationship between production and accounting.

To say that console price is a marketing issue is to not understand the dynamics of a corporation of any magnitude.

I think you should reread

 

[Shifty Geezer]

Sony is getting beat launch aligned by nearly 50%, Sony is getting beat by over 200% in 2007 console sales, and LTD Sony is in over a 5M console hole.

Is not the problem here people expecting/wanting PS3 to win (maximum sales) over XB360 in NA rather than just be a healthy platform? Seems to me the real concern is a suitable install base. 2:1 sales isn't a good thing for Sony's reports or investors, but at the same time it's far better than XB or GC managed against PS2, yet XB had its share content and key titles. Sure, PS2 had a lot more exclusive, but that's because its install base advantage was so large. If the PS2 and XB markets were much closer, it'd have been a different experience altogether. So being outsold 2:1 in North America doesn't mean death, give up now, through in the towel. If the sales trend continues, when XB360 has PS2 levels in the US, PS3 will have >XB levels in the US. Couple that with better worldwide performance than XB360, and the PS3 market in terms of install base looks like it'll be healthy enough to carry the platform, so no-one who's buying a PS3 needs to worry that their expensive investment is going to crash out on them. It seems unlikely XB360 will attain a market dominance that wins it many 3rd party exclusives over PS3. As many have said from the beginning of this gen, it's a generation of cross-platform games, with exclusives being fought with 1st and 2nd party titles.

The real concern here should be both software sales on PS3, which are going to discourage investment if they carry on being low, and software tools for PS3 to prevent cross-platform titles being poor cousins of their XB360 versions. If those issues are sorted out in the (not too) long run, even with PS3 selling below XB360 2:1 n NA, or even worldwide, what's the problem? Only a mentality that people want to align themselves with the 'winning team' it seems to me. If you only care about the system's games and functions, and you can be safe in having your system supported, what does it matter if it doesn't sell as well (as long as it's not a critical undersell!)?

 

[liolio]

I don't know about US but heere in France, this year again each 360 comes with a ticket that grant 50 Euros if you send it back to MS, so the 360 is 299/229 euros.

Is there something like that in US, that would make the 360 really cheap if you add specific retailers offering!

 

[Zaphod]

2:1 sales isn't a good thing for Sony's reports or investors, but at the same time it's far better than XB or GC managed against PS2

Depends on how you count. A Sony pessimist would say that even the Xbox managed to outsell the PS3 by more than a million units in NA during each console's respective first year on the market. They might add that did so against much stronger competition (the PS2).

 

[Acert93]

but at the same time it's far better than XB or GC managed against PS2

Shifty, you are right that the ratio is better, but that is slighly skewed by the fact the PS2 was a runaway success. But I am sure a couple posters have noticed (cough) that the Xbox 360's install base in isn't trending significantly higher than the Xbox did, launch aligned (although there is more separation appearing as of late). This is reflected to a degree in the PS3 figures and reflecting on the on the total PS3 install base in NA and comparing it to the relative sizes of the GCN and Xbox (which you mention) at a similar time in their lifecycle. Notably, in NA, the PS3 isn't comparing well to the Xbox and GCN. At the end of 2002 (the end of the Xbox's and GCN's first year) they stood at:

GCN: 3.49M units in NA (2.45M in October 2002)
Xbox: 4.6M units in NA (3.09M in October 2002)

From a historical perspective, the PS3 is doing poorer than the GCN and Xbox in NA.

If the sales trend continues, when XB360 has PS2 levels in the US, PS3 will have >XB levels in the US.

I don't think MS is going to pull off 41M units in NA in 5 years like Sony's amazing PS2 did

And while the Xbox 360 is tracking only slightly higher than the Xbox in console sales, software sales are through the roof and over 50% of next gen software sales in NA. And I think that is the biggest problem for Sony right now: software isn't selling on the PS3. Sure, the fact the PS3 is tracking lower than the GCN in NA (!) is worrisome, but the software situation is a larger concern.

The GCN, and even Xbox to a degree, had some hurdles sustaining strong developer support. The PS3 still has a number of future price drops and internal titles to help remedy the situation, but as things stand today the PS3 isn't a very profitable system for publishers.

yet XB had its share content and key titles

It did, but there is no denying the PS2 had the bulk of exclusives. One thing the Xbox had going for it was it was easier to develop for and quite powerful which made the investment a profitable one.

