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Even a new console launch couldn't stop November's steep decline
Even a new console launch couldn't stop November's steep decline
December 6, 2012 | By Frank Cifaldi

December 6, 2012 | By Frank Cifaldi
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    22 comments
More: Console/PC, Business/Marketing



There may have been a brand new home console on American store shelves, but that wasn't enough to stop yet another month of decline for the retail video game industry in the ever-important November shopping month.

Tracking firm The NPD Group says that revenue generated from the entire video game retail industry -- including sales of new hardware, software and accessories -- was down 11 percent, from $2.87 billion in 2011 to $2.55 billion last month.

That's well in line with where the industry has been for quite a while -- this is, after all, the twelfth straight month of decline. Some analysts were expecting the launch of Nintendo's Wii U to stem the decline, but that doesn't appear to be the case.

Wedbush Securities analyst Michael Pachter was expecting console and handheld sales of $1.57 billion, down just two percent from last year. Instead, sales were merely $1.43 billion, an 11 percent decline.

The explanation, he tells us, is that Wii U software sales were "a disaster," selling only around one-third of what the analyst was expecting.

"Only Super Mario sold any meaningful units," he told USA Today.

The NPD cheerfully points out that the overall 11 percent decline is the smallest we've seen so far this year, though for many it's still a disappointment in a month that saw a new Halo, a new Call of Duty, and a brand new home console make their debuts.

Top ten software sales for November 2012

1. Call of Duty: Black Ops II (Activision)
2. Halo 4 (Microsoft/343 Industries)
3. Assassin's Creed III (Ubisoft)
4. Just Dance 4 (Ubisoft)
5. Madden NFL 13 (Electronic Arts)
6. Skylanders Giants (Activision)
7. Need For Speed: Most Wanted (EA)
8. NBA 2K13 (2K Sports)
9. WWE 13 (THQ)
10. FIFA Soccer 13 (EA)

Dollar sales

Total video game sales: $2.55B (from $2.87B, -11%)
Video game hardware: $838.9M (from $962.2M, -13%)
Video game software (console and portable): $1.43B (from $1.60B, -11%)
Video game software (console, portable and PC): $1.46B (from $1.65B, -11%)
Video game accessories: $280.9M (from $305.3M, -8%)


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Comments


A W
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Well I got CoD BLOPS2 and Ninja Gaiden Razors Edge for my Wii U, and only one of those games was reproduced by Nintendo. So... don't know Pacther maybe it was a disaster for analyst to predict.

Leon T
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"Wedbush Securities analyst Michael Pachter was expecting console and handheld sales of $1.57 billion, down just two percent from last year. "

This right here is how you should have known there would have been a bigger drop. Pacther is almost always wrong.

"The explanation, he tells us, is that Wii U software sales were "a disaster," selling only around one-third of what the analyst was expecting."

A console with an install base of only 425k didn't more a ton of software and this guy somehow thinks that is to blame.

"Only Super Mario sold any meaningful units,"

Oh, and the only big name exclusive that it had at launch was the big game that did well while the multiplats that were out on other hardware before the console launched didn't do as well. Sure you could have expected ZombiU to sell as much as Mario , but you can also expect to be called stupid for thinking that.

Andrew Chen
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I am not one of them Pach haters. These comments however have me curious...how many games was he projecting would be sold with each Wii U? Thismwas not an issue with hardware sales, generally considered sold out and himself noting were "supply constrained".
He stated that software revenues for Wii U came "$50 million below expectations"...simple math at an average retail price of $60 per game suggests a shortfall of over 800,000 "expected software sales". With about 425,000 Wii U sold, that amounts to something like two games per console.

Again, just How many games was Pach expecting to be sold with each console? With many of the biggest titles downloadable Day One, did he take into account digital sales? Did he count NintendoLand, sold with the majority of console purchases as part of the deluxe pack?

Questions questions!

A W
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Well I can tell you that Toys 'r' Us has this deal the Saturday after Black Friday where you buy a game and get one on discount. 40% I think it was. So I got two game on top of the one that came with the console.

Joe Zachery
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I have bought 8 Launch Wii U games. Toys R Us also has a buy 1 get on 50% off deal going on now. So I plan to get a least 2 more games. That's 10 out of the possible 23 launch titles.

Still I love how he forgets to mention another new system. This is the Vita's first Christmas in the US. Shouldn't that be holding up it's end of the bargain. I mean with those 2 bundles featuring Call of Duty, and Assassin Creed. The Vita should have pushed some good units.

