The Farmer Report: March 2008

April 21, 2008

March has come and gone, and with it a number of major new game releases. Now NPD has released the numbers for the month, so we can take a look at them and  try to dig deeper into what they mean for the industry at large.

First, I want to sidetrack and cover a common question from last month’s comments: why do these numbers matter? As game players and not developers, publishers, or retailers, what difference does it make to us how well they sell? The answer is that it doesn’t matter right here and now, but going forward it’s very important. If a big-budget game with a massive advertising blitz fails to sell in-line with that budget, the odds of a sequel or other, similar games getting green-lit are significantly reduced. Meanwhile, surprise successes can energize developers and publishers to take more chances along a similar line. If you want to see more games of the type you like in the future, you’d better hope that the current ones sell or future titles won’t exist.

As for the consoles themselves, their sales matter in a more immediately apparent way: the better a system sells, the more attractive a target it becomes. Games need to sell to a large number of consumers in order to turn a profit, and if the installed base of a console is small enough that such sales become impossible, development for that console is likely to diminish or cease altogether.  Last generation, the GameCube frequently saw far lower sales of multiplatform titles than did the PS2 or Xbox, so later in the generation many multiplatform titles were no longer developed for it. For GameCube owners, they were stuck with a platform that had far less games coming out for it than the other two consoles. Selling in large numbers and having the biggest possible installed base means that, even if a game sold to only a tiny percentage of owners, it could still sell extremely well overall. So if you own a PS3, strong hardware sales that maintain or even close the gap with the 360 will help attract developers to your platform of choice. Meanwhile, if it falls even further behind, interest will flag.

Hopefully that offers some justification for why taking a look at the sales numbers and gleaning what information we can from them makes sense, so let’s dive in.  Rather than listing last month’s and last year’s sales at the beginning, instead I will list each console’s sales for March 2008, followed by February 2008 (month-to-month), and then finally the March 2007 numbers (year-over-year). Weekly averages for each will also be given in parenthesis. The March NPD month is a five-week retail month covering the time period from Sunday, March 2nd until Saturday, April 5th. Since February was only 4 weeks long and April will be as well, I’ll compare weekly averages instead of monthly sales in order to make comparisons between months more accurate. And here we go.

Wii: 721,000 (144,200)/ 432,000 (108,000)/ 259,000 (51,800)
Meet the new single month, non-launch, non-holiday (i.e. November and December) sales champion. That’s right, the Wii’s astonishing sales last month are the greatest ever recorded outside of console launches or the holidays (the previous record was the PS2 in June 2002, when it sold 690,000 units following the price cut to $199). Pick your own superlative, since none of the ones I came up with were strong enough to cover Nintendo’s accomplishment. Riding the release of Smash Bros. Brawl and an apparently massive increase in supply (and despite these astonishing sales, the console is still supply-limited in the US), Wii sales surged to literally unprecedented levels. The Wii, DS, and PSP were the only consoles to increase their sales from last month, and when accounting for the extra week in March, only the Wii showed a month-to-month increase. Whether the increased supply was due to Nintendo further increasing their manufacturing capacity (possible) or diverting additional systems to the US to cover the Smash Bros. launch (also possible) I can’t say, but if this level of supply is maintained and demand stays at these levels expect the Wii to take the lead in installed base in the US by the end of summer (it already leads worldwide).

DS: 698,000 (139,600)/ 587,600 (146,900)/ 508,000 (101,600)
Not to be totally overshadowed by its younger brother, the DS also broke previous non-launch, non-holiday sales records to set a new second place finish. Between its two systems Nintendo sold an amazing 1.41 million systems in March. Forgive me if I sound like I’ve lost any pretense of objectivity and am merely gushing, but with numbers like these any realistic analysis requires admitting that Nintendo just smashed beyond anything ever done. To break the sales record once is impressive enough, but to do it twice in a single month is simply astonishing. The only downside I can find at all is a 7,000 unit per week drop from last month, but even with that caveat the DS still sold nearly 140,000 units per week. This would be a great number for November, but in March, without any major software releases, it’s incredible. Don’t be fooled by the lack of software in the top 10 either. The DS sells a massive amount of software below that very high threshold and has proven itself to be a very viable platform for game sales.

PSP: 297,000 (59,400)/ 243,100 (60,775)/ 180,000 (36,000)
This was one of the best months the PSP has had. Compared to last year, sales were substantially higher, and compared to February weekly sales were nearly flat. Only the Wii performed better relative to last month. More important however is the presence of not one but two games in the software top 10, the first time a PSP title has made an appearance since GTA: LIberty City Stories. Unfortunately, it’s impossible to extrapolate from those two games to the entire library, so I can’t say if this is part of a larger uptick in software sales or limited strictly to these two very high profile games, but if this is the beginning of a new trend and not an outlier, the PSP as a gaming device may be able to substantially improve its standing in the coming months.

360: 262,000 (52,400)/ 254,600 (63,650)/ 199,000 (39,800)
The 360 slipped by the PS3 by the slimmest of margins to reclaim the number 2 spot among home consoles and showed a nice year-over-year gain, but the weekly numbers show a definite slide from last month. Given that the hardware supply constraints were mostly lifted by the end of February but didn’t totally cease until mid-March, I would expect that MS was hoping for substantially higher sales as the channel refilled.

