Non-Perceivable Declines

The year 2012 seems destined to be an unforgettable year. There’s the Olympics, a Presidential election, the dawn of a new videogame generation, and of course, THE END OF THE WORLD™…that is if you go for all that Mayan apocalypse prophecy jazz. Every year makes news but 2012 feels like it will be one of those landmark years that serve as milestones in people’s memories. Like the tragic 2001 or the bicentennial 1976 or the tumultuous 1968. Whether welcomed or dreaded, expect some newsworthy life-changing events from this period in Pope Gregory’s calendar.

The videogame industry is probably dreading this year so far based on the latest reports from The National Purchase Diary Group, Incorporated. The usual January after-holiday dropoff is expected but not like this! Everybody’s “favorite” Wedbush Morgan Securities analyst Michael Pachter points out that this month’s software revenue number is the lowest since January 2004! Well, I did my research and I can vouch that he said this for dramatic effect. Something to make a headline grabber. There have been lower software revenue numbers than that AFTER January 2004. Nevertheless, this month’s software revenue number is INDEED lower than the past eight Januaries. But compared to the hardware numbers, software looks golden. In both unit and revenue sales, January hardware is the lowest of this entire generation! In the transition between console generations there is always a lean period but expect the 7th gen to get downright anorexic as the year rolls on—new consoles or not. Gather your forget-me-nots and recollect what looks to be the haziest NPD guesstimates in recent memory.

Microsoft’s XBox 360 resisted the memory wand from Men In Black with 270,000 warfare widgets sold in the month of New Year’s Day. In the month of New Year’s Eve, the Box of Duty sold over 1,700,000 of its FPS-filled kind showing a post-holiday decrease of over 1/6 December’s total. January is always a month of retraction but this is the lowest number for the top-selling January console in the entire generation (January 2006’s PlayStation 2 = 275,000, January 2008’s Wii = 274,000). But if you’re on a small hill might as well be at the top of it, right? Another new year, another one with the 360 at the top of the charts.

But what will the 360 do for games in 2012? There’s UFC Undisputed 3 in February; Street Fighter X Tekken, Ninja Gaiden 3, and Mass Effect 3 in March but it seems like big hit games are going to be few and far between for most of the year. Kinect is a non-factor so don’t expect much on that front. The 360 section of games in retail stores are getting stuffy and crowded with the slow sales of games outside of megahits like Modern Warfare 3 and such. But those megahits aren’t enough to prop up the software numbers obviously and might not prop up the 360’s hardware numbers anymore either. This month Modern Warfare 3 sold about half of what previous sequel Black Ops sold in its first January (also roughly half of Modern Warfare 2 in its first January). So if the big dogs can’t add to 360’s bark how will the rest of the pound?

Now while Kinect is proven to be non-factor for game sales on the 360, Microsoft hasn’t given up on the motion sensor yet. February 1st will be launch date for Kinect for Windows. Cost will be higher than the 360 version at $250 compared with the $150 price of the 360 version (an extra camera in PC version). And speaking of new platforms when will Microsoft answer Nintendo’s Wii U with the successor to the 360? Note I said ‘when’ not ‘if’. Personally I don’t expect to hear them make any announcements until 2013 but with the 7th gen obviously petering out, odds are that Microsoft will make the next-gen leap sooner than later. I could be wrong and they pick E3 2012 to make the big news. But make no mistake, it’s coming.

Nintendo’s 3DS tested its photographic memory with um, ummm…I don’t know how many sold in National Book Month. In the month of Bill of Rights Day, the 3D photo machine sold um, uhhh…who knows what, showing absolutely unclear results! Two months in a row with unreported numbers for the 3DS. Can’t even come up with an approximation based on percentages. No data. No info. All that’s offered is Nintendo’s press release about 3DS selling more than 4.25 million units in the United States. I could more accurately deduce what January’s sales were if there weren’t blanks in July and December of last year (especially December!). If we subtract the known figures of last year from Nintendo’s “more than 4,250,000”, we get “more than 1,876,000”. The bulk of that figure definitely comes from December since July was the last month before 3DS’s $80 price drop. How much of this figure January provides is unknown but based on current trends it has to be more than Wii but less than 360 especially with Nintendo not promoting its sales this month.

