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NPD/Pachter: First-Party Comprised 47% Of Wii Game Revenue In 2009
NPD/Pachter: First-Party Comprised 47% Of Wii Game Revenue In 2009
January 27, 2010 | By Chris Remo

January 27, 2010 | By Chris Remo
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Nintendo's own games made up nearly half of United States retail Wii software revenue in 2009, according to new NPD data passed on to the public by analyst Michael Pachter, with the Wedbush Morgan analyst predicting a 25 percent to 75 percent split between "hardcore" and "casual" gamers among the user base.

The NPD figures were casually released by Pachter himself in a detailed post on consumer web forum NeoGAF. According to Pachter, NPD puts first-party Nintendo game revenue at $1.53 billion in 2009, 47 percent of the system's total $3.23 billion software revenue.

Nintendo games sold 27.5 million units, compared to 44.9 million units for third parties, meaning Nintendo games had an average retail price of $55.63. That's considerably more than the average retail price of $37.86 for third parties.

However, when the costly peripheral-bundled Wii Fit games are taken out of the equation, Nintendo's average retail price drops to $45.16.

Pachter threw in various bits of game-specific data as well, indicating the Wii audience prizes name brands from mass-market sources like television much more than gamers on other systems do.

For example, games like Just Dance, Cabela's Big Game Hunter, Deal or No Deal, The Biggest Loser, and Jillian Michaels Fitness Ultimatum 2009 all finished higher in the year-end sales totals than Guitar Hero World Tour, a big brand among casual gamers, which finished at number 30.

Guitar Hero's competitor Rock Band 2 fared better, placing in the top 20 along with fellow third-party games EA Sports Active, Lego Star Wars, Madden 10, Tiger Woods 10, Deca Sports, and Game Party. Meanwhile, hardcore-oriented games such as Resident Evil: The Darkside Chronicles and Dead Space Extraction, only placed at numbers 151 and 261 for the year.

As a result of reviewing the NPD data, Pachter says he adjusted his estimate of the split between casual and hardcore gamers on the Wii from 50/50 to 75/25.

And the disparity between first-party and third-party sales isn't endemic to Nintendo systems across the board. According to Pachter, NPD data puts Nintendo as generating only 32 percent of Nintendo DS software revenue and 27 percent of software units in 2009.

Likewise, the price disparity was much smaller, with Nintendo games only $8 more than third parties on average, as opposed to nearly $18 more.


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[User Banned]
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E Zachary Knight
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Wow. Its a bit surprising how close I was in my own estimates here:



http://www.gamasutra.com/view/news/26856/Analysis_Wii_Overtakes_X
box_360_LTD_Software_Sales.php#comment41008



1st Party games: 31.68 Million games



3rd party games: 40.32 Million games



Maybe I should become an analyst.

Chris Remo
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John,



This post is mainly just reporting of data. It's a topic a lot of people are interested in. If you want to draw a message, a big throughline is that it confirms that Wii software sales are disproportionately dominated by first-party revenue. This is generally seen as common knowledge, but hard numbers supporting it are relatively rare.

John Giordano
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Are third parties performing poorly on Wii, or is Nintendo just performing exceptionally well?

Prash Nelson-Smythe
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Why is Pachter considered such an important source of analysis in games journalism? His Wii HD predictions are enough to discredit him. The hard data is fine, but the wild speculation and meaningless statements such as "Pachter says he adjusted his estimate of the split between casual and hardcore gamers on the Wii from 50/50 to 75/25"? Nintendo don't split their customers into "casual" and "hardcore", which is why they are wiping the floor with the industry.



I would rather see Gamasutra's own analysis than ready-made Pachter press releases turned into articles that further inflate his questionable importance.

Jamie Mann
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@Christian: the problem for third parties comes down to the breakdown of those sales. For example, are ten games shifting a million units each or are a hundred titles shifting 100'000 units apiece?



