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February 2008 NPD Analysis (next-gen.biz)

jvm

Gamasutra.
Last week NPD released its figures for the February 2008 videogame market and this morning Next-Gen put up the little article I cobbled together on them. I haven't had time to follow this month's official results thread, but I'll try to get through it later today. I hope there are at least a couple of new angles I can offer.

Full article is here at Next-Gen.biz.

The whole thing's six long pages, so I can't put everything here. Regardless, a few points of interest:

We estimate that the average sale price (ASP) for the PlayStation 3 was $415 - $420 in February 2008. By a better than 5-to-1 ratio, consumers are buying the $400 model over the $500 model.

I think this was my favorite graph of the whole thing.
Using estimates from a previous article, along with data released in February 2008 and then again this month, we developed the following graph which shows how estimated software tie ratios have grown with respect to each system's installed base.
10hiq87.jpg

When the Xbox 360 had an installed base of 8 million systems consumers had purchased nearly seven Xbox 360 games per system. With the Nintendo Wii just now passing 8 million systems, consumers have purchased just 5 Wii games per system. To the extent that publishers can exploit this two-games-per-system advantage, Microsoft's platform is more attractive.

The Wii sold 2.9 million units of software in February 2008, for an estimated LTD software sales of 40 million units. In February 2008 Wii software had an ASP of $45.

There's a lot more little bits of data I estimated in there (ASPs for Xbox 360 and PS3 software, as well as NDS; a graph that tries to quantify the change in PS3's fortunes; revenue by sector for current generation consoles; etc). Hopefully something that makes it worth the read...

As always, I look forward to reading y'all's comments. If you find an error, let me know and I'll have it corrected. Thanks. (Caveat: Today's a busy day at work, so there's a possibility I won't be able to respond until later today.)

Finally I wanted to point out that Jesse Divnich of The simExchange will be posting new stuff on Gamasutra throughout the week, as he did last month. Here's the first one for this month, which went up yesterday.

In case you'd like to review previous threads:
January 2008
December and all of 2007
November 2007
October 2007
 

Sadist

Member
However, the Wii's attach rate curve is steeper than that of its two competitors, indicating that consumers are purchasing software more quickly as the user base increases. Since Wii games sell for $45 on average, lower prices and a growing library of Wii software could explain that acceleration. Should Wii owners continue to buy software at a faster rate, the Wii could begin to rival the Xbox 360 as a software-selling platform.

Interesting read...
 

Parl

Member
Sadist said:
Interesting read...
That's because of Wii Sports. If Wii Sports wasn't bundled, then it wouldn't be as steep, but would start higher (because many people would buy Wii Sports).
 

JeremyR

Member
How did you estimate that PSP sold 2 million units of software in Feb? There were only a handful of releases. Some were fairly big - Patapon, NFS:pS, Wipeout Pulse, maybe Dungeon Explorer. But the rest were just puzzle games.

While usually you'd think a NFS game would sell tons, this years iteration on the PSP was just horrible.
 

jvm

Gamasutra.
JeremyR said:
How did you estimate that PSP sold 2 million units of software in Feb? There were only a handful of releases. Some were fairly big - Patapon, NFS:pS, Wipeout Pulse, maybe Dungeon Explorer. But the rest were just puzzle games.
I don't have my notes here with me, but the estimate involved the following:

1) Because we know ASP for all software and total software revenue, we know total software units.
2) We know NDS and Wii units from Nintendo PR. Remove these from total software units.
3) Make estimate of Xbox 360 SW and PS3 SW units, based on ASP after accounting for RB and GH3, and remove these from total software units.
4) That just leaves PSP and PS2 units.
5) Nintendo stated that NDS had most software units (3.6M) and Sony stated PS2 had most console software units. That gives an upper and lower bound for PS2 units.
6) Remaining units are (a) PSP units plus (b) leftover from errors in rounding, estimating

The number I ended up with at the end was in the neighborhood of 2M. Because I want better data, the article plainly asks for NPD or Sony to give us more. :^)
 
Son of Godzilla said:
These analysis would be far more interesting if they were derived from actual NPD numbers instead of reports of NPD numbers.