Nintendo is shadowy with detailing sales info on a month by month basis for sure but they tell us Super Mario 3D Land has sold 1.7 million and Mario Kart 7 has sold 1.3 million lifetime in the U.S. Those 2 games along with the giant price cut saved the 3DS this holiday season (and so did Monster Hunter (tri-) 3G in Japan with its million-plus sales). Nintendo’s piling on the software for the first few months of 2012. In February, there’s Resident Evil: Revelations, Tekken 3D: Prime Edition, Metal Gear Solid: Snake Eater 3D (no snakeskin 3DS for us Americans, blah), the 3DS version of Mario & Sonic at the London 2012 Olympic Games. And then there’s Kid Icarus: Uprising in March (Circle Pad Pro option included). On top of this Nintendo hints about a new 2D-style Mario game expected to launch within Nintendo’s next fiscal year (which starts April 1, 2012). Expect that for the holidays.

But troubling word comes from Nintendo with talk from President Satoru Iwata about possibilities for downloadable content for Super Mario 3D Land and Mario Kart 7. And he talks about “new profits” from these possibilities. Sounds like pay-for-DLC to me and if THAT’S the case I got a problem with Nintendo. It was one thing to offer the Pay & Play option for the Nintendo Wi-Fi Connection to 3rd party games since Nintendo always kept their stuff free. It was one thing to offer minor DLC items in a game like Animal Crossing: City Folk. But one thing I will NEVER tolerate is Nintendo doing this game-divvying microtransaction crap. Despite constant calls to follow what the crowd does, Nintendo always has its own agenda and does things its own way. This is the reason for their enduring success and why many customers inherently trust the Nintendo brand. When everybody else is putting out beta tests; putting out multiple DLC packs only to turn around selling it altogether again as the complete “Game of the Year” edition; having you pay to unlock characters, stages, tricks, and cheats when all of this used to be unlocked by playing skill; Nintendo gives you complete fully tested games from the start. Fully tested games with content you unlock the old-fashioned way…you EARNNN it—as the old Smith Barney commercials used to say.

This focus on the integrity of a product is why Nintendo’s sequels don’t necessarily feel like sequels. It’s why they don’t put games out to fit a deadline if the game simply isn’t ready. It’s why they don’t feel a need for yearly iterations of a franchise like Call of Duty or any of the sports games. It’s why their games have evergreen sales and sell the console throughout the console’s lifetime. It’s why they can build a heritage and legacy to sell a Super Mario All-Stars in the 25th anniversary of Super Mario Bros. and even HAVE a such thing as the Super Smash Bros. series. Yeah, Nintendo has their own version of nickel-and-dime routines like the tragically unsupported peripheral thing (Wii Speak!!) but that’s why they call them ‘peripheral’, they’re not central to the product (they’re on the periphery). If Nintendo goes through with this pay-for-DLC thing, they are going against one of their central tenets, the integrity of the product. And I will stand against that short-sighted foolishness. Nintendo, you didn’t get to where you are by following the lemmings off the cliff. YOU are the leader, not them.

*deep breath* In other news, the Pearl Pink 3DS becomes a regular color option on February 10th just in time for Valentine’s Day (and tax refund fever). Don’t break our hearts, Nintendo. Do the right thing.

Nintendo’s Wii left mementos as they sold uhhh, we just don’t know, in the month of Martin Luther King, Jr. Day. In the month Rosa Parks made history in 1955, Wii sold about 1,062,000 double-u double-i’s showing an obvious but unspecified post-holiday decrease. Once again no figures offered by anybody leaving this month’s Wii number under the shadows of the NPD Blackout. Microsoft said the 360 sold 270,000 capturing 49% of the console marketshare (not counting handhelds). So not knowing if that 49% is a rounded-up or rounded-down percentage, subtracting that 270,000 as 49% of a round figure like 550,000 will leave us with 280,000 as the 51% remainder. And based on current trends I would say that Wii got more of that 280,000 than the PlayStation 3 did.

Well, maybe it got more of that number but it surely got less of the important number that keeps Nintendo in the black. Yes, the money-efficient Nintendo will most definitely see its first fiscal annual loss since 1981! That’s over 30 years ago! That’s the time when Nintendo emerged as a gaming force with the Donkey Kong arcade! That arcade gaming force that made sure landlord Mario Segale didn’t boot the fledgling Nintendo of America out of his warehouse in Tukwila, Washington for not paying the rent on time! Can’t say they didn’t deserve it the way they obliterated the Wii and launched the 3DS so badly. Now it’s recovery time and Nintendo’s gonna hafta get the most out of Wii until the Wii U launches at the end of the year (Just Dance 3 and the rest of Ubisoft’s dance family will help in this mission the most).

