[Gamasutra's in-depth NPD analysis returns with a deep dive into September's U.S. numbers - exclusively revealing the full top 20 games, tie-in ratios, and plenty more specifics on how hardware and games are faring.]
Industry observers always knew that the launch of Halo 3 would be difficult to match. After the NPD Group released September 2008 videogame industry sales figures on Thursday, everyone knew: the value of sales were down 7% from the same period last year. Relative to August, only the Xbox 360 and Nintendo Wii saw increased hardware sales, while Sony's PlayStation 3 was flat, and all other systems experienced a drop in sales.
In this month's overview we will explain the effect of the Xbox 360 price cuts, and how the PlayStation 3 and Wii are positioned as the holiday sales season begins. We'll also pore over the top 20 software list, and then provide updated tie ratios for the current generation systems.
After assessing the growth in software sales throughout 2008, we'll take a brief look at what analysts expect for the remainder of the year and how October sales may finally reveal whether the industry is being affected by the larger economy.
Price drops are exciting not just for consumers but also for those of us who watch the market and track sales. We fully expected strong sales of the Xbox 360 this month, given the significant price cuts Microsoft made on 7 September:
Xbox 360 Arcade cut from $280 to $200
Xbox 360 Premium cut from $350 to $300
Xbox 360 Elite cut from $450 to $400
The price cuts worked: 69,000 Xbox 360 systems were sold each week during September, giving Microsoft its best hardware month this year. What is far more telling, however, is how the average price of each system sold changed after the price drop.
According to the NPD Group, the average sale price (ASP) of an Xbox 360 from its launch through July 2008 was just over $376. We estimate that the ASP was in the $330 to $340 range during August.
For September, we estimate that the ASP of the Xbox 360 dropped to $276, about $100 below its lifetime average and more than $50 below its average before the price drop. If our estimates are correct, then this signals an even greater role for the $200 Arcade model in Microsoft's hardware mix.
It is worth making two quick historical comparisons. The first Xbox 360 price drop, in August 2007, spurred a 63% increase in sales over the previous month. Then in September 2007, the month of Halo 3 and the second month of the lower Xbox 360 prices, sales rose over 50% from the already elevated August 2007 levels.
This year, with least expensive Xbox 360 model dropping below the price of the Nintendo Wii and finally hitting half the price of the least expensive PlayStation 3, Microsoft's system managed only a 43% increase in sales.
By these measures, the September 2008 price drop appears to have less of an effect than last year's more modest cuts. At least part of the difference is that the Xbox 360 sales this year have never been as weak as they were in July 2007, but there is still a lingering impression that Xbox 360 could have been stronger.
Regardless, with the deepest software library and the lowest entry-level price, Microsoft's price cut ideally positions the Xbox 360 for the coming holiday season.