2010 Half Year in Review, A Look at Q2 Shipments and Beyond - News
by VGChartz Staff , posted on 05 July 2010 / 7,350 Views
Introduction
The first half of 2010 has ended. It is the last six month period in which the Wii will have motion sensing features all to itself and it is likely the last six month period before the 3DS launches. Overall, there was not much change for the first half of 2010. DS, PSP, and PS2 continue to slow down, while X360, PS3 and Wii continue to shine. Software sales were relatively robust in Japan - pushing hardware sales up over the first part of 2009. Elsewhere, hardware sales are down quite a bit as DS peaked in 2006-2007 in Japan, 2007-2008 in Others, and 2008-2009 in the Americas. Following the DS peak in both Japan and Others there has been a major hardware contraction and there is some evidence that this pattern is starting to impact the Americas. In essence, here is what has happened from H1 2004 - on the eve of the DS launch - to H1 2010 - the likely eve of the 3DS launch.
After seeing increasing hardware sales in each first half from 2004 to 2008, the big three have seen total hardware sales drop off sharply in subsequent first halves. Nintendo and Sony saw their hardware sales drop by over 10% against January to June 2009, while Microsoft's figures dropped by about 1%. For Nintendo and Microsoft, the problems may be relatively easy to fix as Wii and X360 can see price cuts and new motion initiatives (Kinect / Vitality Sensor). 3DS can also offset the DS decline. For Sony, PSP and PS2 are down 2.4m units, while PS3 is only up 1.4m units. There may be a new PSP on the horizon but both platforms can't be replaced in the next year given the costs of getting PS3 to where it is now. Eventually, PS2, PSP, and PS3 will all be declining at once - and Sony will not be able to offset that with a PS4.
Broken down by manufacturer, the first halves since 2004 have transitioned to a very Nintendo-centric market starting in 2007.
Since 2007, Nintendo's systems have accounted for 53%-58% of all hardware sold between January and June. In 2008, when Wii and DS went on to set records, the figure was actually only 53% - as the entire industry did very well that year. Nintendo's first half hardware totals for 2007 and 2009 were 58% and 57%, while 2010 was 54% for Nintendo. Sony went from a high of 56% of al hardware sold in January to June 2005 to a low of 32% in January to June 2009. The first half of 2010 marks a small recovery for Sony, with their hardware back to 33%. Microsoft has had anywhere from 7-15% market share for hardware - it all depends on how strong its systems are doing against the Nintendo and Sony portables where the company does not compete.
Early 2010 Against Early 2009
The biggest change in hardware sales against 2009 is that DS, PSP, and PS2 are declining much faster than Wii, PS3, and X360 can grow. Combined, DS, PSP and PS2 are down over 6.5m units from January to June 2009, while the Wii, PS3, and X360 are up by a combined 1.6 million units.
Overall this amounts to hardware sales down 4m units, a drop of nearly 12% from the first half of 2010. In the second quarter of the year, the results are even less encouraging as the first quarter had been buoyed by very strong content.
The first quarter only showed major declines for PS2 and PSP. Wii, X360, and DS were relatively flat while PS3 was up quite a bit. But the second quarter shows DS, PSP and PS2 down quite dramatically.
The only good news for the quarter is that X360 has switched into slightly positive territory. That should continue until the X360 slim lift, and the more temporary 'clearance sale price cut' ends. DS is down nearly 45% - a pace which would put it on pace to ship 'only' 15.5m units or so, while PSP is down 32% - a pace which would put it on pace to ship 6.6m units or so going by how the portables performed in the last fiscal year. Both portables will likely recieve price cuts in the west this year to meet their numbers as their price cuts have been quite effective in Japan. Sony's PS3 is still ahead of the early 2009 pace, however the level of growth is slowing. The PS3 may actually end up flat or negative in the next quarter given how strongly the PS3 Slim and price cut lifted PS3 in 2009. Wii and X360 are likely to remain flat or slightly up on the new hardware skus / bundles / clearance sale - particularly with a strong July for both consoles in Japan.