Or ACTUAL numbers and not just ~40% of the market - which is why I have no idea why people even look at NPDs for anything other than %.
 

Rolf NB

Member
What's the attach rate based on? Reported figures from PR? I'd be careful about that, because there have been several instances in the past of certain manufacturers releasing monthly attach rates, without labeling them as such, which can produce impressive but pretty much meaningless numbers. I.e. you divide games sold in the period by hardware units sold in the same period, but of course it's not just new owners that buy games, but preexisting owners as well. This is in no way the same thing as the LTD attach rate.

How misleading this metric can be is easily demonstrated if you think about the scenario where your software sales stagnate and your hardware sales sharply drop. When applying just a shred of reason your platform has a problem in that period, and yet the monthly attach rate goes up.
 

jvm

Gamasutra.
bcn-ron said:
What's the attach rate based on? Reported figures from PR?
I understand your concern. The original text I submitted to Next-Gen included a link to the earlier article; it didn't get included in the version online.

Check here for details: Tie Ratios article

Adding: The tie ratios used in that older article are clearly all LTD. I then estimated LTD software unit sales in January and February for my estimates of LTD tie ratios in those months. They're just that, though: estimates.
 

jvm

Gamasutra.
mr_bishiuk said:
Does Wii sports get counted in the tie ratio then? If so its a farce imo
No. Unless I'm mistaken (always a possibility!) NPD does not count packed-in software as part of the software revenue figure, and therefore (again, unless I'm mistaken) when Nintendo quotes NPD figures in their PR they are not including Wii Sports (or Motorstorm, e.g., in Sony's case)
 

Minsc

Gold Member
King_Slender said:
Or ACTUAL numbers and not just ~40% of the market - which is why I have no idea why people even look at NPDs for anything other than %.

So are you saying MS/Sony/Nintendo who have said NPD's data is dead on, are now wrong? And they just use NPD's numbers in their press releases because they enjoy putting out incorrect information?

Or maybe your premise is flawed, you make it sound like NPD's releases are worthless, care to explain?

Edit: I thought they covered 60% of the market, not 40%. I tried digging through sonycowboy's posts to the one where he lists a half-dozen points on why one should be assured NPD is incredibly accurate, but I can't find it.
 

Mario

Sidhe / PikPok
jvm said:
The number I ended up with at the end was in the neighborhood of 2M. Because I want better data, the article plainly asks for NPD or Sony to give us more. :^)

Unfortunately, your estimate ended up quite far from the actual number.
 

Rolf NB

Member
jvm said:
I understand your concern. The original text I submitted to Next-Gen included a link to the earlier article; it didn't get included in the version online.

Check here for details: Tie Ratios article

Adding: The tie ratios used in that older article are clearly all LTD. I then estimated LTD software unit sales in January and February for my estimates of LTD tie ratios in those months. They're just that, though: estimates.
Cool, thanks for clearing that up.
 

Stumpokapow

listen to the mad man
King_Slender said:
Or ACTUAL numbers and not just ~40% of the market - which is why I have no idea why people even look at NPDs for anything other than %.

When you graduate junior high school and take a high school stats course, you'll look back on this post and laugh.
 
jvm said:
We estimate that the average sale price (ASP) for the PlayStation 3 was $415 - $420 in February 2008. By a better than 5-to-1 ratio, consumers are buying the $400 model over the $500 model.

Matt,

What is this estimate based upon? There are a number of factors related the the PS3's price point that aren't described here.

1) The 80GB was outselling the 40GB by a 2-1 ratio throughout last year based on various reports.

2) The 80GB was essentially unavailable at retail for the month of February (and some of January).

So to state that consumers are buying the 40GB over the 80GB could be a bit misleading. First, without hard data, we don't know if that's true. However, by every report I've seen nobody had the 80GB model, so by virtue of it not being available it's 99.9% certain that the 40GB greatly outsold the 80GB model.