And speaking of that Wii U, it looks like Nintendo’s gonna beef up their online presence with the new Nintendo Network which looks to do away with the friend code system and absorb the existing Nintendo Wi-Fi Connection. It will have online communities, multiple non-console bonded personal accounts, capabilities for downloadable add-on content, basically everything the other guys got. Like the Wi-Fi Connection covered the Wii and DS, the Nintendo Network will cover the Wii U and 3DS. President Iwata even mulled over ideas to make the Wii U read credit cards direct for convenience of purchase (that could lead to bad things if a kid gets a hold of the parent’s card).

He made a better idea by withdrawing Nintendo’s support for the Stop Online Piracy Act and the Protect IP Act. And the best idea was not hiding under the banner of the Entertainment Software Association to support the bills indirectly (luckily the ESA backed out from support on January 21st). Listen, you guys can’t control all the money. Make good products and the buyers will cover whatever potential losses the pirates give you. Look at how much you earned from the easily hackable Wii and DS for goodness sake! Look at how much you’ll get from that totally new idea Shigeru Miyamoto’s kicking around. That’s how it always works.

Sony’s PlayStation 3 slipped the mind selling heh, who knows, in the month the Vietnam War ended. In the month the Iraq War ended, the PS3 sold possibly 936,000 to maybe 940,000 immovable objects showing another obvious but uncertain post-holiday decrease. Using Microsoft’s stated 270,000 XBox 360 sales being 49% of console marketshare (non-handheld), using the round figure of 550,000 to subtract the 360’s sales from, we get 280,000 to represent the 51% remainder. Based on current trends, I believe the PS3 was under Wii and over DS (duh!) for January…though I don’t know exactly what that means with all of this non-information going around. I’ll take figures from Michael Pachter at this point. Give me something to work with, ANYTHING!

While the NPD Blackout keeps observers like me from detailing the videogame sales, I can still see the business moves. And a MONSTER one comes with the report from Nikkei (the Nihon Keisai Shinbun or the Japan Economic Times in full) that, by April, Kazuo Hirai will take over as President of the entire Sony Corporation! A position currently held by Sony Corp. Chairman, President, and Chief Executive Officer Sir Howard Stringer! The man who made the calls “599 U.S. Dollars” and “Riiiiidge Racerrrr!” famous had been under the titles of Representative Chief Executive Officer and Executive Deputy President of Sony Corp. (among his many other titles within Sony branches) and truly most people—ALL people expected him to be the heir apparent to the Sony throne. He had been a loyal Sony soldier since the mid-1980s rising through the music arms of CBS/Sony Inc. (which evolved into Sony Music Entertainment [Japan], Inc.) and the branches of Sony Computer Entertainment, Inc. helping to make the PlayStation a force in the videogame world. Of course, Sony denied his ascension to the public but we all know what happened in the end. But January stuff within January. I’ll save the “dramatic conclusion” for the February NPDs.

Will Kaz Hirai’s rise to the top signal a change in how the PlayStation business operates? Will it mean a turnaround in fortunes for all of Sony including its videogame sector? Well, Kaz is still sticking to that 10 year plan, no matter what, according to his words at the 2012 International Consumer Electronics Show. No PS4 unveilings at this year’s Electronic Entertainment Expo, says he. Well we’re working on Year 6 and the PS3’s running out of gas fast. Do they truly think they can wait until after Wii U and whatever Microsoft is obviously planning set the foundation for the 8th generation? Move stands still and 3D World is one-dimensional in the videogaming world. And in the U.S. the PS3 always plays second banana to the 360 and that affects developer priorities. Well maybe we have to read between the lines on this one. He DID say that Sony wasn’t making any announcements about a PS4…“at E3”. He did not say that Sony wasn’t making announcements at some OTHER event. Aha? Aha?