Even though I already know the Vita died at retails this November. Even with the crazy deal Amazon had for the system during Black Friday. Also Sony had 2 major first party games released, and both of them bombed at retails. Playstation Allstars, and Little Big Planet Kart. So everyone had a part in the industry being down this month!

Ujn Hunter
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I only bought 1 Wii U game (ZombiU after canceling my Ninja Gaiden 3: Razor's Edge pre-order after poor word of mouth from friends) not including the Nintendo Land that came with my Wii U.

I did however buy that AssCreed PSP Vita bundle that came with a Digital Download of (the really unpolished, which is probably why it bombed at retail, version of) PlayStation All-Stars.

I still don't think making $2.55 billion instead of $2.87 billion is something to worry about though.

Ujn Hunter
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It would be awesome if I could complain about only bringing in $2.55 billion this month...

A W
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I wish that was my only life complaint as well

John Flush
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With games abbreviated to CODBLOPS2 and AssCreed who would have guessed.

But on a real note, who needs new games when all the games we wanted to play but never got to are now $20? With no real improvements to the new games and a huge backlog I think we finally see why a new console cycle matters. And the Wii U isn't a new console - it has the same 'wow factor' as the 8 year old consoles. Thus why it won't make the anticipated dent normal new consoles make.

A W
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No... I got to disagree. Wii U is a new console, and does have a wow factor that places it steps beyond this gen. The problem is believing in graphical leaps constituting a gen, and well to tell the truth that not going to happen as much as one would think when the next consoles hit the market.

They are going to most likely focus on building in UI that try to take advantage of the consumers wow factors much like what Nintendo has done now and in the past. I can see Microsoft building in a Kinect on the main controller or Sony splitting the Sixaxis for regular and motion play.

But when it comes down to graphic engines, all the systems are going to be close together on what they can run at certain resolutions at locked frame rates. The PC will still be the optimal performance king in graphical fidelity on a screen because you can change out the parts when you want to run new software.

John Flush
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Don't get me wrong, I'm not a big fan of the graphical improvement leaps as a driving factor - but it is.

Personally I see any game that is $20 or more to be a ripoff these days. Why pay for AAA when I can get a game for less that $20 that does the core gameplay better? Or maybe even getting the AAA that has finally reached $20 or less?

So now how does the Wii U do anything the customer actually wants? Is there a measure of improvement for the games coming out? No, in fact a bunch of them are just ports of stuff we already have on the PS3 or X360... There is a new controller that promises something 'better' than what we have now - it just seems so, unnecessary...

Where does an industry go to next when 'new' isn't enough and the graphic improvements don't make someone interested anymore?

At this point I don't even think the Wii U is the point at talking about here anymore - though that is what the articles title was trying to throw blame at.

Bob Johnson
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Remember the PS2 outsold the 360 and PS3 for at least a good 18 months after the latter were released.

And that is despite the leap in processing power the 360 and PS3 provided.

Russell Carroll
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Just looking at his Michael Pachter's own statements:
He forecasted $1.57 Billion, but the actual number was $1.43 billion

That means he over-estimated by $140 Million

His explanation for why?
"The culprit, he says, was Wii U software sales, which came in about $50 million below expected"

Do the math.
50 Million is what percentage of 140 million? 36%
This means 90 Million of the shortfall (64%) was NOT caused by WiiU sales. WiiU is a scapegoat.

Tom Baird
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One thing that I don't understand, is that if an Analyst predicts the sales of a product, and he comes out incorrect, how is it the product at fault, and not his own inaccurate predictions? If he is inaccurate, it's his failing, not Nintendo's.

It's like he thinks he is Nostradamus.

(Edit: As an aside, I find it very strange that spell check corrects 'Nostradamus' to 'Stradivarius')

A W
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From Ars:
"Wii U hardware was sold out, we checked, so it's a supply issue," Wedbush Morgan analyst Michael Pachter told USA Today. Even so, the Wii U launch brought in 21 percent more revenue than the Wii launch in 2006 and helped Nintendo increase its total hardware sales 76 percent year over year, according to NPD.

Initial information seems to show that new Wii U buyers aren't snapping up software at the rate Nintendo might have hoped. New Super Mario Bros. U sold 243,000 copies in November, which wasn't enough to crack NPD's top 10 (though, to be fair, it was competing against combined sales for games sold across multiple platforms, and roughly one out of every two Wii U owners in the US bought the game). Outside of that, though, Pachter described sales of other Wii U launch software as "abysmal—only Super Mario sold any meaningful units."

