Monday, October 17, 2005

Michael Pachter Weighs In On Madden

DQ Honorary Video Game Analyst Michael Pachter sends this:
I think your analysis of sell through is flawed. Madden launched the same time as last year, sales are up 10% according to NPD, and there are no $20 games out there to suck in value conscious consumers who would otherwise wait till January to buy these games at a discount.

More importantly, the NPD ACTUAL count shows that Madden sales are up 17.8% year-over-year. The NPD (long a bastion of unquestionably flawless data capture) has presumed that LAST YEAR, it captured 62.1221% of Madden sales, but THIS YEAR, it has miraculously improved its capture rate so that it has captured 66.5506% of total sales. Please note that the NPD has not changed the number of retailers it captures.

It appears to me that the NPD has made the simplifying assumption that more people shopped at Wal-Mart last year than did so this year. That is ridiculous. If anything, more people bought Madden at Wal-Mart this year, so the NPD's percentage should have probably gone in the other direction.

The point is that Madden sales are up 17.8%, and discounting hasn't begun.

That's some excellent information on NPD in terms of how they capture and analyze data, and I think Michael's critique is fair: it appears that NPD's numbers, if applied consistently, argue to a higher increase in Madden sales than they reported.

His point about "value conscious consumers" is also interesting. His theory appears to be that NFL2K5 captured a large part of the budget gamer segment last year, which is reasonable, because the game was excellent, it was only $20, AND it was available at that price when it was originally released. In lieu of that $20 competitor this year, Madden will capture those sales when it does get discounted.

One thing I should have mentioned (which Michael doesn't specifically say, but implies) is that comparing Madden sales from last year to this year is not truly an apples-to-apples comparison, at least in the sense of profit. Madden had to discount heavily and early last year because NFL2K5 was selling a stunning number of copies. So there's no question that the average selling price for Madden this year is higher.

This makes me wonder to what degree marketing and exclusive licenses drive game sales. I actually wonder about this across the entire EA sports line. EA is demonstrably not the best game in hockey, college basketball, pro basketball, and soccer, yet their sales are far higher for every product but the NHL game. The only game where they could be considered best where they actually have competition is baseball. So clearly it's not just a product quality comparison.

I know--EA has the best baseball game, and that's the one game where they don't have a license anymore. Life is cruel.

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