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[In a Gamasutra-exclusive analysis, we analyze U.S. game hardware and software numbers for the whole of 2008, discovering surprising multi-year growth comparisons and marketshare changes.]
The United States videogame market grew to $21.3 billion in 2008
according to industry figures released by the NPD Group on Thursday
of last week. That marks a nearly 19% increase over the previous
record of $18.0 billion set in 2007 and a doubling of annual revenue
since 2005.
Yet, as industry analyst Anita Frazier noted in comments which
accompanied the NPD Group's release, “This is not a case of the
rising tide lifting all boats.”
As the figures detailed below will
demonstrate, “the increases are not being enjoyed equally by all
manufacturers and publishers.”
Hardware Unit Sales
For yet another month Nintendo's two platforms – the Wii console
and the Nintendo DS handheld – dominated hardware sales.
While the
2.15 million Wii systems sold in December was well below many analyst
estimates, it was still far ahead of the competition and up 59%
year-on-year. For the year, Wii system sales increased to 10.2
million, up from 6.3 million in 2007.
Over 3 million Nintendo DS handhelds were sold during December, and annual DS sales are now as follows:
Nintendo's December DS tally was an industry record for monthly sales of a system in a single month and a
23% year-on-year increase from December 2007. (The previous
single-month hardware sales record was 2.7 million systems by Sony's
PlayStation 2 in December 2002.)
As for the competition, Sony controls two consoles, the PlayStation 2 and PlayStation 3,
as well as a handheld, the PlayStation Portable.
During its eighth
full calendar year on the market, 2.5 million PS2 systems were sold,
down 36% from 3.9 million in the prior year. Monthly sales in December 2008 fell an
even sharper 63% to 410,000.
Here's Gamasutra's specially compiled yearly hardware sales for all systems for 2007 and 2008:
Conversely, the PS3 increased its annual sales from 2.6 million
systems to 3.5 million for 2008, somewhat offsetting the loss of PS2
sales. However, PS3 sales for the final month of the year were
actually down from 798,000 units in 2007 to 726,000 units in 2008.
Sales of the PSP handheld were flat year-on-year at 3.8 million
units, making it the best selling of all three PlayStation systems in
2008.
The third platform holder, Microsoft, saw sales of its Xbox 360
console jump over 14% year-on-year for the month of December, from
1.26 million systems to 1.44 million systems.
However the Xbox 360
was only up from 4.6 million units during calendar year 2007 to 4.7
million during 2008. Without the dramatic increase in sales after
Microsoft's August 2008 price drops, the system might well have
recorded lower sales in 2008 than in 2007.
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It just shows that Nintendo is growing, everyone else? Not so much.
Still waiting for that six-axis minigame collection for $10 more than a controller alone, sony. It's a cash cow and you could use it!!
Microsoft is at an interesting point: they touted the high ratio, but now that their average price is lower it may begin going down as the console base expands. Of course, the fact that they barely maintained positive YoY sales may hit them this year.
This fact does actually matter if you consider the fact that your average consumer who buys a DS would consider going to Toys R Us for one, but the average tech savvy gamer buying a PS3 would likely just buy it on some online site at a discount. I'm not saying NPD sales are a lie, but I question their accuracy in painting a true sales picture these days.
Even though each company spins the numbers to make themselves look good the official company numbers are the ones worth comparing...as long as we can differentiate units shipped vs units sold to consumers.
The most interesting thing I've found from this article is that it seems as PS2 sales continue to drop off, roughly the same rate that they drop is the same rate that PS3 grows. It would be logical to assume that once PS2 is completely dead, say in 2 years from now, those 2.5m/year they are selling of PS2 would convert to PS3s, selling 5+ million PS3s in North America for the next 5-6 years means Sony could eventually pull ahead of the competition. I truly believe the PS3 will have a 10 year cycle if you consider we are just getting into the swing of things on it -- the life cycle feels extremely early on the PS3, whereas I feel that the Wii is very quickly losing its appeal (those it's attracting new gamers, and that is good for the sales -- existing gamers hate the Wii).