Regionally speaking, the strength of the first half of 2010 varies tremendously.
In the Americas, the HD systems are up, but the overall industry is down. Japan meanwhile has shown how impactful price cuts can be.
Japan had price cuts for Wii, PS3, and PSP in September-October 2009. All three systems are up over the first half of 2010. DS had a price cut about three weeks ago - and the cut should narrow the DS decline next quarter. With PS2 and X360 down by 200,000 units though the Japanese industry barely beat its figures from early 2009.
In the Others region, hardware is down a staggering 21% so far.
This can be attributed to big declines for not only the PSP, DS, and PS2 - as in the Americas - but also the X360 which was down 17% in the region.
Hardware trends grew more negative in each region for the second quarter of 2010 - particularly in Japan where the price cut induced lifts began to wear off turning hardware sales from up 3% in January - June to down 8% in April to June. The Americas has also turned more sharply negative.
Wii joined X360 and PS3 in tracking ahead of 2009 in the Americas for the second quarter, but PSP, PS2, and DS turned more negative - offsetting that growth.
Wii and PS3 growth in Q2 was significantly less than in Q1 in Japan, and PSP growth turned negative. DS, X360, and PS2 also continued to trend more negatively, though DS would have been down even further without Nintendo's effective price cut on June 19.
The 'Others' hardware market had a terrible second quarter for hardware. Every system but PS3 sold less than in Q2 2009, and even PS3 generated less revenue as the increase in sales did not fully offset the revenue lost due to the price cut. The portable hardware market literally halved year over year - with 4.1m units sold in Q2 2009, and only 2.03m units sold in Q2 2010. X360 shrunk more than in the first quarter, and Wii went from growth to shrinking but both systems were offset by gains in the Americas to come out ahead of 2009 figures for Q2.
Top Software for Early 2010
Although hardware sales were down 12% against January to June 2009, and 23% against the second quarter of 2009, there were some bright sports on the software side. Below are the top titles for Wii, DS, PS3, PSP, PS2 and X360 in the first half of 2010.
Ubisoft's Just Dance is the biggest breakout hit of 2010 - not just for Wii - but for any platform. No other new IP has done as well in 2010.
Square-Enix is the main third party to benefit from DS year to date.
Microsoft has yet to really sell alot of its own software on X360 in 2010 - that should change in the second half with Kinect and Halo: Reach.
Sony has five of the biggest ten hits for PS3 year to date. That isn't real good for publishers, as PS2 / PSP are now small software markets, and Nintendo also tends to take 30-45% share on Wii and DS.
There aren't many big hits releasing for PSP anymore, but there is still money to be made on the platform as Konami and Square-Enix are showing.
PS2 is only going to see a smattering of games top 500,000 in 2010, but that is still a decent volume for many publishers, which is why the system isn't completely dead yet.
Overall, some publishers have handled the fracturered nature of the industry better than others. EA and Activision had top ten hits for PS2, Wii, X360 and PS3. Ubisoft had top ten hits for Wii, PS3, X360 and PSP. Konami had top ten hits for PSP and PS2. Capcom had top ten hits for Wii and PSP. Square-Enix had top ten hits for DS, PSP, PS3 and X360. Sega had top ten hits for Wii, DS and X360. Take Two had top ten hits for PS3, X360, PSP, and PS2. THQ had a top ten hit for PS2 and Namco-Bandai had a top ten hit for PSP. Overall though, the top ten games on each platform for the first half of 2010 were dominated by a mere 13 companies - the big three, EA, Activision, Take Two, Ubisoft, THQ, Sega, Square-Enix, Konami, Capcom and Namco-Bandai.
Overall, 2010 looks like it will be a tough year for publishers. There may not be any price cuts, and several markets - DS, PSP and PS2 - are sure to continue shrinking. Kinect and Move, the 3DS (probably just for Japan), the Vitality Sensor, and whatever else may come in 2010 all look like they will reduce gaming budgets for software because of their prices. First party share on Wii, PS3 and X360 is also set to increase from Move, Kinect, and major titles like Halo: Reach, Donkey Kong Country: Returns, Kirby's Epic Yarn, Wii Party and Gran Turismo 5. Purchasing rates by the Wii, PS3, and X360 user bases are also shrinking due to age - as has happened with every previous system - so an increasingly small number of titles will likely eat up most of the new games market.
