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December 2009 NPD Article (Gamasutra)

J

jvm

Gamasutra.
Gamasutra posted my comments on the NPD Group data released last week. While the data released was about December 2009, I used what I had available to make more general comments about the full year too. The article is here:
Direct link to Gamasutra story about December 2009 NPD data.
I was not able to get as much information this month as I have previously, but I tried to do a decent job with what I had. Things of interest:
  • According to Sony's PR (and combining data from a couple of years), they were down $1.3 billion in revenue this year compared to last. I tried to point out where some of the difference might have come from.
  • Marketshare by platform stakeholder for 2007, 2008, 2009.
  • Some estimates of annual software unit sales. The big three (PS3, Wii, Xbox 360) were all up for the year.
  • LTD I believe the Wii has overtaken the Xbox 360 in software unit sales, by at least 10 million units.
If and when I get updated figures from NPD, I may make some revisions to the software unit sales stuff. I don't believe I'm that far off, but I'll admit the Dec 09 Wii software sales figure I came up with scares me a little.

An image from the article:
estimated-annual-sw-units-big-three.png


As always, I'm up for corrections, comments, etc. Please don't take a lack of immediate response personally -- I may simply not be here. My overlordseditors will probably be watching the thread, so changes may happen without a direct response from me.

Thanks, as always, guys.

In case you'd like to review previous threads:
2007: Oct Nov Dec
2008: Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2009: Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov
 
JVM, do you have a sense of what PSP/PS2 revenue were at this year? I'm wondering if Sony will experience another revenue drop, or if PS3 gains this year will outweigh the losses PS2/PSP are sure to manifest.

Which depends, I believe, on how much farther the PS2/PSP have to fall.
 
Thx as usual!

What I do not fully understand, is that you don´t factor the PS3 price cut into Sony´s drop in revenues. (page 2)
 
I'm curious how much the losses the PS3 has incurred for Sony has cancelled out their gains from previous generations?
 
industry-marketshare-by-stakeholder-2009.png


^This is interesting. PS2's and PSP's decline are eating away the growth that PS3 Slim brought to Sony in US market.
 
article said:
We sincerely hope that in the coming year some party – if not the NPD Group itself, then individual publishers or platform stakeholders – will begin releasing reliable information on digitally distributed sales and not the facile top 10 lists that are currently available.
Click to expand...
This needs to be said more often. Perhaps with more forcefulness and accompanied by threats of violence. "We sincerely hope" speaks not to the rabbidity of sales agers.
 
Hammer24 said:
Thx as usual!

What I do not fully understand, is that you don´t factor the PS3 price cut into Sony´s drop in revenues. (page 2)
Click to expand...
My estimate was that PS3 HW revenue was relatively flat YOY. If I can redo the figures really quickly, I'll paste them here.

MattyGrovesOrMe said:
This needs to be said more often. Perhaps with more forcefulness and accompanied by threats of violence. "We sincerely hope" speaks not to the rabbidity of sales agers.
Click to expand...
Yeah, I'm kind of speaking softly there, aren't I? I think there's an opportunity here, and I have a sense that there is some collaboration behind the scenes, but I don't know if the results will be public in the same sense that we currently get retail data. Time will tell.

And, for the record, I'm probably as avid for getting this DD data as anyone -- I just feel it's appropriate to show restraint when doing a straight report. :)
 
AlternativeUlster said:
Do you ever do estimates of what the year may come? I would be interested in seeing that.
Click to expand...
I wouldn't feel comfortable doing that right now. I only started doing this seriously in mid-2007 and I'm still learning (as regulars here know). Until I have more experience, I'll just stick to the GAF prediction thread as a hobby. :lol
 
As I suspected (:P), a December without Wii supply constraints would more than offset any declines for the rest of the year. Still, I have to admit that I didn't expect it to be quite this huge.

Lots of interesting data in this article.
 
jvm said:
I don't believe I'm that far off, but I'll admit the Dec 09 Wii software sales figure I came up with scares me a little.
Click to expand...

PS2 was 23m in software in the same December from launch, and it sold ~ half as many systems that month. 30m for Wii isn't really "out there" from that perspective.

