Console Post Of The Week: Heading DownwardFor review, the June NPD numbers from last week:
As I mentioned last week, analysts have finally stopped making excuses for the declining numbers. No one's saying "it's a tough compare" anymore, and it's about time.
Let's look at some numbers that will help demonstrate how serious this decline is becoming, because it's far more serious than is being generally acknowledged.
First off, here's a rolling 12-month graph of U.S. console sales:
I think it's interesting to note that when the 12-month totals started to decline in the last generation (available NPD data goes back to November 2001), there was no revival--it was a steady decline to 65% of the peak before it turned around.
Could it be different this time? Maybe. I think there are some compelling reasons that it won't be, though. For starters, 4 million units of the recent peak are entirely due to a staggering increase in sales of the Wii from 2007 to 2008. Look, though, at a comparison in Wii sales from 2008 to 2009:
In a word, with capitals: DAMN.
Remember that March of last year was really the first time the Wii didn't suffer from supply constraints. So the last three months have shown an absolutely massive fall in sales compared to 2008--a 51% decline.
Absent a price drop, which Nintendo has given no indication they're willing to do this year, what's going to drive console sales? Not MotionPlus. Look, I love MotionPlus, and it's going to sell very well, but I don't think it's going to sell consoles. Even if it raised sales by 30% (which is ridiculous to even consider), there would still be a huge shortfall from last year.
I said to someone just last week that I thought Nintendo would do fine this holiday season without a price cut, but I was wrong. There's no spinning the last three months, and a bundle with MotionPlus isn't going to be enough. Neither is the fall lineup, which is quite uninspired.
So yes, they need a price cut, and after looking at the data more carefully, I wouldn't be shocked if we get one this fall. It would also be incredibly clever to undercut the PS3 price drop announcement (which is inevitable). Nintendo, though, doesn't use human logic. They are absolutely brilliant beyond words and stupid beyond belief, and it's very hard to know which one they'll be this time.
One note about third party software. Tiger Woods on the Wii was the fourth best selling title in June. Neither the 360 or PS3 versions charted. EA clearly put forth their best effort on the Wii version, and it's selling extremely well.
Here's what Sony looks like, using the same comparison graph for the first six months of the year versus 2008:
It's not the spectacular decline of the Wii, but it's close: 47% for the last three months compared to 2008. I know, June is a "tough compare," but hey, the other months don't look so great, either.
So what's going to drive sales besides a price cut? Uncharted 2 looks great, but past that, it's very thin. A new Ratchet & Clank game, Demon's Souls (which is a great, great game, but it's far too hardcore to drive console sales), and not much else. It's very, very thin.
Microsoft is doing better, certainly, but they're also the ones who had the last price cut, which is largely why they're doing better. Here's the same graph:
For the last three months, they're flat compared to last year. Not great, but they look like A+ students compared to Nintendo and Sony. Their fall exclusives don't look so hot, either, though: a new episode of GTA IV, Forza 3, Splinter Cell: Conviction, Left 4 Dead 2, and Halo: ODST. Are any of those games going to make a ton of people rush out and buy a 360 who don't already have one? Not really.
I can't guarantee I that's a comprehensive list of exclusives, but I don't think I missed anything major. So many games have already slipped into 2010 (with more to come) that it's just not looking like a strong line-up for anyone this year.
It's going to come down to price cuts, and without them, this could be a very, very ugly fall.