Tuesday, January 16, 2007

Console Post of the Week: December NPD Numbers

Good stuff this week--in particular, the NPD numbers from December. From Gamastura:
According to the official hardware statistics released this afternoon, the PlayStation 2 continued to be a popular platform at retail, selling 1.4 million units for the month (37.1 million to date in the U.S.). The Xbox 360 also impressed, selling 1.1 million in December (with 4.5 million lifetime to date), while the Wii sold 604,200 units for the month, putting its total North American number sold at 1.1 million units.

Elsewhere, the severely supply-constricted PlayStation 3 was found to have sold through 490,700 units for the period, with 687,300 units sold since its launch in November.

Sony, of course, claimed this was a giant win.
"If there was ever any doubt about the power of the PlayStation brand in the US, the December NPD data should quickly quell it," said Jack Tretton, president and CEO, Sony Computer Entertainment America. "Not only did consumers drive records for PLAYSTATION 3, they also validated the excellent value represented by PlayStation 2 and the entertainment versatility of PSP. These sales figures bode very well for the company heading into 2007."

Um, not so much.

Here's the thing: Sony desperately hopes that we forgot how to count. Because if we can count, we take the 1M units they shipped to North America (by their own claim)and subtract 687,000 for North American sales.

What's left? 313,000 units. Sitting on shelves.

Let me just mention that number again: three hundred and thirteen thousand freaking units. At the end of the busiest shopping month of the year, less than six weeks after launch, over thirty percent of the units Sony shipped to North America didn't sell.

Let's say the NPD numbers aren't absolutely inclusive, or they're not totally accurate. Let's say Sony sold 100,000 more units than NPD thinks they did. Even in that incredibly optimistic scenario, that means over twenty percent of the shipped units didn't sell.

Either way, it'stunning.

From the anecdotal evidence I've gathered (both my own eyes and your e-mails) since the beginning of January, it's only gotten worse. The PS3 is a $600 boat anchor. We're witnessing, in real-time, one of the biggest disasters in the history of consumer electronics.

Want more? I looked at eBay tonight and looked at the closing price for ten consecutive PS3 60GB auctions:
$600 (+ free shipping)
no bid (minimum opening bid $625)
$638 (+1 year extended warranty, Madden, and Call of Duty)
no bid (minimum opening bid $625)
no bid (minimum opening bid $625)
$660 (+ second controller)

Let's factor in the 5% sales tax (at a minimum) that the seller paid, so it's fair to say those units cost the sellers around $630. And add $60 for the included games, $40 for the controller, $60 for the extended warranty (at least), and $30 for the free shipping.

Here's what it means: on the PS3 auctions where there were actually bids, the closing prices average out to a discount from retail price of over fifty dollars. It's selling for below retail and it's not even two months old.

Jack Tretton was right about one thing--people love the Playstation brand. Hell, I love the Playstation brand. But I don't love it up to $600. And Sony has been its own worst enemy, because their message is very confusing--it's a Playstation, but it's not.


It can't "just" be a Playstation, because that alone would never justify a $599 price tag. But if it's not primarily a Playstation, why do they expect absolute brand loyalty?

What exactly is supposed to drive sales of the PS3, anyway? PS2 sales are still strong (very strong, actually), but if someone bought a PS2 in December, why would they buy a PS3 three months later?

For a console to be mass market, it must be priced at a level that the mass market will accept. I think Sony has broken the ceiling of what people are willing to pay for a console--at least, the people who make up the broader demographic that made the PS2 such a success. And it's going to be very hard to recover.

I expect analysts to start revising their PS3 forecasts very soon. A few have done so already, but I expect that trickle to become a flood within another four to six weeks.

How long will Sony continue down this seemingly ruinous path?

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