Monday, November 12, 2007

Console Post of the Week: Upside-Down Crazyville

Here's what Howard Stringer said last week about the HD format wars:
NEW YORK - The head of Sony Corp., Howard Stringer, said Thursday that the Blu-ray disc format the company has developed as the successor to the DVD is in a "stalemate" with the competing HD DVD format, chiefly backed by Toshiba Corp. and Microsoft Corp.

"It's a difficult fight," said Stringer, speaking at the 92nd Street Y cultural center in Manhattan.

Toshiba has been selling its players for as low as $200 heading into the holiday season, while Blu-ray players cost more than twice as much. The HD DVD camp also scored a significant win in August, when it induced Paramount Pictures to drop most of its support for Blu-ray and put out high-definition movies exclusively on HD DVD.

"We were trying to win on the merits, which we were doing for a while, until Paramount changed sides," Stringer said.

At the same time, he played down the importance of the battle, saying it was mostly a matter of prestige whose format wins out in the end.

"It doesn't mean as much as all that," Stringer said. He added that he believed there was an opportunity of uniting the two camps under one format before he became CEO, and he wishes he could travel back in time to make that happen.

Those statements are a near-complete turnaround from Sony's position of even a month ago. And don't think these were spoken off the cuff--Howard Stringer doesn't have a cuff. This is a major repositioning for Sony. Huge.

You can read the full article here.

This could be in response to the gigantic sales week for HD-DVD standalone players--in response to some deals where a Toshiba model was sold for $99, over 90,000 units were sold in the U.S. in one week.

Whatever the reason, though, it's a far cry from the "MISSION ACCOMPLISHED" banner the Blu-Ray Association hoisted ten months ago (thanks Engadget):
The Blu-ray Disc Association has wasted no time, issuing a statement that it is victorious as the premiere high definition format of choice. With 25 different companies having released Blu-ray related products, over 170 movie and music titles announced so far and of course, more than one million PlayStation 3s shipped to the U.S. Andy Parsons, chair of the U.S. Promotions committee is comfortable citing Blu-ray's industry support as a reason customers have voted with their wallets and will continue to do so. In 2007 the BDA looks forward to second generation PC and and standalone Blu-ray drives like the BD-P1200, the Sony Vaio XL3 and a strong lineup of movie releases as why its market share will continue to increase this year, all but eliminating any competition by 2010.

Um, oops. That's here, by the way.

I think Blu-Ray is still in a leadership position with the number of PS3s they're going to sell at the $399 price point, so it's curious that Stinger would make his comments now. They're far more competitive now than they've been at any point since launch. It's certainly true, though, that a $99 (or even $199) price point is mass market, while $399 still isn't there yet.

Let me sandwich the bad news for Sony here with the good news: they did confirm that the 40GB PS3 is using the 65nm CPU. First, they denied it, now they confirmed it. Why it works that way, nobody knows.

Last week, there was a seminal moment in Japan: the 360 outsold the PS3. It was entirely due to the release of Ace Combat 6, which is extraordinarily popular in Japan, but the 360 sold 17,673 units, just barely nosing out the PS3 (17,434).

Far more relevant, and something that no one seems to be mentioning, is the course of 360 sales versus the course of Xbox sales at similar times in their lifespan.

Let's take a look.

First off, I have complete sales data from Japan (thanks to PCVS Console). Without that, it wouldn't be possible to have this discussion.

In the first six weeks following the Xbox launch in Japan (February 24-March 31, 2002), Microsoft sold 175,000 units. Then, watch the progression in the following three-month periods:
Q1 2002: 175,000
Q2 2002: 46,000
Q3 2002: 39,000
Q4 2002: 75,000
2002 total: 335,000

Q1 2003: 35,000
Q2 2003: 17,000
Q3 2003: 9,000
Q4 2003: 30,000
2003 total: 91,000

Q1 2004: 12,000
Q2 2004: 5,000
Q3 2004: 4,000
Q4 2004: 12,000
2004 total: 33,000

335-91-33. That's a steady decline into total failure. Now, look at 360 sales:

Q4 2005: 71,000 (less than half as successful as the Xbox launch)
2005 total (one quarter): 71,000

Q1 2006: 33,000
Q2 2006: 23,000
Q3 2006: 18,000
Q4 2006: 120,000
2006 total: 194,000

Q1 2007: 83,000
Q2 2007: 39,000
Q3 2007: 31,000
Q4 (Oct. only): 30,000
2007 YTD: 186,000 (still two months of sales to go)

If you sum totals for four quarters at a time (not annually, since the 360 launched in Q4 2005), that's 145k-273k for the first two years from launch.

So Microsoft's first effort in Japan went 335-91-33, while their second has gone 145-273. Those are two entirely different courses. Microsoft is always going to be third in Japan, but they can no longer be considered irrelevant. Their successful courting of top developers in Japan has produced results, even if they're modest in comparison to Nintendo and Sony.

I'm curious about the slowing sales of the Wii in Japan. They're down significantly, but I also haven't heard any anecdotal reports of inventory stacking up in stores, so I wonder if production is being diverted to produce units for the U.S., where it's still almost impossible to find one. I'm also very curious about the sales follow-through in Japan for Super Mario Galaxy, which is by all accounts a superb game. It sold 250k in its first week.

One last note. NPD announced today that they're backing off their plans to stop publicly releasing console sales numbers each month. Apparently, we were all pissed off, and they were actually paying attention. Imagine that.

Site Meter