Putting The Pieces Together
When it came to making predictions for hardware unit sales last month, my
optimism was punished. Steep year over year declines hit just about every
platform, save for the 3DS. I drank the Max Payne 3 Kool-Aid, buying into the
idea that the game could fuel Xbox 360 sales. That didnít happen -† and
Max Payne 3 was a disaster for
software. I thought that Vita sales would benefit from the start of summer and
certain retailer promotions, but that didnít happen either. I thought that 3DS
would maintain at near 150,000 units, but sales were nowhere near that.
Iíve learned my lesson. Thereís no reason to be bullish on any of the
dedicated video game platforms right now. Weíre getting very close to the
saturation point for the Xbox 360 and PlayStation 3 consoles. The Wii has run
its course. Handhelds are fighting to stay relevant in the broad market, and
more prominent software is needed for them to have a real chance.
In short, expect NPD numbers for June to be strongly negative once again.
The big decliner in June looks to be the Xbox 360 once again. Itís a tall
order to come anywhere close to the 507,000 units that sold a year ago. There
was a lack of new and compelling software to generate any interest, and I donít
think that Max Payne 3 suddenly becomes a factor after its slow start. Iím
expecting a maximum of 250,000 units to have sold last month, which would equate
to a YOY loss of more than 50%. Note that 250,000 is a maximum. My guess is that
the raw number will be closer to 200,000 units, and even that projection might
be overly optimistic.
01. Xbox 360 (200,000 units)
02. PlayStation 3 (170,000 units)
03. Nintendo 3DS (130,000 units)
04. Nintendo Wii (65,000 units)
PlayStation Vita (55,000 units)
I expect PlayStation 3 unit sales to be lower YOY, as well. Itís estimated
that 275,000 PS3 units sold last June, and at least some of that was due to the
release of inFamous 2. Thereís no such catalyst this year. Since the gaps
between Xbox 360 and PlayStation 3 unit sales have been fairly consistent in
2012, and since theyíve consistently been the #1 and #2 platforms in 2012, I
expect no change in a quiet month like June was. Iím thinking that the gap
between Xbox 360 and PlayStation 3 sales is somewhere between 30,000 and 40,000
Nintendo Nation doesnít like hearing my continued analysis that the 3DS is
struggling in the US. Nintendoís Satoru Iwata, however,
recently echoed my analysis during a recent shareholder Q&A session:
ďSales momentum in the U.S. and Europe is not so good. Considering that the
U.S. and European markets are larger than the Japanese market in terms of the
size of the population, sales in the U.S. and Europe are supposed to be larger.Ē
That momentum will not have improved much, if any, last month. There is a
light at the end of the tunnel when it comes to the recent software drought, but
that wonít affect what will be another ho-hum month for the 3DS. Unlike last
month, when the YOY target was less than 100,000, the 3DS is now facing a target
of 143,000 units just to break even with June of 2011. Could it happen? Sure.
Will it happen? I donít believe so, although itíll probably be no worse than 15%
lower than last year. There are more games coming this month and then New Super
Mario Bros. 2 hits in August along with the pricier 3DS XL. I do expect sales to
begin trending upwards soon... but not for June.
Itís getting harder to project the Wii over the Vita, but Iím still
projecting that the Wii will come out ahead for June. Itís the least expensive
platform. It has the largest library of family-friendly titles, and a
considerable selection of cheap games. Wii Remotes and Nunchuks will be
compatible with the Wii U. Meanwhile, the Vita has zero momentum here in the
United States. New software is in drought, it costs as much as a PlayStation 3
(or more, when you consider the all-but-required memory card), and then thereís
the rise of mobile gaming. These factors are making many consumers rethink
whether an investment in the Vita makes sense. Until more software comes, Vitaís
struggles will continue. In fact, itís possible (though not probable) to see
Vita unit sales drop below 50,000 for June. Weíll see about that.
Turning to the software side of the business, I expect the combined list of
best-selling games to include LEGO Batman 2 and Spec Ops: The Line. Lollipop
Chainsaw could make it in thanks to weak competition in its week of release, and
Pokťmon Conquest could get in based on IP loyalty. I think that physical
software is going to struggle YOY once again when NPD posts its numbers, but as
we know, it doesnít track digital sales... so itís tough to gauge how rough the
sector is. The best-selling game in June 2011 was
L.A. Noire, which moved 419,000
copies combined. That was followed by Duke Nukem Forever (376,300 copies) and
InFamous 2 (369,200 copies). I donít know that the top three games in June of
2012 can combine to sell more than 1.1 million units.
Itís likely that some will try to pass off what will be the seventh straight
month of declines as the summer doldrums, but itís very important to note that
there isnít any guarantee that consumers will come back in droves over the
holiday season. Even then, weíre still a good three months away from the start
of the annual software avalanche, which means that the freefall may last for
nearly a full year before a turnaround might begin.
TheThere are still a lot of variables surrounding the Wii U, which retailers are
hoping will spark some consumer interest and stop the bleeding. Will the
hardware price be acceptable? Will software prices increase and turn off
consumers? Will it be enough of a step forward to get consumers to buy in, or
will they wait for the new Microsoft and Sony offerings? Or... will they pursue
gaming interests on other platforms, like PC, tablet, or smartphone?
These are future questions, of course. Until the future gets here, weíre
locked into more declines, more worries, and growing pressure on the industry to
turn these trends around before consumers jump ship. Weíll see how bad the
damage is for June when NPD shares its data soon.
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