Perhaps why Ubisoft and others where not happy about the Wii U Price tag. However Even if it was 50 to 100 dollars less, would that then mean gamers would have bought more multiplats for it? 3-5 games instead of 2-3? I think the Multiplats got a bad rap because people on computer sites started comparing frame rates of Batman and Mass Effect against other console and declaring Wii U not a new generation system. So maybe that kind of negativity hit core gamers that was going to by some of those games when they got their Wii U. My theory of course.

A W
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@Jeferson I agree to just about everything you said. And it should be a known fact by now that Patcher has some kind of biased bend when it comes to Nintendo's business models and practices.

What ends up happening with this information results in the post below mine. Nothing more than blah blah blah... my two points why Nintendo is doomed. And probably from someone thst works in a development community no less.

I just happened to find that information on Ars and tried to rationalize some of the factual infomation reported on leading up to the results of the analyst information.

We should take note though to understand that these market analyst do not have to be right on with thier predictions to turn a profit. They can offset thier predictions before the facts come in and still profit. Patcher has tried to forcast the doom of Nintendo for a console generation now. No one expects him to really stop. But it seems that when he can admit to just not understanding the business model of Nintendo or how it manages to stay afloat. One would think that he would not continue to carry on in the manner that he does.

Personally I have turned on the Wii U everyday since its been in my house. It controlls my TV Cable box, I can surf a decent internet, and I can use the games on HDTV when no one is around or switch them over to the gamepad when families need the HDTV. If they can get the Wii in it to stream from the pad I'm all set becaues I have quite a few Wii games.

Has it been all good. No. I have had games freezes on several ocassions and some app crashes here or there, but when it works, it work very well. These problems are not earth shattering. Kinks will be ironed out in time; but to count this system out as not starting a new generation is going to be a costly mistake on anyone in the development community. There is really no excuse to not get your top software on this thing up and running well.

But my point about information circulating concerning stuff like framerates and the such. There is a community of gamers and gaming journalist that have nothing better to do with thier time but to use information to missinform, Its just sad that for a few generations its been used with vigor as a tool against Nintendo on an unprecedented level. Unfortunatly people do allow this kind of midinformation to guide thier mindset.

John Flush
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"So maybe that kind of negativity hit core gamers that was going to by some of those games when they got their Wii U"

Core gamers have already tried these games or pretty much decided they aren't going to try them until they hit the bargin bin. They are getting the Wii U for something different, not to buy the same game with a new $60 price tag (unless they are industry news people that is)

A W
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@John I realize that too. So could that make ZombiU the second top selling Wii U game along side of NSMBU because, it is one of the only other games out now for Wii U that you can not get on another console, and the only third party game build from the ground up to run on the console? It quite sad that some of the other mutliplats didn't do enough to make their resale at 60 justifiable for people who already owned the game on other hardware, but hey they did what they could with the info they had.

I do have to say though that playing Assassin's Creed with out a HUD on the main HDTV screen makes the game seem more cinematic to onlookers that are not interacting with the game. I know that is not enough to get a person to rebuy the game at 60USD, but I can see sometime in the future free camera look with games that use lots of RT cut scenes, with maybe a game mechanic thrown in for good measure.

Dan Jones
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I think there are issues with the Wii U (and the public's perception of it) that are a problem independent of any overall trending decline.

1) People don't know what it is, and/or don't understand it's an entirely new console. Is this a marketing problem? Maybe. Maybe the name is an issue, with "Wii U" carrying the same sort of vibe as Apple's "iPhone 4S?" By which I mean most people would agree the 4S wasn't REALLY a new iPhone, it was just "the iPhone 4 with Siri added," and then the REAL "next" iPhone came out later as the iPhone 5. By that logic, perhaps the Wii U is just an HD Wii with a funky new controller, and I, as a customer, should just wait for the inevitable "Wii 2" that is surely just around the corner?

2) The second problem I see is in physical hardware, rather than public perception. As much as I hate to say it... maybe those theoretical confused customers are right and the Wii U really IS just an HD Wii with a funky new controller. I bear no ill will toward Nintendo, but I just can't shake the feeling that they've seriously underestimated how much to push hardware to compete over the next 5 years. They've released an interesting experimental system that will be obsolete as soon as Sony and Microsoft make any official console announcements.

A W
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Do you have one?

Brian Buchner
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Pachter reminds me of a weather reporter.

Daniel Burke
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What I do not understand is how the Wii U can be to blame for November sales when it only launched at the end of the month. Or was it released at the start of November in the USA?

Perhaps I am mistaken but it was released on the 30th November in Australia and considering it runs all the old Wii games most people, like me, ordered the Wii along with the new Super Mario and will pickup titles after I play SMB and know how the touch screen device works and therefore what games I would like on it.


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