The former scenario causes issues for everyone: the top-selling publishers are dependent on a single revenue source (i.e. a single point of failure) and the risk of introducing new titles and IP onto the market is too high for most developers/publishers to accept - which in turn impacts on the level of innovation and competition in the market and is therefore bad for consumers. There's also then the risk that the third-party market will then tend towards lower budget titles which generally offer lower quality gameplay and could lead to a general turn-off within the market, as happened in the great Atari crash in the 80s.



Regarding the point on Brand recognition, I think it was meant to highlight the fact that the "casual" demographic isn't a single mass; for want of a better description, I think I'd label the majority as "brand-casual" and the rest as "gaming-casual". The brand-casuals are interested in TV/Celebrity/lifestyle games and the gaming-casuals has some overlap with the traditional games market - e.g. racing, music, military FPS.

Ken Masters
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@ Chris:



Why is 1st party success so demonized and by what standard are we considering that 1st party titles "disproportionately" represents Wii software sales? Is there some arbitrary percentage that someone deemed to be the figure in which 1st party sales should represent total sales? I'm just trying to get a clear understanding here... You'd think there was some kind of municipal ordinance or state/federal law mandating what this percentage should be or something - the way folks in the industry try to make Nintendo software success such a negative thing.

E Zachary Knight
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@Juice,



I have to agree with Christian here. The whole industry is plagued by such lopsided sales. On the PS3 and 360, it is probably the same 50% of revenue and sales came from 10% of the games released. It just so happens that the proportion on the Wii consists of 1st party titles rather than a select few 3rd party titles as found on 360 and PS3.

Jamie Mann
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@Christian/Ephriam:

I fully agree that "lopsided" sales are an issue on all platforms (and indeed, any branch of the entertainment industry): sales will generally follow an exponential curve where a small number of games commands the vast majority of the sales.



However, the question I was trying to pose (badly, it seems!) is: for each of the consoles, how many games are needed to reach the "90% of all sales" figure? The bigger the number, the stronger the ecosystem, for the reasons outlined earlier.



E.g. (please note: entirely made up numbers!)

On platform A, 10 3rd party titles make up 90% of the 50 million sales

On platform B: 25 3rd party titles make up 90% of the 40 million sales

On platform C: 20 3rd part titles make up 90% of the 30 million sales



As a developer, I'd be inclined to target platform B as my primary target: unless the IP is really strong, the odds of making money on platform A are minimal.



@Christian: the 80s crash: I have to admit, it was a bit of a throwaway comparison and the situation is a bit different now: the games industry is too diverse to crash in the same way again. However, that doesn't necessarily mean that individual companies are safe: it's hard to believe anyone will be able to directly compete with Nintendo's grip on the non-hardcore market, but it is plausible that people could drift away onto things like the iPhone/iPad for their casual gaming needs



@Ken: personally, I don't think 1st party success should be demonised: if Nintendo are doing well, then all credit to them! However, if 1st party games do command a significant percentage of overall sales, this implies a weak 3rd party market, which could be cause for concern...

Russell Carroll
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@ Chris

"If you want to draw a message, a big throughline is that it confirms that Wii software sales are disproportionately dominated by first-party revenue."



I think your statement is slightly off by what the article says. I believe it says that "Wii software Revenue is disproportionately dominated by first-party revenue."

(...and of course disproportionately is just an opinion either way...what proportion is reasonable when you fully consider the 3rd party approach to the situation?)



Regardless, the point is that 47% of the revenue is first party, but 62% of the software sales are 3rd party. However, the first number is being "reported" not the later.



The debate goes back to what would be the right 'proportion,' and whether we should be talking about the 47% number or the 62% (which of those can Nintendo help impact and which is more the responsibility of 3rd parties is an interesting topic as well).



The reporting and focus on the 47% shows more of bias towards the problem being Nintendo...while focusing on the 62% would show a bias towards the problem being 3rd parties. The approach by those providing this information is clearly the former bias, with him noting the decrease in reduced retail price by removing WiiFit, without noting what the unit sales decrease would be alongside it.