Thanks for the estimated software sales! That means that 360 and Wii's tie ratios are basically unchanged from September, and PS3's tie ratio dropped. That's what happens when you have a bump in systems sold, though. The fact that Wii's tie ratio didn't drop with 3.81m sold in December is astounding. :o
 
Okay this is some scary shit Nintendo.

No need to go into the arguments from every '3rd party talks about their Wii games' thread, but 3rd parties screwed up so badly it's ridiculous.
 
donny2112 said:
PS2 was 23m in software in the same December from launch, and it sold ~ half as many systems that month. 30m for Wii isn't really "out there" from that perspective.
Click to expand...
Thanks for helping me here. I've been in a haze all day and wasn't sure where I'd made my error. This helped. This sentence has been corrected:
By our estimates, well over 30 million units of Wii software were sold in the final quarter of 2009.
Click to expand...
I had "month" originally. That said, the estimate I have for December 09 is about 25mm units of Wii software.
Thanks for the estimated software sales! That means that 360 and Wii's tie ratios are basically unchanged from September, and PS3's tie ratio dropped. That's what happens when you have a bump in systems sold, though. The fact that Wii's tie ratio didn't drop with 3.81m sold in December is astounding. :o
Click to expand...
Yep, I believe you're right that PS3 tie ratio went down a bit -- and that's related to hardware sales. Wii -- well, what can one say? It hasn't ceased surprising me. :lol
 
Hammer24 said:
*click*
Click to expand...

Wow. I don't think I ever noticed that there was only one year where Sony's gaming division made more profit than Nintendo since the PSX era began.

Also, it looks like Sony's profits gained from the PSX/PS2 era are almost gone.
 
AniHawk said:
Wow. I don't think I ever noticed that there was only one year where Sony's gaming division made more profit than Nintendo since the PSX era began.

Also, it looks like Sony's profits gained from the PSX/PS2 era are almost gone.
Click to expand...
Yeah that's really surprising information. Damn. Nintendo CEOs really know how to run a business,
 
Firestorm said:
Yeah that's really surprising information. Damn. Nintendo CEOs really know how to run a business,
Click to expand...
If Nintendo were to fall out of favor with the fickle gaming public, I'd buy stock in them again. Get it on the cheap when everyone's saying that Nintendo should go 3rd party, and it's worth more than gold when they take the market again.
 
bmf said:
If Nintendo were to fall out of favor with the fickle gaming public, I'd buy stock in them again. Get it on the cheap when everyone's saying that Nintendo should go 3rd party, and it's worth more than gold when they take the market again.
Click to expand...
Nintendo has always owned the videogame market.

They just let Sony play with it for a little while. They are good at sharing.
 
bmf said:
If Nintendo were to fall out of favor with the fickle gaming public, I'd buy stock in them again. Get it on the cheap when everyone's saying that Nintendo should go 3rd party, and it's worth more than gold when they take the market again.
Click to expand...
Yeah. If only I wasn't 15 back when it was at $8. It hit $76 last year.
 
Sipowicz said:
wait

if i'm reading that right it means that if sony has one more bad quarter they will have officially lost money of the playstation brand

is that right?
Click to expand...

If I remember correctly there are a few more years of modest profits that aren't included in that chart. Also it wasn't for a year or two after the launch of the PS1 that gaming was spun off into its own division. Also just this year Sony shuffled around some divisions so it's no longer a pure gaming division.

But yeah, chances are that Sony will be back to where they started for the PS4.
 
lowlylowlycook said:
If I remember correctly there are a few more years of modest profits that aren't included in that chart. Also it wasn't for a year or two after the launch of the PS1 that gaming was spun off into its own division. Also just this year Sony shuffled around some divisions so it's no longer a pure gaming division.

But yeah, chances are that Sony will be back to where they started for the PS4.
Click to expand...

dumbest fucking videogame company ever, holy shit

EVERYONE owned a PS1 back in the day and they still fucked it up
 
Great read as always, JVM. The Wii software dominance in the final quarter of '09 is just astounding.

I too look for 2010 to bring growth back to the electronic entertainment industry for many of the same reasons you pointed out. It will certainly be interesting to watch 2010 unfold!
 