However, that's not an indicator of consumer preference, it's an indicator of inventory (or lack thereof of the 80GB model).
 

jvm

Gamasutra.
sonycowboy said:
However, that's not an indicator of consumer preference, it's an indicator of inventory (or lack thereof of the 80GB model).
You're right that inventory plays a part here. However, I was of the impression that 80Gb models were still in supply in stores and online during most of February. Maybe I'm wrong on that. I'm PMing you more info, to address your question more directly.
 

tanod

when is my burrito
Minsc said:
Edit: I thought they covered 60% of the market, not 40%. I tried digging through sonycowboy's posts to the one where he lists a half-dozen points on why one should be assured NPD is incredibly accurate, but I can't find it.

They cover 95%+ of the market. They estimate about 40% of it
 

Firewire

Banned
jvm said:
You're right that inventory plays a part here. However, I was of the impression that 80Gb models were still in supply in stores and online during most of February. Maybe I'm wrong on that. I'm PMing you more info, to address your question more directly.

Well all 80GB's were gone in my area in the second week of January.
 
I love how blatantly disingenuous they are being when they round down the Wii's attach ratio and call it "5 games", and then round up the 360's attach ratio from "just below 7 games" to "7 games" to come up with their two game tie-in lead. I bet it's actually closer to 1.5 games.

Now, consider that Wii Sports is 1:1 to with the system, and that's fine if they don't want consider that, but we all know that the game would still have sold close to 1:1 if it had not been packed in. So the real story about actual software that Wii owners own and play is around 6 games for the Wii at 8 million sold, and "just under 7" games for the 360. That's not much of a difference at all.

Then they act like this all shows how great the advantage is for third party developers, while flat out ignoring the fact that many CEO's of third party publishers have stated that the costs to develop Wii games is a fraction of the cost to develop a 360/PS3 game.

Now throw in tie-in ratios from a worldwide standpoint, and I guarantee the Wii and 360 are around neck and neck. And to most Wii owners, Japanese support is a lot more important than western developer support. It's all spin to hide the truth, and make it seem like the 360 has this great tie-in advantage. Seriously, lets look at the tie-in for the entire story, including Japan. Hell, look at the third party advantage for the Wii in the U.K.-- Europe's biggest market, by far.
 

Laguna

Banned
cortland_andrus
You are right. Another funny thing is that overblown PSP softwaresales number. 2mio in February alone. Who are they kidding?
 

Slavik81

Member
mr_bishiuk said:
Next gen all the manufacturers will sell a game "with free controller"
I'm in support of this move. Now if only Microsoft would sell a game "with free wireless adapter".
 

apujanata

Member
cortland_andrus said:
I love how blatantly disingenuous they are being when they round down the Wii's attach ratio and call it "5 games", and then round up the 360's attach ratio from "just below 7 games" to "7 games" to come up with their two game tie-in lead. I bet it's actually closer to 1.5 games.

Now, consider that Wii Sports is 1:1 to with the system, and that's fine if they don't want consider that, but we all know that the game would still have sold close to 1:1 if it had not been packed in. So the real story about actual software that Wii owners own and play is around 6 games for the Wii at 8 million sold, and "just under 7" games for the 360. That's not much of a difference at all.

Then they act like this all shows how great the advantage is for third party developers, while flat out ignoring the fact that many CEO's of third party publishers have stated that the costs to develop Wii games is a fraction of the cost to develop a 360/PS3 game.

Now throw in tie-in ratios from a worldwide standpoint, and I guarantee the Wii and 360 are around neck and neck. And to most Wii owners, Japanese support is a lot more important than western developer support. It's all spin to hide the truth, and make it seem like the 360 has this great tie-in advantage. Seriously, lets look at the tie-in for the entire story, including Japan. Hell, look at the third party advantage for the Wii in the U.K.-- Europe's biggest market, by far.

Please calm down. You are reading into things that are not actually there.