[point being if you remove WiiFit to show that it is making the unit sales price much higher, to try and point out that the difference between 3rd party sales price and 1st party is largely explained by one game, you must also remove it from the overall revenue as it likely follows that a large part of the peculiarity in the revenue numbers is also explained by the one game - the information is presented with a definite bias, which lessens it's value as a "report" and makes it more opinion-like ...which coming from Pachter and not a reporter...of course it is just an opinion I suppose]



The report is further clouded by the usage of 2 light-gun shooting games to represent the whole of the hardcore on the Wii, which is a bad sample by either measure, and further confounded by the fact that Light-Gun games have long been considered casual affair (from Duck Hunt to House of the Dead in the arcades, these games are made for extreme accessibility and are clearly aimed at a more casual demographic than Call of Duty...which notably was not included in the report).



I'd love to see a totally unbiased approach to the numbers. There's many facets to the issue of how to sell video games on any platform, and some of the focus included here furthers the biases already in place, which seems unfortunate to me.

Jonathan Gilmore
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I see the usual suspects are here, Prash, Ephraim and Russell. More spin in the comments than from Pachter his analysis doesn't add much to what has already become common knowledge. Brands and IPs that appeal to gamers who owned consoles last gen (and sell well on the PS3 and 360) don't necessarily appeal to people who have purchased Wiis (or at least don't sell as well on the Wii as they did on the PS3 and 360). If Deca Sports and Game Party were in the Wii top 20, its hard to blame the dismal sales of Dead Space, Resident Evil, the Conduit and Madworld entirely of lack of quality.



Clearly there is something going on there, but my spin (which is probably the same as the gaming press and Pachter's) is probably not much more valid than the pro-Nintendo spin of Prash, Ephraim and the others who generally post here.

John Gordon
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A lot of games on the PS3 and XBox360 had release dates pushed back, so they didn't have to compete with Modern Warfare 2. I don't see why developers can't do the same on the Wii. Nintendo tends to only release 3 really big titles a year and those are usually all around the same time period. That leaves at least half of a year open for third parties to release games on the Wii without much competition. I think cries of "competing against Nintendo" are more of an excuse than an actual reason why more third party games are not on the Wii.

Prash Nelson-Smythe
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Gilmore, I have to laugh at how personal you make this, lumping people together and making it "us" vs "them, "anti-nintendo" vs "pro-nintendo". We weren't even talking about the same thing on this thread yet you lump us together as spinmeisters. We need people we disagree with to make discussion worthwhile else we'd just be slapping each other's backs saying how awesome we are. I'd rather have opponents to debate and be friendly about it. Lighten up! (Disclaimer: can't tell tone from text. You might have typed all of your comment with a massive smile on your face, in which case make it more obvious next time)



I think we can mostly agree the villain of the day is Pachter (AND the journalists who give him a podium).



Do you actually see Dead Space and Resident Evil rail shooters, The Conduit and Madworld selling well on any platform? Because I don't (I haven't played any of them, though I have watched RE:UC being played and well, it's a rail shooter). It's interesting that Resident Evil 4 did OK on the Wii *even though* it was released on other systems years before. It's not conclusive evidence for anything, but it could mean that there's a market for "hardcore" third party games when they are made with full prev-gen effort. Sometimes I think if someone just pretended it was 2005, tried to make the best "hardcore" gamecube game ever (not rail shooters, senseless violence or average FPS) and release it on the Wii with added pointer it would bear more fruit than the examples you give.



Final thing, should we be asking ourselves why we draw arbitrary lines between first and third party sales, when the matter of choosing a platform to develop for comes up? A games sales clearly have a lot of different factors and that *could* be one of them. Publishers build brands. People respond to them on every platform. Nintendo have a very strong brand and I think their games would sell on a 360 if available there. Third party publishers have built up strong brands for their PS3/360/PC games but then on the Wii either they don't use their brands or they water them down somehow. People don't think, I'll buy this game because it's first-party or third-party, they think I'll buy it because it's Mario or Halo or Gears of War.



There are much more important factors in deciding on your platform such as the audience (you rightly mention this), and the fact that games can do a multi-platform release on 360, PS3 and PC without too much hassle due to controllers and graphics hardware.


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