Conclusions: What Early 2010 Tells Us About the Future
For the year ending March 2011, Nintendo and Sony stated that they would ship the following volumes of hardware and software:
DS + 3DS - 30m / 150m
Wii - 18m / 165m non bundled sw (i.e. around 195m with the Wii Sports & Wii Sports Resort bundle)
PS3 - 15m / Roughly 195m between PS3 / PS2 / PSP
PSP - 8m / Roughly 195m between PS3 / PS2 / PSP
PS2 - 6m / Roughly 195m between PS3 / PS2 / PSP
X360 - No forecasts provided as Microsoft's year end in June. The company doesn't issue forecasts anyway - although we may get some information about Kinect on July 22 when results are revealed.
Based on Vgchartz data, the June 2010 quarter went roughly like this for hardware and software shipments.
DS - 3.8m / 22.0m
Wii - 3.0m / 32.5m
PS3 - 2.0m / 24.5m
X360 - 1.8m / 23m*
PSP - 1.4m / 7m
PS2 - 0.9m / 3.5m
* Microsoft doesn't detail software shipments worldwide.
Without knowing the DS / 3DS split for the fiscal year it is hard to know if DS is meeting the pace Nintendo wants it to. However, the system likely only had about a 3.8m quarter by shipped figures. Barring a price drop, DS will likely have similar or lower figures in the September 2010 and March 2011 quarters. If you call it 11m, and assume a 10m unit December quarter, Nintendo would need to ship about 9m 3DS to make its 30m forecast for the two devices. That isn't happening in less than six months - so the likelihood is Nintendo will lower its portable forecast, or cut the DS price by $20-$30 (Pounds / Euros) worldwide at some point in the current quarter. With a price cut, DS can do 24m-26m for the year - meaning 3DS will only need to do 4-6m in the fiscal year which is doable.
By shipments, the PSP looks like it had a 1.4m quarter or so - and thus the device may be in some danger of meeting the 8m target Sony set for it. Normally, 1.4m / 1.4m / 4m / 1.2m would be my expectation for PSP to reach 8m, but with the 3DS likely to launch in Japan by the end of 2010, and in the West by March 2011, sales for the PSP are likely to drop off quite a bit faster than they would otherwise. A price cut for PSP would probably help, although if Nintendo really drops the DS price cut this year, PSP still ends up as 'overpriced' for budget portable consumers, and 'low tech' for the 3DS audience. The middle audience meanwhile would probably rather have an Apple product. None of this bodes well for PSP. So while 8m is doable for PSP, it may be a bit of a lofty target with a DS price cut and a big 3DS launch. It is too early to say the goal can't be met, but it feels a bit high.
Sony shipped about 2.0m PS3s for the quarter. That is a big increase over last year. The issue is Sony shipped 3.2m PS3s in the September 2009 quarter and then another 6.5m PS3s in the December 2009 quarter. PS3 will certainly remain up through mid-August when the old models had price cuts and the Slim was introduced - but late August and September will be hard to match without another price cut. If we assume Move drives demand for a second, a 2.5m-3.0m quarter is reasonable for September. But that puts PS3 at 4.7m or so. Without a price cut, PS3 hardware shipments will likely fall to 6m (down about 10%) over Christmas. With a strong first quarter of 2011, Sony could reach 13m-14m PS3s. Obviously if Move (or Kinect!) really takes off or flops, or if Sony does cut price , these figures could change dramatically - but as with PSP the 15m goal is not a slam dunk without a price cut. It is again too early to tell, but without a price cut Nintendo and / or Microsoft seems likely to try to restore a harmful pricing advantage against PS3.