As you mention later in your post, the tools/porting situation is going to strongly dictate how much TLC PS3 ports get. If PS3 software sales remain low it will be difficult to justify the additional expense of bringing the PS3 versions up to par, so the bulk of the responsibility is going to fall on Sony to provide tools, education, and aid to get developers there as quickly and as cheaply as possible.

Couple that with better worldwide performance than XB360, and the PS3 market in terms of install base looks like it'll be healthy enough to carry the platform

Is the PS3 performing better WW? (I hate this link... but...) while the PS3 is doing a lot better in Japan, those numbers still aren't impressive, especially with how the Wii has dominated the territory and seems to be the chief focus of software development for the region. The PS3 is behind in "Europe/Other" and behind in Europe+Japan (WorldWide-NA).

I am not saying the PS3 is going to die as a platform.

But it looks unlikely that the PS3 is going to best the 360 in total WW sales. While this generation should see some market growth, the market caps at the end of last generation give us a general picture of how these territories will likely impact total marketshare:

END OF 2005 (146M total units WW)

North America (69M -- 47.3%)
PS2 - 40.99 million
Xbox - 16 million
GameCube - 12 million

Japan / Asia (28.81M -- 19.7%)
PS2 - 22.83 million
Xbox - 2 million
GameCube - 3.98 million

Europe / PAL (48.19 -- 33%)
PS2 - 37.55 million
Xbox - 6 million
GameCube - 4.64 million

The Japanese market has been in decline and is by far the smallest region. Even if the PS3 picks up substantial steam I don't think, at this point, it is going to be as significant as NA/Europe. Japanese software taste has really shifty toward NDS/Wii and Europe/NA have significant overlap in buying tastes--and are by far the largest segment of the industry.

One reason the Xbox had stronger support than the GCN was the Xbox, while a failure in Japan and fairly weak in Europe, was fairly concentrated in NA.

If you are going to be in 3rd place it would seem being strong in 1 territory -- instead of equally weak in all 3 -- is a recipe for stronger software support. At least that makes sense to me, especially if the one territory you are strong is is the most important/largest one.

It seems unlikely XB360 will attain a market dominance that wins it many 3rd party exclusives over PS3. As many have said from the beginning of this gen

While I wouldn't disagree with this, that was said under the premise that both platforms would be profitable.

I think the biggest danger, right now, for Sony is that PS3 versions begin getting the short end of the stick. While some think the PS3 already is, the few developers who do talk to me have said the PS3 versions get a LOT of attention.

We may see a situation arise where developers who make the PS3 the lead SKU come up short against developers who go the 360 lead-SKU approach and do a half-ass port of the PS3 version.

What would have been better: Having a really good PS2 game and a crappy Xbox port, or an Xbox-PS2 game which is pretty even on both systems but held back by their mutual bottlenecks? Seeing as the PS2 had a huge install base lead and higher software sales--and more competition--hitting a homerun on the PS2 would be a good strategy. Another "also ran" no the PS2 wouldn't solicit much attention, and a port to the Xbox isn't going to compare well to native software.

The real concern here should be both software sales on PS3, which are going to discourage investment if they carry on being low, and software tools for PS3 to prevent cross-platform titles being poor cousins of their XB360 versions. If those issues are sorted out in the (not too) long run, even with PS3 selling below XB360 2:1 n NA, or even worldwide, what's the problem?

If porting can become financially profitable then there is no problem. A lot of this at this time is going to fall to Sony:

1. Increase the install base (see: price drop; upcoming exclusives)
2. Motivate software adoption to justify the expense
3. Ease the process to keep titles within budgets, notably time

In a best case scenario Sony will get ports on par (some better, some worse, most the same) and it will become easier/faster and Sony PS3 exclusives will begin to differentiate the platform. Software, as much as anything (including price) is what is hindering the PS3. That and people not buying software like they should.

Is not the problem here people expecting/wanting PS3 to win (maximum sales) over XB360 in NA rather than just be a healthy platform?

From Sony's perspective, at this point, that is by far the most pressing issue. We are still debating, "Is Sony still able to win NA?" because we have posters here who are still expecting 100M console sales for the PS3. Likewise some are upset at the pessimism at the PS3 hardware/software sales.

