The Farmer Report: October 2008 NPD Analysis

November 17, 2008

NPD has released the October numbers. They’re quite interesting and the most important in some time. October historically is where the early signs of the holiday uptick in sales begin, and you can actually get a pretty good idea of where total holiday sales will turn out. Historically November sales are roughly 2-5-3 times October’s, and December doubles November, so seeing how each system did last month can give some insight into how they’ll finish out the year as well.

The NPD retail month of October was a 4 week month that started on Sunday, October 5th and ended on Saturday, November 1st. Since October was a 4 week month but some are 5 (including the previous month, September), most of the 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 October 2007’s sales and weekly average.

Wii: 803,000 (200,750)/687,000 (137,400)/519,000 (129,750)
Impressive: the Wii improved on September’s absolutely stellar numbers. Even more impressive: it increased sales by nearly 17% in a 4 week month while compared to a five week month. Account for the extra week and you’ll see that October sales were up nearly 50% from Septembers. That’s an astonishing number that even the PS2’s record setting 2002 can’t approach. Every time you think Wii sales can’t get any higher, they do. Based on these numbers it’s conceivable that Nintendo could clear 6 million total consoles sold in the last two months of 2008 if they can manage the inventory, although I highly doubt they’ll be able to do so. They’ve indicated that they expect to increase shipments by roughly 50% over last year’s, which will still give them some huge numbers in November and December, but nothing like what these numbers indicate is possible. In any case this is a truly unprecedented number. No system has ever come close to these kind of sales outside of November or December.

DS: 491,000 (122,750)/536,800 (107,360)/458,000 (114,500)
This is a much more reasonable number. It’s impressive, but not unprecedented. The DS is up slightly year over year as well as month over month, but not by a huge amount in either case. Although even if this number isn’t necessarily astonishing, it’s still extremely impressive. The DS has definitely sold better in 2008 that 2007, and with the launch of the DSi in Japan without a decrease in DS Lite production, I expect the last 2 months will see more DS shipments to the US than the last two years, where shortages made the DS impossible to find after late November. Expect a huge November and an absolutely massive December.

Xbox 360: 371,000 (92,750)/347,200 (69,440)/366,000 (91,500)
MS has to be pretty happy with these numbers. They’re not up hugely over last year’s, but remember that October 2007 was right after the launch of Halo 3 and 360 sales were still pulled up by that title. They’re also up nicely over September despite the 4 week month, while last year’s October numbers were much lower (again, unsurprising coming off the Halo 3 high). In this case it seems to be selling on the broader library and continued momentum from September’s price cut. With MS’ biggest title (Gears of War 2) hitting in November instead of September like last year, they should be able to solidly improve on 2007’s performance coming down the stretch.

PSP: 193,000 (48,250)/238,100 (47,620)/286,000 (71,500)
I predicted a rebound in PSP sales following the launch of the PSP-300- model, but that clearly didn’t happen. Instead, week sales were roughly flat month-over-month and down substantially from last year. I really don’t have much interesting to say about the PSP. It’s position in the market is well-established and it hasn’t done much to break out of that.

PS3: 190,000 (47,500)/232,400 (46,480)/121,000 (30,250)
This is a fantastic improvement over last year, but that’s about the best that can be said about this number. Over the last 2 months MS has wiped out every bit of the lead Sony had gained in the rest of the year and is now ahead of the PS3 in 2008 hardware sales. That’s not how you make you presence felt in a market where you already started a year behind. The PS3 should have a respectable holiday season, but MS has the bigger games down the stretch and Nintendo is in another league entirely. A price cut would help, but Sony simply can’t afford one. Their gaming division is already losing too much money to take an even bigger bath on the hardware. Sony wants the PS3 to become profitable come hell or high water, but they’re going to give up a lot of market share to accomplish it.

PS2: 136,000 (34,000)/173,500 (34,700)/184,000 (46,000)
This is right in line with the last 6 months or so of sales. The PS2 continues to sell a respectable amount and is no doubt making Sony an enormous amount of money, but otherwise these numbers are totally predictable.

Overall there are three big things to take away from this month. First, the Wii is continuing to rewrite the rules of how well a console can sell. Second, MS gained some much-needed traction with their price cut, and October indicates that sales are holding (bolstered, of course, by the release of Fable II). Third and finally, the PS3 is pretty much locked in 3rd place in the US for the rest of the generation.the PS3 has been on the market now for 24 months, exactly 2 years, and it’s further behind the 360 than when it launched, and let’s not even get into the Wii.

So with all that said, let’s turn our eyes to the software charts.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 Fable II 790,000
2. Wii Wii Fit W/ Balance Board 487,000
3. 360 Fallout 3 375,000
4. Wii Mario Kart W/ Wheel 290,000
5. Wii Wii Play W/ Remote 282,000
6. 360 Saint’s Row 2 270,000
7. PS3 SOCOM: U.S. Navy Seals Confrontation 231,000
8. PS3 Little Big Planet 215,000
9. 360 NBA 2K9 202,000
10. 360 Dead Space 193,000

Coming in at the top of the chart, Fable II, the sequel to one of the best-selling Xbox games, debuted to fantastic sales. It’s no Grand Theft Auto or Halo, but nobody expected it to be. It’s a very strong start heading into the holidays, and decent legs should be expected, especially launching right before the holidays like it did.

Numbers 2, 4, and 5 are the usual trio of Wii games that have all been fixtures in the top 10 since their release.  Mario Kart slipped a smidge from last month, but both Wii Play and Wii Fit increased their numbers. Wii Fit is particularly noteworthy as the game nearly cleared half a million units 6 months after launch.

At number 3 is the 360 SKU of Fallout 3. Bethesda took the reigns of one of the most treasured IPs in Western RPGs, and both the reviews and the sales indicate that their take on a post-apocalyptic world has struck a chord with gamers. Saint’s Row 2 seems to have launched far better than its predecessor; although I can’t find the original Saint’s Row on previous NPD charts, the low threshol
d to make the top 10 in its debut month indicated that the sequel sold substantially more. Then again, sequels tend to be more front-loaded by their nature, so while the original had fairly decent legs it remains to be seen how Saint’s Row 2 does over the coming months. SOCOM started out solidly on the PS3, but these aren’t amazing numbers at all. Little Big Planet either underwhelmed, did about as expected, or is a smash hit, depending on who you ask. What is clear, however, is that the game didn’t move systems and the controversy over the music didn’t do much to raise sales either. Of course the botched launch, recall, and delay didn’t help matters any. Finally, the 360 versions of NBA 2K9 and EA’s new IP Dead Space round out the top 10.

Most interesting to me, at least, is a game notable for its absence. Not one single version of Guitar Hero: World Tour. Compared to last year, when Guitar Hero 3 dominated October almost as thoroughly as Madden dominated August, that’s quite the change. I really have no idea why this occurred. Sure the band bundle was a $200 game when all was said and done, but I would have expected the game-only and guitar-only SKUs to still sell very well. This one is a total mystery to me.

Looking ahead to November, we should see sales of all the consoles ramp up substantially for the holidays. As I said earlier, traditionally November hardware sales are roughly 2.5-3 times October’s, although I doubt the Wii will jump that far due to supply shortages and the uncertain economic times make it difficult for the other systems as well. Otherwise Gears of War 2 hits, along with Animal Crossing Wii (a 4th perennial Wii games on the charts?), Banjo-Kazooie on the 360, and Call of Duty 5 on everything. Software sales get so crowded in the top 10 during November and December that our already narrow view gets even more focused, but the hardware sales should be very interesting. We’ll find out soon.