Big Three Shipment Update / Forecasts through June 2010 - News
by VGChartz Staff , posted on 29 July 2010 / 5,229 Views
Introduction
Earnings results for another quarter have arrived. With that information in, we can now update where the industry stands, how it is changing, and what is likely to happen in the next 6-12 months. The June quarter was definitely a strange one.
Let's begin with a look at how strange:
- None of the big three saw their video game divisions profit. Nintendo had a "non operating" foreign exchange loss, Microsoft's division had the Kin disaster, and Sony just missed. This might be the first time ever each hardware company in the industry has posted a loss in the same quarter.
- Nintendo shipped 24.29m DS systems in July 2009 to June 2010. That is down from 27.11m in April 2009 to March 2010 and down from 28.91m in January 2009 to December 2009 when DS hardware first began to slow quickly. Nintendo still expects to ship 30m DS and 3DS systems in the fiscal year though but it won't be announcing specifics on 3DS until September 29. The math suggests that 3DS is probably going to have to ship at least 6m units in six months (at most) to meet the 30m DS + 3DS projection for hardware, even with DS likely to get a price cut in the Americas by Christmas.
- PS2 shipments were actually in 'fourth place' worldwide - beating both the X360 and PSP slightly.
Overall, hardware shipments for the quarter were as follows. Lifetime to date shipments follow.
DS - 3.15m / 132.04m
Wii - 3.04m / 73.97m
PS3 - 2.40m / 38.12m
PS2 - 1.60m / 146.10m
X360 - 1.50m / 41.70m
PSP - 1.20m / 62.70m
We also routinely recieve software shipments for Nintendo and Sony platforms. Software shipments for the quarter were fairly strong (although its hard to say overall since Microsoft doesn't provide sw shipments).
Wii - 28.17m / 573.00m
PS3 - 24.80m / 315.30m
DS - 22.42m / 740.93m
PSP - 9.20m / 260.20m
PS2 - 3.40m / 1516.20m
X360 shipments were likely at 20-25m for the quarter, as the market is similar to PS3, but there are no official, publically provided X360 software shipment figures.
Long Term Trends
Lifetime to date, the largest ten software ecosystems for videogames are PS2, PS1, DS, Wii, GB, NES, SNES, GBA, X360, and PS3. PSP will need to top 377m games shipped, where the stagnant GBA is to reach the list so PSP will probably never crack the top ten.
On the hardware side, Sony's PSP has passed Nintendo's NES to become the seventh largest hardware base ever. Sony's PS3 will need to top either SNES (49m) or X360 (41.7m) at some point to crack the top ten. Sony's hardware forecast, if it ends up being close to reality, should see one or both systems fall behind PS3 by the end of March 2011.
Hardware shipments over the last year have been fairly strong for all three players. Looking at consecutive four quarter periods from launch (i.e. Jan to Dec, then Apr to Mar, then July to June, etc) we can see Wii and PS3 have actually seen modest increases over the previous 12 month sequence.
DS shipments peaked at 31.47m units during January to December 2008 and are now 23% off the peak pace for a 12 month period. PSP shipments peaked at 16.08m units during October 2007 to September 2008, and have since fallen 39% to 9.8m units in the most recent 12 month period. Nonetheless, it is Nintendo that has announced a portable successor - Sony has not. PS3 is tracking for a similar but lower peak in relation to PSP - if it comes at exactly the same time in aligned launch, it would be about 15m during October 2009 to September 2010, before falling slightly. Sony's 15m PS3 forecast is for April 2010 to March 2011, so it will be interesting to see when PS3 peaks as compared to PSP. The X360 has been tracking below the PSP in an aligned launch for years already. However, with the PSP likely to reach over 80m units eventually, that isn't an entirely poor result for Microsoft as software shipments per unit are much stronger on X360 than on PSP. It also looks like PS3 will track at 70-90% of PSP values for much of its lifetime. Wii remains higher than PS3, X360, and PSP at comparable time frames by large volumes but it is well behind DS now, even in an aligned launch which accounts for the stronger Wii launch. Putting Wii between lifetime PSP (80m+) and lifetime DS (150m+) figures for the rest of its lifetime suggests it will get to 110m or more, while X360 and PS3 may each reach 65 million or more going by their relationship to PSP.