Hmm... jvm suggests that Sony might reveal a new PSP in 2010, but not whether they will launch one or not. E3 could get very crowded with hardware announcements... Natal, Gem, PSP2, Vitality Sensor?

I have to wonder if Sony would be willing to reveal a new PSP so soon after the disastrous PSPgo... perhaps not at E3, but at TGS or something.
 
AniHawk said:
Wow. I don't think I ever noticed that there was only one year where Sony's gaming division made more profit than Nintendo since the PSX era began.

Also, it looks like Sony's profits gained from the PSX/PS2 era are almost gone.
Click to expand...

Yeah, those will be gone by the time the year is out.
 
Firestorm said:
Yeah that's really surprising information. Damn. Nintendo CEOs really know how to run a business,
Click to expand...

I've always equated Nintendo with a savant. They're genius, absolutely genius in some aspects. But in others they make no sense at all.
 
Eteric Rice said:
I've always equated Nintendo with a savant. They're genius, absolutely genius in some aspects. But in others they make no sense at all.
Click to expand...

Good analogy. I'm a big fan of Nintendo's games, but even when trying to look from their point of view, they make some frustratingly stupid and annoying decisions. I have a love/hate relationship with all the console makers, but with Nintendo it's magnified a thousandfold.
 
Perhaps the bigger story that we perceive in our estimates is that Nintendo Wii has finally overtaken Microsoft's Xbox 360 in life-to-date sales.

Recall that the Xbox 360 launched a year prior to both the Wii and PlayStation 3. With that headstart Microsoft has often touted its strong record in selling a high number of units of software per system owner (also known as a tie ratio). According to Microsoft's latest press release on Xbox 360 sales, the system now has a tie ratio of 8.8, suggesting LTD software sales of 164 million units after 50 months on the market.

While the Nintendo Wii has historically had a lower tie ratio, even when sales were launch-aligned, the system's extraordinary hardware sales have yielded similarly strong overall software sales. According to our estimates, the Wii has now sold in excess of 175 million units of software in a mere 38 months.

After 38 months on the market (December 2008), the Xbox 360 had achieved software sales of around 112 million units.
Click to expand...

Are you serious? Wow... Nintendo has hit the jackpot. All 3rd party devs am sad :(
 
I think this is an interesting chart.

4Q09-software-unit-dist.png


Software only. Kind of makes 3rd parties look like fools.

Edit: Oh, and this quote:

According to our estimates, the Wii has now sold in excess of 175 million units of software in a mere 38 months.

After 38 months on the market (December 2008), the Xbox 360 had achieved software sales of around 112 million units.
Click to expand...
 
Sipowicz said:
wait

if i'm reading that right it means that if sony has one more bad quarter they will have officially lost money off the playstation brand

is that right?
Click to expand...

norminal dollars they would have, but a finance person would probably count differently.

The $722,738,949 they earned in 2000 for example, assuming they just stash it in the bank, earning 4% interest compounded over 10 years would have earned them $347million dollars over 10 years, earning interest on top of interest.

Given how the financing of Sony is, it's difficult to follow where each dollar earned goes, a lot of it probably went to finance non-game projects.

But for our exercise, assuming that same $722,738,949 was shoveled back into their PS2 project, and the PS2 certainly earned a return of >4% for Sony, probably closer to 10%, you can see that financially, those profits earned which were shoveled back into each successive console that generates very high returns will compound their 'true' profitability even more.

What will screw them over is the large drop in profitability (negative profits) for the PSP/PS3 era, so the profits they earned during the PS2 era, is generating a very large negative return for them with the PS3.
 
SlipperySlope said:
I think this is an interesting chart.

4Q09-software-unit-dist.png


Software only. Kind of makes 3rd parties look like fools.
Click to expand...
You have to factor in number of releases per platform too - it's far from equal. How many X360 games have been released since launch? Metacritic has 804 rated over a 4 years period. Contrast with the approximately 730 released over 3 years on the Wii in North America (902 listed games on Nintendo website minus 173 WiiWare titles).

More third parties releasing more games on the Wii, taking into account the high install base at this point in the console life cycle, of course, results in a higher number of total games sold for Wii over its competitors.

But this higher total does not necessarily translate to mean adequate sales/profitability per individual release.
 
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