So putting that into perspective (like the GCN/Xbox to PS3 comparisons as an example) drives home the point of the current plight and that this pessimism isn't unwarranted. The amount of abuse taken by those questioning Sony PS3 strategy, and the bitter fallout and venting when it materialized, is only now settling in. We have been told "you need to wait" for a long time. Now firmer numbers are materializing and I do think it is good to put the current situation into perspective.

Things can and will change. But establishing a rough historical bearing for what is happening--and what are the realistic options/outcomes--is worth exploring.

 

[Nesh]

Does anyone have the sales figures for Europe in Octomber?

 

[Acert93]

Depends on how you count. A Sony pessimist would say that even the Xbox managed to outsell the PS3 by more than a million units in NA during each console's respective first year on the market. They might add that did so against much stronger competition (the PS2).

How did you know I was going to say that Darn my long post!

 

[Carl B]

Is the PS3 performing better WW? (I hate this link... but...) while the PS3 is doing a lot better in Japan, those numbers still aren't impressive, especially with how the Wii has dominated the territory and seems to be the chief focus of software development for the region. The PS3 is behind in "Europe/Other" and behind in Europe+Japan (WorldWide-NA).

PS3 has enjoyed better sales than 360 in Europe in 2007, so although in absolute terms 360 is ahead there, I don't think that 360 winning Europe (over PS3, I'm excluding Wii) is a lock at all. The PS3 is presently enjoying a steeper rate of sales ascent there as well. In fact, outside of the United States if you were to total Japan and Europe/PAL territories, PS3 is nearly ahead of the 360 in install base.

This thread is about the U.S. and I don't want to distract, but I feel if you're bringing up other territories simply for the sake of painting a broader picture, the above points must be noted. Although NA is ostensibly the most important territory, I also think it's the only one MS is on track to ultimately conquer; I don't claim powers of clairvoyance, but I do think that Europe will have a larger PS3 install base than 360 within a year.

 

[Teasy]

In fact, outside of the United States if you were to total Japan and Europe/PAL territories, PS3 is nearly ahead of the 360 in install base.

As far as I can see PS3's at about 3 million combined in Japan and Europe, 360's at about 4.5 million.

 

[Carl B]

Based on which numbers? As far as I can see PS3's at about 3 million combined in Japan and Europe, 360's at about 4.5 million.

The spread between Europe/Japan for PS3/360 is ~820,000 consoles. Since we're using the same source, I can't explain any numerical discrepancies between our totals. Though I'll admit that that number is higher than the initial total I calculated in the first place when I made the statement.

...which is why I think that if we can stay away from Europe numbers and VGchartz, the better off we are in this thread. But I wanted to respond to Joshua's point that seemed to cast PS3 as destined for 3rd in Europe as well; 360 might edge it out, but I think the territory is still very much in play, and personally would give the odds to the PS3.

 

[Shifty Geezer]

...This thread is about the U.S. and I don't want to distract, but I feel if you're bringing up other territories simply for the sake of painting a broader picture...

We don't really need to go into small numbers. Broad strokes determine the software situation, which is what the whole worry over a console is about (except for those following allegiances), and in that respect it's clear that neither console is going to obtain a crushing superiority of numbers over the other (ignoring Wii, as we do!). If PS3 and XB360 go toe-to-toe in Europe, with a few million extra PS3s in Japan, and a dozen or so less in NA, the actual install bases aren't going to be disparate enough for developers to ignore one platform as they could with PS2. From that perspective there's no point arguing about sales figures until one system shows runaway success or death-throw failure; the consequences of install base superiority or failure won't come to bear.

The only other argument I see is those thinking PS3 will take off and sell zillions, and IMO you won't see that through historical context because the market is changing. The price is much higher, but also the services and features and much more numerous. These boxes are moving away from being consoles and becoming 'entertainment devices' which is a different sort of market. Only a proportion of households bought consoles in the past, but they all have TVs, music systems, media recorders/players. If these consoles can infiltrate that market, the potential sales will be totally different to previous games systems. And if such a thing happens, there's no real knowing when it'll happen nor how much sales can change. eg. Looking at iPod, it's begins were slow. No-one looking at it's initial sales could have predicted a sudden explosion of interest, even following for 3 years from launch. Only when the iPod made a name for itself did it get anywhere. Same could happen with any of these boxes.