Nintendo shipped about 3.0m Wiis in the quarter up about 20% from the previous June quarter. To meet the 18m goal for the fiscal year, Nintendo likely intends to split the four quarters up as 3m / 3m / 9m / 3m roughly speaking. Last year though, Nintendo relied on a trifecta of mega hits (10m+) and a price cut to push Wii to a massive December quarter. For 2010, there are fewer massive big hits, but likely more big hits from Nintendo and publishers. That may or may not push Wii almost as high as last year in the fourth quarter. As the comparisons for December 2009 in particular are going to be tough to match, Nintendo will likely cut the price of Wii a bit (maybe to $170) to make sure Wii has another massive holiday quarter. The good news on the Wii side for Nintendo is that Japan has a much steadier set of releases than 2009, and the Wii had more momentum coming out of 2009 than 2008 in Japan and so even though Wii is likely to be down in the Americas and / or Others - it is almost assuredly going to be up a bit in Japan for the year. Since Wii shipments were 20.5m in the previous fiscal year, and the forecast is for 18m, a drop of 3m-3.5m in Western regions might be absorbable by the increased sales in Japan.
Microsoft will likely be the key to determining how 2010 finishes. If Kinect does well, there is little incentive for Microsoft to drop price and Sony probably won't match the cut, ceding market share for cold, hard cash. Nintendo probably would try to blunt Kinect with a bigger price cut than they would normally do at this stage in the Wii life cycle. With a Kinect flop, the pressure is on Microsoft to cut price, as the company seems hell-bent on having a big Christmas. My guess is Kinect is either a single or a double - rather than a strike out or a grand slam home-run leaving Microsoft flat for Christmas, and leaving Nintendo comfortable to make only a small price cut. It is way too early to know for sure, as Kinect pricing has not even been revealed yet. That said, more Call of Duty, more Halo, etc isn't enough to push X360 to a huge Christmas when so many of those fans already own an X360. Value has to increase from another source or two, either Kinect or a hardware price cut.
Contact Vgchartz at jmazel@vgchartz.com
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Maybe it's possible that game consoles are getting close to the point of saturation. I mean, look at what point in the life of the consoles we are at. Unlike past generations where there has been one clear winner and maybe one runner up, five years have passed and we have THREE impressively selling consoles. Maybe Kinect and Move will give sales of the hardware a boost but I actually believe that most people that (after the holidays) console sales are going to hit a serious wall.
"the PS3 is just getting going"
Er no it's slowing down actually, and it'll be down YOY unless it gets a price cut (which it won't)
If Wii surpasses the 100m mark by the end of fiscal year 2011, it will officially outsell the ps1.
I think it's possible that WIi could hit 100M by end of 2011, by then it could be as cheap as $130 and 3DS will had sold a lot too.
Wii shipments were 11m+ in Oct-Dec 2009 it probably won't fall that sharply. We'll have to see, but the Wii seems to have a better lineup than in 2009, as far as hits go.
Ahh well before Nintendo released their shipments figures for March 31st, I thought they had shipped about 72M but it was less so I wont think they've shipped around 74M as of 30th June, I think the distance between sell-through and shipments is roughly 2,000,000, Wii hit the 70M mark in April so shipping about 72M end of March was ideal, but it was different.
So I assume they will have shipped about 73.6M end of June and will shipe about 76M end of September, and then they will ship less end of December, about 83M since Move and Kinect will be massive hits.
Gilgamesh - PS3 is up now but the "rate of upness" is shrinking and may vanish without a price cut this quarter if you're going by units. By revenue its already down in some spots.
Nintendogamer - Wii shipments were 70.93m through March 2010. So through June, roughly 74m, through Sept maybe 77m, and then through Dec maybe 86m if Nintendo remains on target to meet its forecast of 89m by the end of March 2011. Sell through may only be 83m or so though.
The industry may be down but the PS3 is just getting going, its up drastically in every region.
My guess that Nintendo will ship around 83M Wii as of December 31st and 142M DS. Sony about 45M PS3 and M$ about 48M 360. Long read too but interesting.
