NintendoÂ’s Takeaways:
Nintendo had another banner month. Despite a pretty sizable drop in weekly sales for Wii, it had no problem taking the console lead again in June. And though it seemed a ridiculous notion at the start of 2008, Wii is now the best selling current generation console in the US. There’s no doubt about it – Nintendo has a bona fide hit on their hands.
Not to be overshadowed by WiiÂ’s success, DS saw a huge increase in June on the legs of a new color and the surprisingly strong launch of Guitar Hero World Tour. There were some doubts that a handheld Guitar Hero could mirror the success of the console titles (I was one of the naysayers), but despite a split critical opinion, it had a great first month on the market.
Though I obviously didnÂ’t predict the magnitude of WiiÂ’s sales decrease, itÂ’s a pattern that will probably continue throughout the next few months. There has been speculation over the first part of this year that Nintendo might divert some stock from the US because of the weak dollar. ItÂ’s a credible theory (Nintendo has often commented on the affects of world currencies on their bottom line), and I wouldnÂ’t expect to see an increase in stock until the fall.
Further, while it is only July, Nintendo is no doubt keeping a careful watch on their stock in anticipation of the upcoming holiday months. TheyÂ’re already pumping out a record number of Wiis per month, and they might decide that stockpiling some units now is a prudent investment.
SonyÂ’s Takeaways:
I expected PS3 to see some decent growth in June, but I was surprised by how much of a positive effect Metal Gear Solid 4 had on console sales. A 55% increase in the middle of the year is dramatic.
But what exactly does this mean for the future? There are really two ways to look at it: either this recent sales surge is the sign of an upward trend, or itÂ’s simply a blip in the radar.
It’s tough to argue that June is the sign of a long term sales increase. Not to say that it’s a complete impossibility, but it makes very little sense for a single title to improve the performance of a console over a long period of time, and it’s especially unlikely for a single player game. As good as MGS4 is, most will only play through it once, and those types of games rarely see long legs (on consoles, anyway – handhelds are a whole different story).
I think people should be careful about reading too much into MGS4Â’s initial sales impact. If anything, that it had such a profound effect on PS3 sales is almost damming in and of itself. ThereÂ’s something to be said for the fact that large console bumps due to specific titles are more of an indication of unhealthy platforms as opposed to a viable software ecosystem.
Bear with me for a moment, as I know that what I said probably seems illogical. Common sense might lead someone to believe that this “Metal Gear” bump is a sign that consumers are almost ready to adopt the PS3 platform en masse, that they just need a little extra encouragement. In a nutshell, the thought there is that the PS3 is a valuable platform that only needs 1 or 2 big games to really capture mainstream appeal.
But that is very rarely the case. As weÂ’ve seen with GameCube, a console needs more than big releases to gain a real foothold in the market. Nintendo supported that console with a large number of critically acclaimed and fantastically selling games, and it still wasnÂ’t enough to make notable impression on the industry.
In fact, PS3Â’s performance in Japan is very similar to what I expect from it in the US. Metal Gear Solid 4 was released to impressive first week sales. Just like here, the game also drove a large increase in console sales. After a few weeks, though, PS3 has settled back to its pre-MGS sales pace. Expect the same to happen in he US over the next few months.
Ultimately, that’s why I think Sony should be very concerned about the loss of Final Fantasy XIII exclusivity. That was a very unique, high profile title that added a lot of value to the PlayStation brand, and it will be tough to replace it. It was more than a game – it was an identity, a tent pole on which the rest of PS3’s library could count on. Not only will consumers find the platform less attractive than before (in relation to 360), but other publishers have one more reason to be uncertain about throwing exclusive support behind PS3.
Uncertainty breeds uncertainty. ItÂ’s tough to change public perception, and while Metal Gear Solid 4Â’s success is nice to see, thereÂ’s just not much else on the upcoming slate of PS3 releases that will make any improvements to the perpetual cloud of doubt that surrounds SonyÂ’s best efforts.
MicrosoftÂ’s Takeaways:
E3 came at a great time for Microsoft. While I donÂ’t think the Expo has the large sway over public opinion that it used to command, this monthÂ’s NPD report will probably see less press than normal because the industry is focused on other things.
360 sales in June were not surprising - a small drop in week/week sales from May, but that was to be expected with no notable releases for the month. Still, expected doesnÂ’t mean impressive. Everyone can see that Microsoft needs to cut the price to see substantial improvement, and they recently took that to heartÂ… sort of. The price of the 20 gig premium unit has been slashed to 299, but rest of the skus will remain at their current prices. When stock of the 20 gig is flushed out of retail channels, a new 60 gig unit will be released at the 20 gigÂ’s previous 349 dollar price.
So, as usual, Microsoft has sidestepped the pricing issues by trickeration. They’ll see some benefit in July and August, but it will take a more comprehensive price cut to gain real momentum. It would be too soon to cut again in August with Madden ‘09, but perhaps they’re anticipating an opportunity in October or November that would really capitalize on the holiday rush. Sony has commented that they’re content to sit at their current price for the time being, so the potential is there for Microsoft to make a splash.
Still, while Microsoft has so cleverly kept their price flexibility advantage in their back pocket, Sony has quietly strung together a stronger than expected first half of year. Microsoft would benefit from a stronger sense of urgency, but they are still in a decent position heading into the second half of the year.
Expect to see a solid but unspectacular rebound in July on the back of their half-hearted price cut.