PS3: 257,000 (51,400)/ 280,800 (70,200)/ 130,000 (26,000)
Looking at the sales curve it appears that the mini-surge from BluRay winning the format war might be tapering off a little, with weekly sales off nearly 20,000 per week from last month. However, while the PS3 had a substantial drop from last month, a quick glance at least year’s number provides some healthy perspective. It’s still struggling, and the PS3 will almost certainly remain the 3rd place system in the US for the rest of this generation (worldwide it has a solid chance to overtake the 360 for the number 2 slot, but number 1 is out of the question), but it’s no longer on death row. The installed base is starting to reach levels that software can chart with a little more consistency, although obviously it still lags far behind the Wii and the 360 in this respect. It’s not in a great position here in the US, but it’s not horrible either, and given the 360′s nonexistence in Japan and the PS3′s gains in Europe the possibility for a moderate performance is still present. A fall from the PS2′s unimpeachable dominance? Absolutely. There is no way the PS3 will approach anything like what the PS2 did. But if you can ignore the pedigree of the PlayStation name, the PS3 at least has a chance to turn in a respectable performance on its own merits when all is said and done.

PS2: 216,000 (43,200)/ 351,800 (87,950)/ 280,000 (56,000)
And fina
lly we arrive at the month’s most baffling number. After months of strong sales what caused the PS2 to drop by more than 50%? I honestly don’t have an answer. If forced to speculate, I would say that the massive increase in Wii supplies skimmed off a good chunk of consumers that were opting for the PS2 in previous months. The Wii’s ultra-wide appeal allows it to target both customers wanting a current system as well as more budget-conscious, casual gamers that likely make up the bulk of recent PS2 sales. If this is the case, and if Wii supplies remain high, then expect PS2 sales to continue trending down as the best-selling console in history finally slips into a dignified retirement.

Moving away from the individual consoles to the overall market, Nintendo is the obvious winner. Nearly 60% of systems sold in March were from Nintendo, and 3 of the top 10 titles were for the Wii. Meanwhile the HD consoles showed solid improvements from last year, with the PS3 in particular showing a Lazarus-like resurrection. The handheld market also showed continued strong hardware sales (with the DS expanding its lead), but the PSP proved that it can move software under the right circumstances, even if it takes a AAA mega-game to do it.

Shifting over to software, I’ll again give a brief run-down of the top 10. Since 10 games is such a small subset of the market, it’s impossible to extrapolate that subset to the larger software market (see months where the Wii had fewer titles in the top 10 than the 360 yet sold more software overall), but some information can still be extracted. At the top of the list are the outstanding Super Smash Bros. Brawl sales. Despite limited advertising, the sequel to the GameCube’s biggest title (and the only GameCube game to break 7 million worldwide) hit the market with a launch that can realistically be compared to Halo 3. It’s smaller yes, but 2.7 million vs. 3.3 million is at least in the same ballpark, although Brawl also launched far earlier in the month. And given that Melee was a nearly constant fixture in the GameCube’s top 10 for the life of the console, expect Brawl to have the legs of a thoroughbred. Meanwhile Rainbow Six Vegas 2 hit the 360 like a thunderbolt. Unsurprising given the installed base’s love of shooters, but still yet another software success for a console that seems to churn them out nearly monthly. This one appealed perfectly to the console’s core demographic and has the sales to prove it. Army of Two had a very strong debut, particularly for a new IP, and charted on both the 360 and PS3. Kudos to EA for taking a chance and delaying the game, making sure it was finished when it shipped. They definitely earned their reward. Wii Play will continue to sell as long as the Wii does and will remain an immovable fixture in the top 10 for the life of the console. I’ve already mentioned the two PSP titles, but they deserve to be each noted. Final Fantasy and God of War and two of the PlayStation’s biggest franchises, and they both sold very well for their efforts. Good games deserve to sell regardless of platform, and by all accounts these were both good games. The Wii version of Guitar Hero 3 continues to chart, and is nearing 2 million in the US. MLB 2K8 had a nice debut on the 360. Finally the chart-topper for the last three months may have relinquished the number one slot, but it hasn’t left the top 10 entirely.

Finally, let’s take a quick preview of next month. The big news is Grand Theft Auto IV. Brawl’s stay at number 1 is destined to be for one month only, as GTA will assuredly take the crown. More interesting will be the split between the 360 and PS3. Will it lean disproportionately towards the PS3, like Devil May Cry 4 did, indicating that consumers still link Grand Theft Auto with the PlayStation brand? Or will they sell comparably for the installed bases, showing that GTA is seen more as a platform-neutral title, a la Madden? Nintendo is releasing their own driving game in Mario Kart Wii. Expect the sequel to the GameCube’s second-highest selling game to come in behind GTA IV, but to still do outstanding numbers in its own right. Brawl will undoubtedly show strong legs as well. Also: watch the hardware numbers. Will the 360 see significant bumps from the release of GTA IV? Halo 3′s September launch put the ceiling on a major new release’s impact on hardware at around 500,000, but will GTA IV’s multiplatform status siphon sales towards the PS3? Meanwhile, keep an eye on the Wii to see if Nintendo can keep up March’s massive shipments . With the trifecta of Smash Bros. Brawl in March, Mario Kart Wii in April, and Wii Fit in May, these March numbers may look paltry by comparison in a few months.