You point about the average tech savvy gamer... I believe most of them have already bought their consoles. That is why Microsoft and Sony are having such a hard time at incrementing their sales at a good step. Now they need to break into the mass market.
I remember having read once that Microsoft was asked whether the NPD numbers were fine with them or not, and they stated that sometimes the numbers are a bit lower, sometimes a bit higher, but that the average was pretty close to their estimations. That says enough I believe.
About your reasoning, I think you didn't read page 3, where the market share for Nintendo consoles went from 37% to 47% in a year, while Sony went from 35% to 30%. You are also not taking into account the fact that the market is getting bigger (at the same point in the consoles life, the Wii has sold more than the PS2), and those new individuals are apparently choosing the Wii. Finally, the PS2 went from 3.9m to 2.5m (a decrement of 1.4m), while PS3 went from 2.6 to 3.5 (an increment of 900k). Following your reasoning, the 500k or around 35% of the PS2 install base chose the Wii.
Regarding whether the PS3 will stay here for 10 years, I just mention something: The next generation will start whenever the first console is released. Analysts are stating a Wii upgrade for 2010 and a new Xbox for 2011. Remember that the 10-year cycle does not mean a new console in 10 years, but rather keeping one alive for that much time. The PlayStation 1 was launched in 1994 and was discontinued on 2006, but the PlayStation 2 was launched on 2000, approximately at half life. The PlayStation 2 was launched in 2000, a ten-year cycle means 2010 is the year it will die, but PS3 was launched on 2006 (and according to the book by the IBM chip designers, it was aimed at 2005, also half life). So, it is not gross to say Sony will try to have a new console by 2011-12. If you were one of those who bought the PS3 during the launch window, you will be buying a new Sony console in around 2-3 years. Just don't expect Sony to put 32 cores and 16gb of memory. It will likely be an upgrade based on an existing platform (much like GC -> Wii), not something revolutionary (and controversial) like the Cell.
"I truly believe the PS3 will have a 10 year cycle if you consider we are just getting into the swing of things on it"... "we are"? ;-)
There is no way Nintendo releases a Wii follow-up system (Wii 2?) in 2010 unless miraculously they start to dramatically lose market share (which seems next to impossible). Consider where Sony was between PS and PS2 where they actually held back PS2 for more than a year so they did not cannibalize their market dominance and that allowed them to continue to print money during that time. For the PS3 they did not have any incentive to be first to market back in 2006 when they were still dominating sales on PS2 (not to mention Blu-Ray standards were still being finalized until very late). I do think they know recognize their mistake of allowing Microsoft a whole year lead.
I see Sony being the first to market with the next Next Gen console system assuming they continue to trail on their flagship console. I imagine Micro$oft will launch their next Next Gen console soon after (neither will want to sacrifice a year lead this time). And for sure both Sony and Microsoft are already working on new input devices that will evolve the game play experience and dramatically reducing complexity in the way that the DS and Wii have done (hopefully in a unique way). More innovation and competition will be good for consumers and the industry as a whole.
I think it will be interesting to see what timing and market strategy Nintendo takes going into the next Next Gen consoles with such a commanding lead and trying to come up with new innovations to top the Wiimote.
Imagine a Wii Slim. After having produced the same console for the last three years, I guess prices have gone down enough to redo it and save some more money.
For future consoles, Microsoft will continue to extract power (I have been stating for a year or so that a future Xbox will use any computer available in the house for processing, sending data to either the computer CPU or GPU for processing when the results aren't visible immediate, like making the CPU process the AI of the citizens of a city the player hasn't reached yet, that Sony will focus on graphics, sounds and storage (graphics and sounds would help drive new sets of TVs and audio systems available, and storage to keep Microsoft and Intel from getting the monopoly on digital distribution), and that Nintendo will continue continue with their "revolution-evolution" cycles (NES -> SNES, GB -> GBC, N64 -> GC, GBA -> GBASP/Micro, DS -> DS[Li], Wii -> WiiHD?).