The only major problem is the 2 Million PSP S/W, which has been confirmed as wrong by Mario. I do believe the original intention is not "spin to hide the truth". It is normal to do rounding to closest integer. If you have 5.3, will you round it to 5 or 6 ? Normally it is 5.
If you have 6.8, will you round it to 6 or 7 ? Normally it is 7.

The analysis didn't include W/W factor, since it is NPD analysis, not WorldWide Analysis.
 

Parl

Member
cortland_andrus said:
I love how blatantly disingenuous they are being when they round down the Wii's attach ratio and call it "5 games", and then round up the 360's attach ratio from "just below 7 games" to "7 games" to come up with their two game tie-in lead. I bet it's actually closer to 1.5 games.

Now, consider that Wii Sports is 1:1 to with the system, and that's fine if they don't want consider that, but we all know that the game would still have sold close to 1:1 if it had not been packed in. So the real story about actual software that Wii owners own and play is around 6 games for the Wii at 8 million sold, and "just under 7" games for the 360. That's not much of a difference at all.

Then they act like this all shows how great the advantage is for third party developers, while flat out ignoring the fact that many CEO's of third party publishers have stated that the costs to develop Wii games is a fraction of the cost to develop a 360/PS3 game.

Now throw in tie-in ratios from a worldwide standpoint, and I guarantee the Wii and 360 are around neck and neck. And to most Wii owners, Japanese support is a lot more important than western developer support. It's all spin to hide the truth, and make it seem like the 360 has this great tie-in advantage. Seriously, lets look at the tie-in for the entire story, including Japan. Hell, look at the third party advantage for the Wii in the U.K.-- Europe's biggest market, by far.

Yeah, this article is quite pathetic really (well, the tidbits I've read). Not only is it misleading with tie-in ratios, it also ignores that Wii got to 8 million much, much quicker, meaning that average Wii owners have purchsed only 1.5 titles less in a much shorter time span.

At the end of the day, 360 has a bigger install base, and yet Wii software sales have been higher in recent months.

apujanata said:
The only major problem is the 2 Million PSP S/W, which has been confirmed as wrong by Mario. I do believe the original intention is not "spin to hide the truth". It is normal to do rounding to closest integer. If you have 5.3, will you round it to 5 or 6 ? Normally it is 5.
If you have 6.8, will you round it to 6 or 7 ? Normally it is 7.
I'm not sure how normal it is to round like that when dealing with such tiny units, but it seems quite silly. I personally wouldn't do that and then make a conclusion off of it. If the values were like 24.7 and 28.3, then not so much of a problem because rounding doesn't change their ratio all that much.
 
When the Xbox 360 had an installed base of 8 million systems consumers had purchased nearly seven Xbox 360 games per system. With the Nintendo Wii just now passing 8 million systems, consumers have purchased just 5 Wii games per system. To the extent that publishers can exploit this two-games-per-system advantage, Microsoft's platform is more attractive.
When X360 passed 8 million systems, it had been out 26 months. When Wii passed 8 million systems, it had been out 16 months. Wii gamers would've needed to be hella game hungry to reach the same amount of games sold in 10 fewer months.
 

schuelma

Wastes hours checking old Famitsu software data, but that's why we love him.
JoshuaJSlone said:
When X360 passed 8 million systems, it had been out 26 months. When Wii passed 8 million systems, it had been out 16 months. Wii gamers would've needed to be hella game hungry to reach the same amount of games sold in 10 fewer months.


Bingo
 
I can't really get into your analysis pieces, jvm, because they tend to be too even handed and don't tell me which console is going to win. I'll stick with teh biased NeoGAF analysis threads, thank you very much.

jk, good read, interesting things to think about.
 

jay

Member
"As you might expect, a higher tie ratio is better."

I thought a high tie ratio wasn't necessarily "better" for a console because it could be a sign of systems not selling. Like a company that sells 100 consoles and 150 games for that console is better off than a company that sells 10 consoles and 50 games for that console.
 

Guy Legend

Member
jvm said:
However, I was of the impression that 80Gb models were still in supply in stores and online during most of February.

80gb systems have been incredibly hard to find since early February.
 

