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Analysis: Sony Hardware Struggles At Retail,  LittleBigPlanet 2  Sells 353,000 Units
Analysis: Sony Hardware Struggles At Retail, LittleBigPlanet 2 Sells 353,000 Units
February 23, 2011 | By Matt Matthews

February 23, 2011 | By Matt Matthews
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More: Console/PC



[As part of our monthly U.S. NPD retail video game sales analysis, Gamasutra analyst Matt Matthews looks at the sales of Sony's various platforms and software, noting that the publisher's own LittleBigPlanet 2 has sold roughly 353,000 units since its launch in January 2011.]

While Microsoft has been on fire for the past eight months, Sony's good fortunes appear to have run out. It is the only platform holder with three systems still actively being sold, two of which are no longer meaningfully contributing to the market. The third, the flagship PlayStation 3, is saddled with a $300 entry-level price that is killing its mass-market appeal.

The venerable PlayStation 2 has finally ceased to be relevant to the industry's new retail sales, where it accounted for only 1.5% of all hardware unit sales in January and a mere 0.7% of software revenue. (If we're more generous and look only at consoles, then its software share rises to 0.8%.)

While the NPD Group will likely continue to track the system's sales at retail for years, we expect that even analysts will cease to comment on it in the coming months.

The PlayStation Portable, or PSP, has also fallen on hard times, although the circumstances are very different. According to comments made by Wedbush analyst Michael Pachter, the system's hardware sales were down about 24% from January 2010, pegging January 2011 sales at around 76,000 units.

Pachter also noted that software sales for the platform were a mere $10 million in January. That's around 12% of console software revenue, or 1.7% of the overall video game software market.

While our focus here is on the U.S. retail market, we should note that the PSP continues to do exceptionally well in Japan. Regardless, the U.S. PSP market appears to be on a terminal trajectory.

We expect that it will end its run in the American market with lifetime sales of just over 20 million systems, a remarkable achievement for Sony's first true gaming handheld venture. For context, Sega's GameGear had but a fraction of the PSP's sales while neither Microsoft's original Xbox nor Nintendo's GameCube reached 20 million systems in the U.S.

Which leaves Sony with one active platform, the PlayStation 3. And while the system is still coming down off the surge in sales created by the PS3 Slim launch and price cut, its software sales have continued to grow. Consider, for example, the curve below, analogous to the similar curves for the Xbox 360 and Wii produced in the NPD article.

ps3-annualized-hw-and-sw.png

The blue hardware curve shows that the official launch of the $300 Slim in September 2009 immediately drove the annualized rate of PS3 hardware sales to a peak a year later. During that 12 months, PS3 sales reached 4.91 million systems.

However, hardware sales growth ended with the anniversary of the Slim price cut and have declined ever since. Sony can reverse this trend at any time, with a price cut. We would favor one as soon as April of this year, while Wedbush's Pachter has said he expects a cut in June.

A price cut of $100 would be game-changing, and we would expect Microsoft to immediately respond with a cut of their own. However, we feel that a $50 cut (to $250 for the low-end PS3), is probably more realistic.

While Microsoft has Kinect to thank for at least some of its current momentum, it is very difficult to argue that Sony has gained any such bump from its Move control system. The camera and wand combination launched very softly in September 2010, with a few Move-specific titles and Move-compatibility updates for others.

Since that time, no Move-required title has made it into the top 10 software. The biggest Move-compatible title in the near term will probably be Sony's own Killzone 3 which we expect will chart when the February 2011 results are released.

According to data provided by the NPD Group, the top-selling Move-required title in January 2011 was The Fight: Lights Out, a game in which the Move controls are used for fist fighting. With Fight sales of only 16,000 units for the month, we can conclude that all other Move-required titles had similarly low sales. That list includes titles like Sony's EyePet, Start the Party!, Kung Fu Rider, The Shoot, TV Superstars, and Ubisoft's Racquet Sports.

Put another way, Kinect's Dance Central probably outsold the combined total for Move-required titles in January 2011. This doesn't address the titles with Move-compatibility patches like NBA 2K11 from 2K Sports, but it can't be easily established to what degree consumers are buying that title for its Move features.

Of course, part of this speaks to the size of the Move hardware installed base. One straightforward measure we can take is the number of PS3 systems sold with Move bundled in the box. Judging from what Michael Pachter has said, we believe that those system bundles are in the neighborhood of 500,000 units since Move launched.

Specifics of accessory data are closely held information, and we can merely speculate about how well the standalone Move systems have sold. Were we wildly optimistic about Move sales (which we aren't) we'd estimate that 1 million PlayStation 3 systems are Move-enabled as of the end of January 2011. The actual figure is probably well below that.

While Move may not be living up to Sony's hopes, the PS3 software situation continues to improve. Even as hardware growth has fallen, PS3 owners have maintained the momentum in software, as shown in the annualized rate graph above. More than that, however, Sony has a strong slate of software for all of 2011.