Wii was 27% ahead of PS3 for the quarter, and PS3 was 60% ahead of X360 for the quarter. With the X360 clearance sale / Slim in the September quarter, X360 and PS3 should see fairly even sales, both a bit behind Wii. For the final quarter of 2010 though, Wii will likely see a larger spike. Going by aligned launches, PS3 and X360 are still tracking remarkably similar with Wii continuing to accelerate faster than either device.
Short Term Trends
Portable software is in alot of trouble at the moment. In Others (EMEAA), DS has a 53.18m base through June. Nonetheless, DS software shipments for April - June were about 6.6m. In the first half of 2010, Others DS software shipments were only about 14.5m units. In the Americas, where the DS base is 10% smaller, DS software shipments were 27.39m units in January to June 2010. Japan had DS software shipments of 10.51m units - even though it is roughly 60% of the size of 'Others' for DS and has had DS for a longer time frame. What this means is that roughly speaking only one in four DS owners in Others bought a DS game in the first half of 2010 - and so shipments of software per year are likely to drop to well below one game per user. In contrast, the Americas market for DS software looks like it will still be over one game per user in 2010, and Japan will come close to one game per user. As big as the DS base is, once purchasing rates for software drop below about one third of a game worldwide per user (i.e. only one in three people buy a game), publishers will begin to abandon the system en masse. With the 3DS coming, the tipping point for DS support looks like it will come by the end of 2012 worldwide and probably a bit sooner in Japan.
The PSP market is suffering similar problems. During January to June 2010, only 17.3m PSP games were shipped worldwide. That amounts to about 28% of the PSP base buying a game in the last six months. DS, although it is slowing tremendously, still had 52.68m games shipped in the last six months - amounting to 40% of the DS base buying a game in that period. If the 3DS launches by the end of 2010, the PSP game purchasing rate may drop rather dramatically to near irrelevance for publishers - but the DS drop off should be slower since 3DS will play DS games. PSP2, rumored to be a CES 2011 reveal is then likely to really damage the DS purchasing rate and slightly buoy whatever remains of the PSP software market.
Comparing the peak years for GBA, DS, and PSP on a quarterly basis from quarter seven through quarter 23 - June 2010 for DS and PSP (each device had a strange start not like what it would become), we can see that Sony has alot of work to do with publishers for PSP2, as the PSP market now looks like it will end up far smaller than even the GBA market.
Note that GBA launched in a March quarter, while DS and PSP launched in a December quarter - thus GBA Christmas quarters are quarter 8, 12, 16 etc while DS and PSP Christmas quarters are 9, 13, 17, etc. During April 2006 to June 2010, DS software shipments totalled 680.53m, while PSP software shipments totalled 214.1m. GBA software shipments from July 2002 to September 2006 the same period in an aligned launch - even competing against DS and PSP - totalled 276.31m units 29% higher than PSP.
On the console side, software purchasing by the bases remains fairly high. The average PS3 owner has bought 1.42 games in January - June 2009 and January - June 2010 going by shipment figures. For Wii, the average user bought 1.37 games in the first half of 2009 - but that fell to 0.86 games for the first half of 2010. With the Wii base growing though, the drop off is only about 10% in actual game shipments. The current situation is likely to reverse a bit in the coming months, as PS3 laps the PS3 Slim / Price Cut quarter and Move lowers attach rates, while the Wii recieves a major infusion of million-sellers late in the year. Both bases will probably end up purchasing between two and three games on average between April 2010 and March 2011.
Regional Software Markets
Nintendo breaks down its software shipments by region. Here is how Nintendo systems are split by region through June 2010.