Guy Legend

Member
gtj1092 said:
Wat wat? Ps3 shortage in February?

80gb yes. The Motorstorm bundle dried up at Best Buy quite early in the year and was never restocked. It pretty much became extremely scarce at all retailers in February. Places like Amazon also sold out a long time ago, seeing an occasional restock that only lasts hours.

There's no way to make a fair comparison between 40gb and 80gb sales right now. It was pointed out that during the holidays, the 80gb system was the better seller. Peter Dille's comments in EGM also pointed out that 80gb sales were much higher than expected (around 50/50) during the holidays. These strongs sales are likely precisely why SCEA brought the 80gb system back into production.
 

jvm

Gamasutra.
You know, I worried about that round of the tie ratios, but I thought I'd thrown the word "estimate" in there enough that people would understand I didn't want to pin things down too hard, because there is some inherent error.

For whatever it's worth to people seeing bias, when I wrote each section, I tried to find an upside and a downside for each system's outlook. If you pick out the section where I'm writing about an Xbox 360 positive, then guess what...it's positive about the Xbox 360. Crazy how that works. ;^) What about where I pointed out that the Wii is growing its tie ratio faster?

What I find most amusing is the idea that I have a bias for the Xbox 360 over the Wii. If you knew me in real life, you'd find it amusing too.
 

No6

Member
JoshuaJSlone said:
When X360 passed 8 million systems, it had been out 26 months. When Wii passed 8 million systems, it had been out 16 months. Wii gamers would've needed to be hella game hungry to reach the same amount of games sold in 10 fewer months.
Define "game hungry". Is it "willingness to acquire titles" or "willingness to spend X dollars on games"?
 

gtj1092

Member
jvm said:
You know, I worried about that round of the tie ratios, but I thought I'd thrown the word "estimate" in there enough that people would understand I didn't want to pin things down too hard, because there is some inherent error.

For whatever it's worth to people seeing bias, when I wrote each section, I tried to find an upside and a downside for each system's outlook. If you pick out the section where I'm writing about an Xbox 360 positive, then guess what...it's positive about the Xbox 360. Crazy how that works. ;^) What about where I pointed out that the Wii is growing its tie ratio faster?

What I find most amusing is the idea that I have a bias for the Xbox 360 over the Wii. If you knew me in real life, you'd find it amusing too.

This NeoGaf!!!
 

Chris FOM

Member
The DS didn't price drop in June 2006. That was the month the DS Lite launched. The price drop from $150 to $130 occurred in August 2005.
 

Haunted

Member
jvm said:
What I find most amusing is the idea that I have a bias for the Xbox 360 over the Wii. If you knew me in real life, you'd find it amusing too.
Nintendo fanboy confirmed.
 
Does anyone know if the lack of 80GB units have any effect on the overall stock of the PS3 itself, or were 40GB units in healthier supply than when both units were readily available?
 

Chris FOM

Member
Another point about Wii software sales. While the Wii's tie ratio is far lower than the 360's was when it had an installed base of 8 million, the Wii also hit that installed base far faster than the 360 did. Given that the nature of tie ratios is to grow on their own with time, the difference in the age of the two platforms is a huge factor depressing the Wii's tie ratio compared to the 360.
 
Pai Pai Master said:
Does anyone know if the lack of 80GB units have any effect on the overall stock of the PS3 itself, or were 40GB units in healthier supply than when both units were readily available?

It doesn't matter unless the 40GB's were in low supply. Whether or not there were 2M units in the channel or 500k, it only matters if store shelves run empty.

And the answer to that is yes. The 80GB has been sold out at most retailers since some time in January. The model was discontinued.

The 40GB was mostly available, but I did hear reported inventory issues both in January and February , but at a much, much lower level than 360 or Wii. However, in February, many stores ran out of the 40GB systems and some took weeks to get the new non movie bundle 40GB systems in, with some stores not getting that sku until early March.

It was a store by store issue and certainly didn't make it all that hard to find a PS3 overall, although obviously, if one were set on an 80GB system, they were out of luck.
 