But first things first. February finally sees the North American debut of the PlayStation Vita. The handheld has launched even weaker than the 3DS in Japan (that’s a NO NO!) and a strong U.S. showing could restore some confidence in the product. And this would also make the 3DS work for its money. Of course, Vita would have to get beyond the groans over AT&T’s ‘Cheapy D’ 3G monthly rates—$15 for 250 MB, $30 for 3 GB (revised from an earlier $25 for 2 GB). Oh and one more headache for Kaz and the gang. Turns out the infamous hacker entity Anonymous will be focusing their attacks on Sony executives due to the company’s support of the Stop Online Piracy Act and Protect IP Act. In Anonymous’ Internet Relay Chat room ‘#OpSony’ was the initial message “NO SOPA! NO ATTACK ON PSN!” And in that strategy room for those ops against Sony was the message “Doxing will occur on Sony executives.” That means that Anonymous will publicize the internal documents (dox) of Sony bigwigs instead of affecting the customers on the PlayStation Network. Since these messages were posted, portions of Sony have withdrawn support for the bills (like Sony Computer Entertainment AKA the PlayStation division) while other parts of Sony (Sony Music Entertainment for one example) continue to support them. Heh. Kaz’s fortune must have read “May you live in interesting times”.

Nintendo’s DS was totally forgotten with ha, ya got me, sold in the month of National Puzzle Day. In the month of Christmas toys, DS sold a number known only by The Powers That Be showing totally unclear results…AGAIN! Is it time for me to stop covering the DS in these reports? The Gamecube’s coverage didn’t last long after Wii emerged on the scene but the Game Boy Advance’s and PlayStation 2’s coverage lasted years into the life of the DS and PlayStation 3. I’ll see how the next few months will go before I decide to give the DS eulogy on the NPD reports. Vita will be here soon so the charts won’t look so lonely. Keep selling those games DS!

In recollection, the U.S. videogame industry reported $750.6 million ($774.3 million including PC portion) in total sales for January, a 34% from last January. Of this three-quarters-of-a-million figure, total hardware sales was shredded 38% down to $199.5 million while total software sales was scissored 38% down to $355.9 million. Total accessory sales was ripped 18% down to $195.2 million. Lowest number of January total sales since all 3 of the 7th generation consoles were on the market (January always hit at least a billion). Remember that all percentages refer to year-to-year comparisons between January 2012 and January 2011.

Is there REALLY any surprise what games we see in the Top 10 this month? Not at the top there ain’t. Call of Duty: Modern Warfare 3 continues to dominate the ‘all platforms combined’ charts. But curiously their first January sales are a little over half of what Call of Duty: Black Ops was last January (750,000). Combined sales of Call of Duty: Modern Warfare 2 were 658,000 in January 2010. Is this a sign that Call of Duty is headed towards the Guitar Hero realm of milked-out franchises? And if so, what will be Activision’s new cow? While Ubisoft will be in this category eventually that day ain’t today seeing Just Dance 3 sit right behind MW3 on the charts. If it ain’t Call of Duty, it’s Just Dance, right? They’re still slaying dragons in Skyrim. Jordan, Johnson, and Bird keep the NBA party rockin’ in the 2K12. Battlefield 3 still reminds you of that old Pat Benatar song. Madden gets some more sales in before the Super Bowl. 3DS players are still racing those multi-purpose Mario Karts. But what’s this? A videogame/toy named Skylanders: Spyro’s Adventure which uses RFID (radio-frequency identification) chips in the toys for easy transference of game stats between different consoles? Or something more sinister? RFID in the toys to be trackable at all times? Hmmm, sounds bad. Zumba Fitness 2 put a Wii exclusive on the charts. And Saints Row: The Third hit The Tenth spot on the list.

Will all the question marks surrounding the NPDs this month make January forgettable or unforgettable? The answer will be news to me.

NPD’s Top Reported Hardware Sales in January

Microsoft XBox 360 – 270,000*
Nintendo 3DS – ???
Nintendo Wii – ???
Sony PlayStation 3 – ???
Nintendo DS – ???

*Microsoft

NPD’s Top Ten Combined Software Sales in January

01. Call of Duty: Modern Warfare 3 (X360, PS3, Wii, PC) – 386,000*
02. Just Dance 3 (Wii, X360, PS3)
03. The Elder Scrolls V: Skyrim (X360, PS3, PC)
04. NBA 2K12 (X360, PS3, Wii, PSP, PS2)
05. Battlefield 3 (X360, PS3, PC)
06. Madden NFL 12 (X360, PS3, Wii, PSP, PS2)
07. Mario Kart 7 (3DS)
08. Skylanders: Spyro’s Adventure (Wii, 3DS, X360, PS3, PC)
09. Zumba Fitness 2 (Wii)
10. Saints Row: The Third (X360, PS3, PC)

*Financial Times