If you want to argue rational pointers against PS3 getting a sales explosion, there's plenty of evidence to support that view, but it sadly doesn't prove anything because none of this is predictable. Company execs spend lots of resources trying to produce the next 'Big Thing' only to find that you can't chose to be big. Culture decides for itself, often on a whim. IMO trying to predict sales is like trying to predict the rolls of a dice in bad condition that's clearly weighted, lop-sided, and has funny bumps on it,which is why I never even try! Que sara sara.

 

[Zaphod]

Here's a question regarding our collective future projections: I think we all agree that a Wii sale this Christmas isn't very likely to 'steal' a PS3 sale in the same timeframe. However, looking at how the PS2 trended with casuals during the latter half of its lifetime; might a Wii sale this Christmas block a PS3 sale next Christmas or the year after that?

 

[Teasy]

The spread between Europe/Japan for PS3/360 is ~820,000 consoles. Since we're using the same source, I can't explain any numerical discrepancies between our totals.

Not sure we are using the same source to be honest, which one are you using?

 

[Carl B]

Not sure we are using the same source to be honest, which one are you using?

VGChartz is what I was using; what were you using?

 

[Nesh]

Here's a question regarding our collective future projections: I think we all agree that a Wii sale this Christmas isn't very likely to 'steal' a PS3 sale in the same timeframe. However, looking at how the PS2 trended with casuals during the latter half of its lifetime; might a Wii sale this Christmas block a PS3 sale next Christmas or the year after that?

I dont think we can use PS2 as an example for Wii.

 

[Teasy]

VGChartz is what I was using; what were you using?

Ah right we were using the same one then, when you said Europe/PAL I thought you just meant generally everything outside of Japan and NA. So I was combining Japan+Other from VGCharts. I was rounding down as well since VGChart numbers tend to be a bit high, which I suppose was a bit pointless given its a comparison of two numbers from the same source anyway

I thought you might have some new source for European numbers I hadn't heard of there

 

[Zaphod]

I dont think we can use PS2 as an example for Wii.

I wasn't comparing them directly. The PS2 reference was only intended to delineate the casual demographic buying the PS2 for DDR/Singstar (or whatever) and to a large degree not purchasing other games. How often are these customers willing to buy a new console?

Thus, even if the PS3 and Wii aren't competing for the same $$$ *today*, might still a Wii sale now stop a PS3 sale at some later point in time?

 

[RancidLunchmeat]

I dont think we can use PS2 as an example for Wii.

I would agree. I would also say that I don't think we can accurately predict at this point the extent to which the PS3 will have legs when it reaches $149 or lower price points.

The determining factors will be the new consoles from N, MS, and Sony and the price points of those new consoles.

I will also say that when the PS3 does reach that price point, MS will be essentially dumping 360s on the market at an even lower price point in order to further their ownership of the living room/family room.

What I mean is that right now, both systems are still very expensive and competing for gamers. MS's goal is to control content, not really to provide a gaming system.

So I can envision a future where MS is actually willing to take losses on hardware at the end of the cycle. Where Sony cleaned up last generation, I can see MS planning to lose money (Perhaps why they've kept the price so high initially), in order to get the systems into homes so they can recover those losses through royalties based on content distribution or at least get people used to digital distribution so when the XboxCoolMarketingNameThatSoundsReallyStupidButPeopleGetUsedTo
launches, their user base is already educated.

 

[Nesh]

I wasn't comparing them directly. The PS2 reference was only intended to delineate the casual demographic buying the PS2 for DDR/Singstar (or whatever) and to a large degree not purchasing other games. How often are these customers willing to buy a new console?

Thus, even if the PS3 and Wii aren't competing for the same $$$ *today*, might still a Wii sale now stop a PS3 sale at some later point in time?

Well the type of gamers that bought a PS2 for these specific games probably wouldnt have bought a console anyways if they didnt exist.

Similarly people that bought Wii for games such as Wii sports probably wouldnt have bought anything else anyways if Wii sports didnt exist.

In other words Wii doesnt necessarilly steal potential PS3 owners. It may gain consumers that the PS3 or 360 would have never won over. Unless they had something similar in store. But ofcourse neither the PS3 or a 360 can offer the same motion sensing experience.