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NPD: Behind the Numbers, January 2009
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NPD: Behind the Numbers, January 2009


February 15, 2009 Article Start Previous Page 4 of 6 Next
 

Who Lost What?

The big question that remains: Whose revenue decreased? Sony or Microsoft or both?

We can determine a few items from the figures available to us. From a drop in hardware unit sales and a drop in the PlayStation 3 average retail price to $407 (according to NPD), Sony's monthly hardware revenue appears to have dropped almost $68 million from what it was in January 2008.

According to Michael Pachter, industry analyst for Wedbush Morgan Securities, January 2009 PlayStation 2 software sales were down 57% year-on-year, which would have further depressed revenues for Sony's platform.

Sales of PlayStation 3 software would have had to increase by 1.1 million units priced at $60 just to offset the lower hardware revenue.

As for Microsoft, we know that the combined revenue from its hardware and third-party software sales came to around $222 million. (According to NPD, the Xbox 360 now retails for $268 on average, down from a launch-to-date average of $376 prior to the system's price drop last year.)

Total first-party Xbox 360 software sales and Xbox 360 accessory sales would have to have reached $80 million in January 2009 for revenue on the platform to have remained constant year-on-year. While possible, such strong sales in those categories seem unlikely.

We lack enough data to make more precise statements, but it would appear that January platform revenues were down for both Sony and Microsoft, with the former taking rather a bigger hit than the latter.

Rise of the Consoles

While the rise of the Nintendo DS as a leading platform has been impressive, the real software money is being made on consoles. From 2006 through 2008, the mix of console and handheld software revenue in January has been indicative of the mix for the entire year.

For example, in January 2006, the software revenue was divided 73% to 27% between consoles and handhelds. For all of 2006, the market was essentially the same, divided 74% to 26%.

Growing Console-Handheld Divide

According to data from Cowen and Company, nearly 82% of the industry's software revenue was for consoles in January 2009. In fact, as the figure above shows, the proportion of software revenue coming from consoles has increased each year since 2006.

Two factors are probably driving this growing disparity: first, the increase in premium-priced console products such as Guitar Hero and Wii Fit; second, the explosion of value-priced software at $20 or less for the Nintendo DS.

These factors would suggest that the gap above has grown more pronounced while at the same time actual console and handheld unit sales may not have changed by nearly the same proportions.


Article Start Previous Page 4 of 6 Next

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