The Farmer Report: August 2008 NPD Analysis

September 15, 2008

NPD has released the monthly numbers for August. The big news on the software side is the release of Madden 09 and its associated gangbuster sales. Meanwhile, hardware sales haven’t deviated much from the recent status quo.

The NPD retail month of August is a 4 week month that started on Sunday, August 3rd and ended on Saturday, August 30. Since August is a 4 week month like most NPD months, but other months are 5 weeks, most comparisons and trends will be drawn using weekly averages instead of the monthly totals. This allows for a more accurate understanding of what’s happening that isn’t broken by different months covering different time spans. We’ll start at the top of the list and work our way down. The first number will be this month’s sales, followed by the weekly average in parenthesis, then last month’s sales with the weekly average, and finally August 2007’s sales and weekly average.

DS: 518,300 (129,575)/608,000 (152,000)/383,300 (95,825)
The DS continues to sell incredible numbers month after month. Since the replacement of the original model with the Lite over 2 years ago, the system has been on a rampage that has never slowed down. Sure it’s down from last month, but it’s 30% higher than last year’s already outstanding number and still well north of 100,000 systems per week. By the time of its eventual replacement, the DS will likely end up as the best-selling gaming system in history, surpassing even the PS2.

Wii: 453,000 (113,250)/555,000 (138,750)/403,600 (100,900)
The Wii slid down from last month to its lowest sales since February and is actually in the same ballpark as last year’s numbers (surpassing them by a little over 10%), but again it’s all relative. The Wii still clearing 100,000 units per week and still outselling the PS3 and 360 combined. It’s also worth noting that the Wii is still almost entirely supply limited, so a large portion of the drop in sales is caused by less supply in the retail channel. Like last year, Nintendo is stockpiling Wiis for the ultra-lucrative holiday season. Factor in that software sales indicate the Wii is still selling on the merits of games that came out in April and May and is still performing astonishingly.  When big, new titles hit in the future, expect the numbers to return to their previous astronomical rates — if not even higher still.

PSP: 253,000 (63,250)/222,000 (55,500)/151,200 (37,800)
Every month I try to find some insight in the PSP’s numbers, and every month I fail. The hardware is selling pretty well. The software isn’t. There’s just nothing else I can find to say.

360: 195,200 (48,800)/205,000 (51,250)/276,700 (68,150)
The 360 won this month’s war of attrition by virtue of its sales falling, but the PS3’s falling even more, giving the 360 a slight edge in the August sales numbers. Expect this margin to widen considerably next month as the price cut in early September will have four full weeks to be reflected in the 360’s sales. Otherwse August was pretty mediocre in terms of hardware. It’s down both month-over-month and year-over-year, although the YoY comparison isn’t fair as the 360 had its first price cut in August 2007. Otherwise these numbers are the 360’s status quo. By no means horrible, but not particularly inspiring either.

PS3: 185,400 (46,350)/225,000 (56,250)/130,600 (32,650)
If the 360’s numbers are unimpressive, the PS3’s are even more mediocre. They’re not horrendous numbers, they’re better than the GameCube’s (last generation’s 3rd place system) and when you look at last year as a sign of what could have been they look downright rosy, but the PS3 remains a distant 3rd in the hardware race and has yet to gain any significant ground, and I’m not convinced that Little Big Planet or any other game this holiday is going to change this.

PS2: 144,100 (36,025)/155,000 (38,750)/202,000 (50,500)
Sales are down slightly from July and way down from August 2007, but again these numbers are hardly surprising. The PS2 has clearly stabilized in the 30,000-40,000 units per week range and hasn’t budged from that spot for quite some time.

All in all, not a very interesting hardware month. The Wii’s numbers are only extremely impressive instead of astonishing, it continues to outsell the two HD consoles combined, and the 360 and PS3 continue to switch off on the charts by a margin that matters only to people with pride on the line. The DS is amazing, the PSP inexplicable, and the PS2 trudges along right were it’s been. That’s about it.

Fortunately the software chart for the month is more interesting. First, though, I’ll put in my usual caveat that extrapolating the larger software market from the top 10 is impossible, and any attempts to do so will lead to wildly inaccurate perceptions of what’s going on. The top 10 list tells us quite a bit about the games that did make it and nothing about those that missed out.

