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Analysis: Xbox 360, PS3's 'Reversal Of Fortune' Down To Modern Warfare 2
by Matt Matthews [PC, Console/PC]
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December 14, 2009
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[Gamasutra analyst Matt Matthews looks at Microsoft's surprise Xbox 360 hardware win in U.S. November sales as part of today's NPD analysis, linking it to Modern Warfare 2's launch and a resulting surge of Xbox-centric console buyers -- also touching on Wii and PSP sales.]
One of the more interesting twists in this month's figures was the reversal of fortunes for the Xbox 360 and the PlayStation 3. We (and others, like analysts for EEDAR and Wedbush Securities) expected Sony's console to post higher hardware sales than its rival, yet the final tally showed that Microsoft had sold better than 100,000 more systems.
Ultimately the decision to purchase a console probably comes down to what the consumer feels is the best value for his gaming dollar. Sony has spent its time in purgatory building value into its console was not capable of lowering the price.
Once Sony was able to drop its price, it effectively relaunched the system at $300 using a new Slim design in August of this year.
Given that the $300 model of the Xbox 360 has recently outsold the cheaper one, we felt that consumers would view the similarly priced PS3 Slim as a better value. In both September and October, that concept appeared to play out as the PS3 outsold the Xbox 360.
So the question becomes: What changed in November? Furthermore, one must ask what we can expect in December and beyond.
As with almost everything in November 2009, a key factor was the launch of Call of Duty: Modern Warfare 2. Clearly the Xbox 360 is the preferred platform for this game, and Microsoft has made multiplayer games and Xbox Live a key selling point for its system.
While we are not privy to the number of Xbox 360 systems bundled with the Modern Warfare 2, we can observe that the average price of Microsoft's system appears to have seen a significant increase in its average selling price in November.
That suggests that consumers were buying the Modern Warfare 2 bundles and possibly a higher proportion of the $300 Xbox 360 Elite systems, the ones geared for online gaming out-of-the-box. Here's the full set of sales and year on year comparisons for U.S. retail console sales for this and last November:
In this context, we believe that it wasn't so much that we overestimated the PlayStation 3 that system's sales were quite strong, historically but rather that we underestimated the Xbox 360. As the effect of Modern Warfare 2 diminishes in December, so too may the advantage for the Xbox 360.
Back in September of this year, while reflecting on PlayStation 3 sales in August, we suggested that Sony's current-generation console could reach 2.0 2.5 million systems in the final quarter of 2009. Entering December, the console is already halfway to that goal and we now expect the PlayStation 3 will reach the lower end of that estimate.
As for Nintendo's Wii, its year-to-date sales are down 28%. Even with the system's price cut to $200, the demand in November simply wasn't as frantic as it was last year. But, with over 1.2 million systems for the month, there is simply no reason to be bearish about the system's future. Look for Wii sales of around 2 million systems in December, which will again be healthy by anyone's standards.
We remain baffled by Sony's strategy for the PlayStation Portable. With a new model on the market and a strong software push, both at retail and online, one would expect the handheld to have at least some traction with consumers. However, sales are down 34% for the year and, as the figure above shows, over 30% in just the month of November.
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...and for many other games as well, if you compare a game on both platforms.
"We remain baffled by Sony's strategy for the PlayStation Portable. With a new model on the market and a strong software push, both at retail and online, one would expect the handheld to have at least some traction with consumers. However, sales are down 34% for the year and, as the figure above shows, over 30% in just the month of November. "
DUH! People still don't want digital-only. DS is still king of the handheld.
Electronic only distribution stops people doing that. It would be different if you could buy a digital game and then get half price on a new digital game in exchange for relinquishing your license to the old game. A kind of electronic trading system as it were. Until that is possible there will always be those with even a modicum of intelligence, that refuse to buy digital ghostware (ghostware because you can neither touch, smell nor taste it but, you know it's there because you're playing it on your comsole).