The first big PS3 release of the new year is LittleBigPlanet 2, a proper sequel to the 2008 platformer and editing title, LittleBigPlanet. After its memorable reveal at GDC 2007, the original LittleBigPlanet launched in October 2008 with sales of only 215,000 units. By the end of November 2008, total sales had reached 356,000 units.

lbp-sales.png

The NPD Group has revealed that sales of 353,000 copies of LittleBigPlanet 2 during January 2011, nearly matching the first game's two-month total. In just the period around launch, the sequel has reached roughly one quarter of the original game's 1.47 million units in sales. (That original LittleBigPlanet figure includes the original 2008 release and the 2009 Game of the Year edition, but not the PSP version.)

With a steady stream of exclusives in 2011, including Killzone 3, inFamous 2, Uncharted 3, and Resistance 3, Sony is making a strong play for consumers this year. If it can reach a price that will renew interest in its hardware, we should see each of these titles do well in 2011.


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Comments


Joseph Tramonte
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I agree a price drop would be good for Sony. However this late in the life cycle I would think hardware sales arent going to spike again. However the software sales I figure will continue to rise...



Jerry Hernandez to spew hate in 5,4,3......

Donald McArthur
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Not sure about the retail situation for the PS3 in the USA, but in Canada the PS3 has effectively been discounted since November. Retailers have either been giving $50 rebate (EB) or bundling around of $100 worth of software with the system (Future Shop and Best Buy).

All this discounting has yet to encourage any of my 360 owning friends to buy a second console. While a purely anecdotal example, I think it is representative of Sony's problem. Unfortunately for Sony the PS3 is the third choice of consumers when it comes to gaming. That being said, this years solid lineup of games lineup and further hardware discounting should turn sales around. Though I feel like someone says this every year.

Jonathan Gilmore
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They do say that every year, although by the end of next year a pretty compelling argument can be made that the PS3 has the best games lineup. I just don't know that anyone cares about game like Killzone and Little Big Planet.

Wyatt Epp
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Good call on the twenty million PSP figure; can we please lay to rest this stupid line about the PSP being a "failure"?

Eric Geer
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Not gonna lie..but I think the market is getting sequeled out. Its fun to play a second one of something---but it would be better if they did more. It seems like any of the big games that have come or are coming out for PS3 are 1, 2, 3s. Yes they have had a few new IPs from Sony--but I think people are looking for new experiences...not more of the same. And many of the the new/non-sequel gaming experiences are multiplatformers...soooo this ends up with people leaning towards xbox because it seems to have a bigger install base--which is sad because I have a PS3 and most of my other friends have an xbox...*sigh*...oh well...their loss.

Tony Lam
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I was going to say; it's kind of a strange statement to claim Sony is struggling in hardware, when the PS3 is outselling the Xbox 360 every month and every year. Most analysts I've heard from seem to think that's there's a CHANCE (however slim) the PS3 can pass the 360 in total units sold by around the end of the year, despite the fact that the 360 is cheaper and came out a year earlier.



A $100 price cut to a mass-market appealing $199 price point (for the low-end 120 GB model) could solidify the aforementioned predictions for Sony. Even a 360 price cut down to $150 in response wouldn't do much to counteract such a monumental price drop from the PS3, because $199 is historically the most important price point for a videogame console to hit in order to attract the most mainstream consumers.

Tony Lam
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Quick question, is the author Matt Mathews primarily a Microsoft or Xbox reporter/analyst? Because looking at all the previous articles he's written, he seems to be consistently down or derogatory in his prediction's for Sony and the PS3's fortunes--I would say excessively so. I've visited Gamasutra on occasion in the past 2-3 years, it seems every time I read an article that's negative about Sony, it was written by Matt Mathews.



I guess Matt Mathews, as an analyst, just doesn't have very positive predictions for the future of Sony or the PS3. *Shrugs*. Ah, well.

Ian Uniacke
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While I think (hopefully Matt agrees) he is a fan of Microsoft, that doesn't change the reality of the situation for Sony. I have seen it time and time again when a company is doing well, all the journalists are apparently (Sony/Microsoft/Nintendo) fan boys. When a company is doing badly all the journalists are (Sony/Microsoft/Nintendo) haters.

Matt Matthews
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I believe most people read far too much about personal preference into these articles.

Russell Carroll
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I wish the analyst didn't talk about each of the platforms by first talking about the X360, the clear bias makes it hard for me to read the rest of the article. X360 seems to be the analyst platform of choice at the moment, and it colors all the commentary.



...and to the points above, these articles tend to be a little myopic, though it is intentionally so. North America is NPD, so these articles talk about the rise and fall of consoles in the US. That said, keeping a little more global perspective in mind when talking about the consoles would provide a more interesting analysis I think. (the little line about the PSP is a start)


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