1. 360 Madden NFL 09 1,000,000
2. PS3 Madden NFL 09 643,000
3. PS2 Madden NFL 09 424,500
4. Wii Wii Fit W/ Balance Board 394,900
5. Wii Mario Kart W/ Wheel 328,700
6. Wii Wii Play W/ Remote 200,200
7. 360 Soul Calibur IV 174,000
8. 360 Too Human 168,200
9. Wii Madden NFL 09 115,800
10. DS Guitar Hero: On Tour 111,200

Madden NFL 09 takes up the top 3 slots and 4 out of the top 10, landing strongest on the 360, followed far more closely on the PS3 than the ratio of installed base would lead you to believe, then on the PS2. Finally the Wii version appears at number 9. Compared to a year ago, Madden sold somewhat better on the 360, nearly twice as well on the PS3, substantially worse on the PS2, and probably about the same on the Wii (although this is a guess, as the Wii version came in at number 12 last year so sales numbers were not released, although the number 10 game sold 127,000 copies). The first thing these numbers tell you is that attach rate does not scale linearly with installed base. That is, if a system’s installed base doubles, a game will sell twice as many copies. The fact that Madden sold roughly 2/3 as many copies on the PS3 as on the 360 despite the PS3 having roughly half the 360’s installed base is evidence of this. The next thing Madden’s sales confirm is that the PS2 is finally dying out. Last year, the 360 version led in August but the PS2 version had stronger legs, giving it the overall sales crown.  Given that the 360 SKU has currently sold more than twice the PS2 SKU, I doubt this will be the case this year. Finally it appears that despite the massive rise in installed base, Wii owners just aren’t hugely interested in Madden. They obviously are hugely interested in software in general, but whether it’s that the All Play branding didn’t strike a chord with consumers or whether your average Madden enthusiast isn’t very likely to own a Wii or whether the Wii audience just isn’t interested it’s clear that it’s not hitting the right notes with Wii owners. It will still likely outsell Madden 08 to become the best-selling version of Madden ever on a Nintendo console (particularly given 08’s horrible word of mouth on the Wii), but compared to the 360, PS3, and PS2 SKUs the Wii version’s performance is nothing short of pitiful.

If Madden is the lead story in this month’s software sales, the continued legs of the Wii’s big 3 is the sub-heading. Wii Fit puts nearly another 400,000 balance boards in consumers’ homes, while Mario Kart added another 325,000 plastic wheels. The staying power of these games is somewhat artificially prolonged by continued shortages, thanks to their included peripherals. Note I’m not saying that the shortage is an artificially created one; rather, the titles would likely be more front-loaded if supply was adequate for demand. Then again, hypothetically, the same could be said for the Wii itself as it continues to smash every record in the book. Regardless, selling well north of 300,000 units 4 and 5 months after their respecti
ve launches is impressive. Even more impressive, however, is Wii Play, which each month keeps breaking its own record as the longest a title has ever stayed in the NPD top 10. Its own attach rate has remained remarkably stable, selling roughly 45% as many copies as Wii hardware month after month.

Finally rounding out the top 10 are Soul Calibur IV, Too Human, and Guitar Hero On Tour. SC IV has now sold just under 400,000 copies. That’s pretty good for a fighting game in general, but far from its peak when Soul Calibur II debuted across the PS2, GameCube, and Xbox to universal acclaim and enormous sales. The controversy around Too Human didn’t seem to spark it to massive sales, although it’s still probably the best a Silicon Knights title has ever done (although without access to comprehensive numbers, I can’t claim this definitively). Finally, Guitar Hero On Tour continues to close in on a million sold in the US alone, a number it will probably break this holiday season as long as GH:OT Decades doesn’t cause sales to plummet.

Next month should be interesting.  The 360’s real price cut will have nearly all month to boost its sales. Expect a substantial surge, although price cuts on non-leading consoles historically tend to cause a temporary spike rather than a long-term rise in sales. On the software side, the big releases are Star Wars: The Force Unleashed and Lego Batman across all platforms, along with Brothers in Arms: Hell’s Highway and Silent Hill: Homecoming on the HD systems. Finally the 360 gets a significant timed exclusive with the early release of Rock Band 2. I’ll be back in 5 weeks to go over the numbers with all of you.