The Farmer Report: June 2008 NPD Analysis

July 20, 2008

The NPD numbers for June are in, and there’s a new market leader in the US: the Wii has now officially surpassed the Xbox 360 as the top-selling home console in the last major market. But there’s a lot more to this month’s numbers than just that one tagline, so let’s jump in.

The NPD retail month of June is a 5 week month that started on Sunday, June 1st and ended on Saturday, July 5th. Since the time period covered is 5 weeks long instead of the 4 weeks like 2 out of 3 months, comparing weekly averages from month to month allows for a more accurate comparison of sales shifts. 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 June 2007’s sales and weekly average.

DS: 783,000 (156,600)/452,600 (113,150)/562,000 (112,400)
Another month goes by, and the DS posts another set of huge numbers. It’s passed 20 million and is showing no sign of stopping. In fact, the DS broke the non-holiday non-launch record set by the Wii just three months ago in March (the previous record was set 6 years ago in 2002). Before this year no system ever sold over 700,000 units in a month (again outside of the holidays or launch months), but the Wii has broken that number twice already this year and the DS just broke it as well (and it was only 2,000 units shy in March). After seeing them month after month it’s easy to forget just how high these numbers actually are, but in this case “unprecedented” is not hyperbole.

Wii: 666,000 (133,200)/675,100 (168,775)/382,000 (76,400)
Did Nintendo make a pact with the Devil to get Wii sales as high as they are? This month’s sales number certainly implies it. All joking aside however, much of what I said about the DS applies here as well. As impressive as the Wii’s sales were a year ago (and make no mistake, selling nearly 400,000 units in a month without any major software releases is an incredibly strong number), Wii sales this year have been nothing short of astonishing. The Wii has now cleared 600,000 systems for four straight months, and 500,000 for 8 out of the last 10. Nintendo sold over 1.4 million systems in June. It’s clear that with both the Wii and DS Nintendo has found something that very much strikes a chord with a far broader audience than any previous system has ever reached.

PS3: 405,000 (81,000)/208,700 (52,175)/98,500 (19,700)
This is perhaps the best number the PS3 has ever posted. There have been months where it sold more, but those were holiday months and paled next to the competition. Clearing 400,000 in June is an excellent performance made even more so when compared to the absolutely dismal number a year ago (the PS3’s nadir). Metal Gear Solid 4 obviously provided a huge boost that other titles have not. In fact, going by additional information provided by NPD, bundles accounted for over half of these hardware sales. Of course, the return of an 80 GB PS3 with backwards compatibility didn’t hurt sales at all either, as BC PS3s have been even scarcer than Wiis for much of the year. In terms of selling systems, despite selling fewer copies than did Grand Theft Auto 4 on the PS3 back in April (even counting bundles MGS 4 didn’t break a million), the PS3 actually sold more hardware than did the PS3 and 360 combined back in April. It would appear that system-sellers have to be exclusives. Multiplatform titles just don’t move hardware if the software sales of GTA 4 and MGS 4 as well as their associated hardware sales are considered. Looking at the bigger picture, the PS3 has substantially more momentum going into the second half of 2008 compared to the 360. It has outsold the 360 4 out of the first 6 months of the year and has a total year-to-date lead of over a quarter of a million units. In terms of installed base the PS3 still lags far behind the 360, but its mindshare has climbed enormously from the embarrassment of summer 2007. However, Sony needs to capitalize on this month and sustain higher hardware sales, lest this turn into a flash-in-the-pan bump that vanishes in July.

PSP: 337,000 (67,400)/182,300 (45,575)/290,000 (58,000)
This is an interesting, if inexplicable hardware bump. I personally have long-since given up trying to understand PSP hardware sales. They seem to have no relation to software releases, much less actual software sales, and rise and fall without any apparent rationale. I’d like to offer more commentary than this, but it’s hard when there’s seemingly no basis for the numbers.

360: 219,000 (43,800)/186,600 (46,650)/198,000 (38,400)
MS should probably be getting worried here. The 360 has not had a great 2008 thus far, and unlike last year there’s no Halo titles to catapult them down the home stretch. These aren’t bad numbers at all, and in fact are an improvement over last year’s, but this year has overall been seemingly more about the PS3 than the 360. Of course this is more perception than reality, as the actual difference in hardware sales this year is a drop in the bucket compared to the life-to-date delta, and multiplatform titles generally sell far more on the 360 (even if the PS3 manages a higher attach rate, the difference in installed base erases such a difference and then some), but sometimes perception is more important than reality and right now the popular notion is that the 360 is losing ground fast to the PS3. This is heightened by the fact that worldwide sales tilt decisively in the PS3’s favor. The price-cut/fire sale on 20 GB 360s will help, but MS needs to do more than that to bolster sales and retake a clear-cut lead over Sony.