I don't think this is the issue at all, and there are many people like myself that actually *do* want digital-only and to do away with physical media. I think the real issue with the PSPGo is that it is not a new system but just another form factor of the PSP, and in this case a form factor that does not let you play games you have purchased in the past on UMD (compared to Nintendo's endless stream of DS versions that obviously continue to support the same games). I have talked to many people that already own a PSP and they would gladly look at purchasing a Go if there was a way to transfer their UMD games to be playable on the system, and others are simply happy with their current PSP and they download games from the PSN on those systems.
I don't think it is fair to say that the consumer doesn't want digital only until we see a console launch with that ability in the future (I'm not saying having a digital-only console with no other option, but say if PSP and PSPGo would have been launched simultaneously).
"As the effect of Modern Warfare 2 diminishes in December, so too may the advantage for the Xbox 360."
That very low average before Black Friday will almost certainly amount to advantage 360 for December as well and likely to a very clear degree versus November. I've also already seen a ton of retailer specific 360 deals going on this month unlike the PS3. Let's not forget also $199 still exists for the 360 and that also appeals to those folks that must watch their budgets this Christmas, which is quite a few indeed. So, we shall see in a month.
DD would be great but I can see no benefit from a customer perspective at this point in the game. They cost the same and they give you nothing tangible. DD doesn't seem to age either. With shelf life games, eventually they drop in price. Old games end up costing less to push out the door. Most of the XBLA launch titles? still the same asking price. Ridiculous.
And taking my games with me with no discs required - yeah, consumers have had that solution for years now via EZ flash and the likes... which only gets them into trying other things they shouldn't be doing.
As a consumer I see no reason to join the DD push until they make it a benefit to me... No ownership, no price advantage. Now I do buy the few games that only get a DD release, but would have bought them via a disc instead any day and what I buy via DD gets fewer and further between each time until I get some confirmation I can take it with me to the next console or service.
Let's all just conveniently forget the fact that Microsoft paid to basically market Modern Warfare 2 as an Xbox 360 exclusive, misleading many more casual gamers into believing that the game would only be available on that one platform (only the Xbox 360 logo popping up at the end of every Modern Warfare 2 ad or commercial).
Also, why don't any of this so-called experts or journalists ever mention the fact that the PS3 is still outselling the 360 by a wide margin in terms of WORLDWIDE sales? The 360 might have managed to edge out the PS3 this month in the US, but is still last-place and losing if the rest of the world is taken into account.
The story is about the US, not the rest of the world. It is right there at the top of the article. Who cares how the PS3 is doing elsewhere if it is a US only story? (BTW I'm a Brit so I'm not getting all patriotic here). And do you really think that it was casual gamers spending their money on Modern Warfare 2? I'll think you'll find they're still flushing their money down the Wii toilet.
It sold better on the 360 as it has a better online community and experience for console gamers, that's my opinion and as much as I joke about being always right, I think in this case I probably am. All my friends play MP games on the 360, only a few of us have the PS3 so when a game like this comes out, we all get it on the 360...
I doubt that's the case. I think that's making the same mistake that people made with the Wii thinking it was just a temporary thing. The 360 has manged to established itself as a solid platform and now is when word-of-mouth tends to drive sales. The bigger install base on the 360 will probably keep it selling pretty well as networks of people keep buying it to play with friends. When it comes to video game consoles, the value we see in the PS3 hardware over the 360 is mostly irrelevant to most consumers who simply want to play games.
I totally agree with you. There are estimates on the web that around 1 million Xbox 360's were banned in November. I wouldn't be surprised if a large number of Xbox 360 sales in November were purchases by banned users.
Don't pop the champagne just yet Mr. Greenberg!
I have heard numerous deals on Steam where many games were selling for significantly less than retailers, as well as frequent discounts on various games (including recent releases even) that ended up generating large sales. Isn't that enough of incentive for you as a consumer?
As for XBLA launch titles still maintaining the same price, I think it's just Microsoft thing. They just don't want to experiment as much as others do. Their loss.