JJConrad

Sucks at viral marketing
Skiptastic said:
I can't really get into your analysis pieces, jvm, because they tend to be too even handed and don't tell me which console is going to win. I'll stick with teh biased NeoGAF analysis threads, thank you very much.

jk, good read, interesting things to think about.
Actually, I think his attempt to be even-handed causes him to misrepresent the data.

For example:
The Wii sold 2.9 million units of software in February 2008 ... The Xbox 360 sold an estimated 2.7 million units of software in February 2008
While I don't exactly believe his estimates are accurate (PSP?), to go from this to...
Should Wii owners continue to buy software at a faster rate, the Wii could begin to rival the Xbox 360 as a software-selling platform.
... is strange. "...Could begin..."? Its the 3rd straight month.



There is too much emphasis on tie-ratio in this story and then its poorly explained. The charts completely ignore the importance of time in tie-ratios (technically, a segment of time is represented but that graph makes that more confusing to understand). The comments about how the PS3's tie ratio are borderline naive.




A few other mistakes and chages I would make:

-Remove the PSP software total. The margin of error too high to make the number worth repeating.

- "Guitar Hero III for the Wii ... for the first time moves ahead of the PlayStation 2 version." This is not the true. It outsold it last month (unless NPD made a mistake) and LTD still aren't close. I'm also no sure why the chart states "all types" for GH3 Wii, when there is only one type. Or even why the Ps2 version is labeled with "all types" when no other multi-SKU games are.

-I have a few more tidbits but I'd rather PM jvm about them if he is interested.
 

Saitou

Banned
I think a tie ratio/time chart is a lot more telling, as has been said before. I'll read the article more carefully once I get home, but judging from your previous ones, I'm sure it'll be worthwhile.
 

jvm

Gamasutra.
JJConrad said:
-Remove the PSP software total. The margin of error too high to make the number worth repeating.
Will make this happen.
"Guitar Hero III for the Wii ... for the first time moves ahead of the PlayStation 2 version." This is not the true. It outsold it last month (unless NPD made a mistake) and LTD still aren't close. I'm also no sure why the chart states "all types" for GH3 Wii, when there is only one type. Or even why the Ps2 version is labeled with "all types" when no other multi-SKU games are.
You are correct on the PS2/Wii ordering in January. That will be fixed too.

The "all types" is a leftover artifact from where the spreadsheet fills in from a previous entry higher up. I remember entering that and saying "need to check if Wii has standalone GH3 now that a standalone guitar is available" and never going back to check.

From a logical point of view, it is true, but superfluous...all types of Wii GH3 are included! ;^)

I have a few more tidbits but I'd rather PM jvm about them if he is interested.
Please do, or post them here.

Adding:
... is strange. "...Could begin..."? Its the 3rd straight month.
I was thinking "have a rate of 7 per console", but I could have made that more clear. And, as others have noted, there is the weakness in my work that it doesn't point out the lifetime of the Wii vs. the lifetime of the Xbox 360. Certainly a very good point, and one I wish I had made.

Adding again:
Some corrections submitted. They should show up eventually.

Thanks for the help, everyone.
 

Chris FOM

Member
Honestly, I think these articles were a lot better when you didn't try to extrapolate as much data. Before you used the publicly available information as well as a little bit of extra from NPD, and those articles were fantastic. But now I think you've crossed a line where you're focused less on the known numbers and more on trying to use a very limited data set to figure out the rest of a much broader one, and the public info just doesn't supply enough data to make those estimates accurate enough to be illuminating. To give one example, look at the number of steps you had to go through to estimate the PSP's software sales, and every one of them had a substantial margin for error on its own. But since each sequential step was dependent on the number from the previous estimate those errors compounded each other, so even if any one calculation had a fairly small for margin of error, the cumulative error was far higher, which gave the final number, which apparently was totally off the mark.

I would recommend only using two known data points to make one estimate, then terminate that chain. Once you start sequencing calculation, using the last number to help generate the next one, the final result is almost guaranteed to be so far off from reality as to be useless.
 
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