On a side note this is also a great demonstration of why it’s so important to keep in mind that there are 4 and 5 week retail months. At first glance it appears that 360 sales rose significantly month over month, but when you account for the fact that June was 25% longer than May you see that sales actually decreased slightly.

PS2: 188,800 (37,760)/132,700 (33,175)/270,000 (54,000)
Again we can see that what looks like a substantial rise in monthly sales nearly vanishes when you account for June’s extra week. This is the second month in a row where the PS2 has showed sight increases in sales, but are still down considerably from January and February. Again I offer my speculation that wider availability of Wiis has resulted in a large number of consumers opting for Nintendo’s system over the venrable PS2.

And now let’s look at the software.
1. PS3 Metal Gear Solid 4: 774,600*
2. DS Guitar Hero On Tour: 422,300
3. 360 Ninja Gaiden II: 372,700
4. Wii Fit: 372,700
5. Wii Play: 359,100
6. 360 Battlefield: 346,800
7. Wii Mario Kart: 322,400
8. Wii LEGO Indiana Jones: 294,500
9. NDS LEGO Indiana Jones: 267,800
10.PS2 LEGO Indiana Jones: 260,300

*Including copies bundled with PS3 consoles, MGS 4 sold nearly 1 million units per NPD

As usual, I’ll first point out that it’s impossible to extrapolate too much from the top 10. NPD tracks thousands of titles every month, so the top 10 provides only a tiny glimpse of the larger market. That’s particularly true in a month like this one, where the threshold to break into the top 10 was over a quarter of a million units. This is exacerbated by the fact that the rate of decline drops markedly the further down the chart one goes. Last month the number 1 title sold 871,000 units, the number 5 title sold 295,000 units, the number 10 title sold 102,000 units, and the number 25 title sold over 60,000 units. In other words, while the drop from number 1 to number 5 (four places on the chart) was nearly 600,000 units, and the drop from number 5 to number 10 (five places on the chart) was nearly 200,000 units, the drop from number 10 to number 25 (fifteen places on the chart) was only around 40,000 units. The gap between number 6 and num
ber 7 was about as big as the gap between number 10 and number 25. Keep that in mind when you think that any game that missed the top 10 was a bomb.

Remembering that, let’s look through what little of the software charts we do get to see. Metal Gear Solid 4 had a fantastic debut. When you include copies bundled with hardware it came in only a hair behind the PS3 version of Grand Theft Auto 4 and sold only slightly less than MGS 3 did on the PS2’s far larger installed base. Not bad for a series many thought was on the downturn. Unfortunately, this was the PS3’s only entry in the top 10. Guitar Hero On Tour had a stellar debut, particularly given that it costs $50 compared to $30 for the average DS game and it was so different when compared to other titles in the series. This is a strong reminder of just how strong the Guitar Hero brand is. It is interesting that Guitar Hero Aerosmith didn’t make the top 10 on any platform, but it also debuted on four different platforms, diluting its sales, as well as having only 7 days to sell in a month with a very high bar to make the top 10. I’d imagine that it did quite well when adding all the different versions together, but no one version was able to crack the top. Ninja Gaiden II checked in with a very similar number to Ninja Gaiden on the Xbox, implying that the market for this genre of game is both well-defined and fairly static. That’s not a bad thing though, and the game definitely sold quite well, although its legs are questionable.

Wii Fit sold everything that Nintendo could ship, moving its life-to-date total over one million. However, due to supply constraints, thanks to the included balance board, the game remains nearly impossible to find in stores and could potentially remain this way for months. Wii Play continues to sell at roughly 50% of the Wii’s monthly hardware sales, an attach rate it will likely hold for the life of the Wii. Battlefield: Bad Company had a good first month on the 360, and Mario Kart unsurprisingly continues to show strong legs. Finally, three different versions of Lego Indiana Jones round out the top 10, on the Wii, Ds, and PS2, in that order. In fact, when adding all the different versions together, Lego Indiana Jones was the top-selling title of the month, selling 1.1 million units and topping MGS 4. The Wii version selling the highest is a slight surprise. I would have assumed that for a very accessible game such as this the massive installed base of the PS2 would make it the default platform (much like Guitar Hero 3 last year), but it seems that the Wii won out, even if only slightly. The DS version also did quite well. Of course, the gap between the Wii at the top of the three and the PS2 at the bottom is less than 35,000 units, so we’re not talking about a huge different in either case. unfortunately, without a bigger list we can get no idea of even the relative performance of the other versions.

Looking ahead to July, the biggest question is how will the price-cut/fire sales on 20 GB 360s affect hardware sales? We’ll also see if the PS3 manages to maintain anything like its current numbers (if October 2007 on the 360 post Halo 3 is any indication, expect a considerable drop). We’ll also get some breakdown of the various releases of NCAA 2009 (expect the 360 to take the lead here, followed by the PS2, but no idea after that), Soul Calibur IV, and Civilization Revolutions (assuming any version of this one makes the top 10 at all). We’ll find out in four weeks.