Friday, April 27, 2007

Console Post of the Week

Well, we all knew it was going to happen at some point. Crazy Ken Kutaragi, "Father of the Playstation" as well as the turgid mess that is the PS3, is "resigning" in June.

If you wonder why, here's a funny quote:
Analyst Evan Wilson with Pacific Crest Securities told Bloomberg that the move “is likely an indication Sony corporate isn't satisfied with the initial success of the PS3.”

You think?

Here's a little quiz. What do the following numbers represent?

Answer: those are numbers, in thousands, for the weekly PS3 sales in Japan this year. Except for a two-week spike (I think it was when Virtua Fighter 5 was released), it's pretty clear where those numbers are headed.

Toilet, table for one.

Look at the weekly sales rates for the PS3 in America (using NPD numbers):

Don't be surprised when the April NPD numbers come out and the PS3 is selling less than 25,000 units a week.

Then there's Blu-Ray. It seemed that Sony was at least winning the high-definition DVD format war. Except his week it was reported that Wal-Mart had placed an order for two million HD-DVD players from Taiwanese manufacturer Fuh Yuan.

This Wal-Mart story has gone from "unconfirmed" to "almost certain" to "denied" this week (see here), so it's ultimate validity is still to be determined. But here's an interesting question: what percentage of DVD's sold in the U.S. are purchased at Wal-Mart?

Incredibly, it's forty percent.

In other words, if Wal-Mart did (or does) place that order, it's a seismic event.

Oh, but it was announced that Command and Conquer 3 would be coming to the PS3 this week. There's your good news.

I put a stake in the ground last week and said Sony was going to have to make some major strategic shifts by mid-June, and I didn't mean forcing out Ken Kutaragi. I still believe they're coming, and soon.

On to Microsoft.

I thought that Microsoft was shrewdly scheduling one AAA title, at least, for release each month until Christmas.

Well, as it turns out, they're not that shrewd.

Instead, it looks like they're going to squeeze a gigantic number of high-profile titles into the September-November window. That's too bad. That means one or two excellent games, at least, aren't going to sell nearly as well because of the fierce competition they will be going up against.

Of course, they're doing this because the release schedule for PS3 exclusives is bone dry for the next three months. But I really dislike the bullshit strategy aspects of release schedules.

If it's done, release the damn game. And if it's not done, don't.

Microsoft also announced earnings this week, with net income of almost five billion dollars. The "Entertainment and Devices" division is still hemorrhaging money (to the tune of 315 million dollars), but that's gum on Microsoft's shoe.

Guitar Hero II for the 360 is still red hot, so that's going to sell some consoles this month. And the Elite unit, even though I think it's a strategic mistake, is going to move some units as well. But the possible long-term consequences of reducing that $200 gap between the 360 and the PS3, in my mind, far outweights any short-term gain.

Unless you make the Elite the $399 unit, make the Premium unit $299, and get ride of the Core. That would be a great move.

Nintendo had what was apparently a huge inventory drop on Sunday. Multiple retailers had Wii's in stock (temporarily), and it looks like Target is holding inventory in support of a Sunday circular this week.

In other words, that theory about Nintendo holding units back in March (because they'd already blown out their fiscal year projections) might well be correct.

Here's the funny thing, though, and no one else seems to have noticed this yet: when Nintendo announced results for their fiscal year (ending March 31), they also announced that they'd sold 5.84 million Wii's up to the end of March.

That means they shipped 5.84 million units as well, because there was essentially zero inventory of Wii's anywhere at the end of March.

Now remember, Nintendo has been heavily criticized for their "poor planning" and manufacturing capacity. Sony, meanwhile, has been lauded for shipping and shipping and shipping, although they seem to tout their supply chain when people are talking about millions of unsold units sitting on shelves, then talk about "production issues" when people are questioning their crappy sales figures.

Remember how many units Sony claimed they'd shipped by the end of March?

Six million.

Sony has shipped 160,000 more PS3's than Nintendo has shipped Wii's. The difference for Sony, obviously, is that three million of their units haven't sold.

So Nintendo doesn't have a capacity problem. They have crazy demand.

Also this week, IDC video game analyst Billy Pidgeon said this:
I don’t believe supply will meet demand for the Wii until 2009.

I know you think I made that up, but I didn't. He's forecasting an inventory shortage for the next twenty months.

I only hope he continues to contact us from the future.

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