Wii is the first Nintendo system to have a 300m units software market in one region. As a point of comparison, production shipments for PS2 Americas software were 280m units through June 2004, while Wii software shipments are at 313m units in the Americas through June 2010 - the same exact time frame. Even without bundled software, Wii software shipments are 278m through June 2010. PS2 never had a big downloadable video game market either - and so the reality is Wii is trending to be the biggest software pusher ever in the Americas. Production shipments of PS2 games reached at least 565m (through March 2007) and so by now shipments to retail have likely exceeded that figure slightly - all of which bodes well for Wii in the Americas. PS1 software production shipments reached 372m units in the Americas - Wii is certain to pass that figure. By the end of March 2011, Wii software shipments in the Americas should only trail the PS2. In the 'Others' region, Wii software shipments are now over 200m units, and should eventually pass PS1 software production shipments of 304m units.
Where the Wii really lags is Japan. Only 51m games for Wii have shipped to date in Japan - NES, SNES, PS1, PS2 (and DS is getting there) had several hundred million and this is the main reason why Wii will not pass PS2 for software shipments. DS on the other hand is at 183m units of software in Japan and will see shipments top 300m units in both the Americas and Others - making it more "Playstation" like in its balance of software shipments. Next quarter DS should be within 200m units of PS1 software, and even though DS is slowing down the massive base should assure a very long tail for software. DS probably has just enough left to top 1 billion units of software lifetime - slightly more than PS1. Wii software should top DS software eventually as Wii software on average has been 20m units bigger per year worldwide and DS is likely to slow down more with 3DS software coming. Including bundled software, the Wii has an 8.89 attach rate in the Americas - if that rate continues to grow, Wii could beat PS2 in the Americas for software as Wii will reach at least 50-55 million and a final attach rate of over ten games per user is quite likely.
As a point of comparison, the PS3 worldwide market for software through June 2010 was 315.3m units. The Wii market in the Americas alone was 312.61m units through June 2010. For DS, the Americas and Others markets for software through June 2010 were 289.29m and 269.14m units respectively. The entire PSP market through June 2010 for software shipments was only 260.2m smaller than both the DS market for software in the Americas, and the DS market for software in Others.
Conclusions
So far, 2010 looks like it will be a repeat of 2009 with weaker portable performance offset to some degree by 3DS and stable software shipments on the console side. While the portable market continues to slow for both hardware and software shipments, console software shipments are still fairly strong. Wii and DS hardware are well off their peaks, but DS is only just begginning to drop quickly on the software side. PS3 software looks like it is going to peak sometime in the near future as the system has been trending very closely to PSP for hardware and software (on a much grander scale). During the next quarter, all three hardware manufacturers should profit, as Sony doesn't look like it has a price drop coming, Microsoft has Halo and increased hardware sales, and Nintendo likely won't have a one-time non-operating foreign currency loss again.
Nintendo and Sony still expect to ship 18m Wiis, 30m DS + 3DS systems, 165m non bundled Wii games (195m or so overall), 195m PS3, PS2, and PSP games, and 150m DS + 3DS games for the March 2011 fiscal year. Microsoft expects mid-teen revenue growth for its entertainment division on Kinect and other new devices for the June 2011 fiscal year. For Sony and Microsoft Kinect and Move really need to work - as neither company is really set up to maintain (or re-establish in Sony's case) sizable profits once PS3 / X360 software shipments drop. A new system will be needed. Once a new Playstation or Xbox releases, the software rates on the older system(s) should begin dropping rather rapidly. Since HD software costs a ton to make this will likely benefit the Wii tail as once one system is replaced, the HD software will support far fewer profitable third party games than the Wii software market - a far different scenario than right now, where the third party market for profitable games is about even between Wii and PS3 + X360 combined. Normally price drops sustain software purchasing rates, but the PS3 and X360 have been out for so long already that by the time the average model drops below $200 / $300, disinterest will prevent software shipments from reaching massive levels. There is of course the possibility that Kinect or Move become huge and simply move the Wii owners to Microsoft and Sony - if that happened Nintendo would have to release its new system fairly soon and the HD software market could last longer than the Wii software market. However, given the pricing for Kinect + X360, or Move + PS3, Nintendo still has a sizable pricing advantage on "motion" and can exploit it further, if neccessary, by dropping the price of Wii to $179, $149, $129, or $99 to blunt the momentum of the rival machines.
If 3DS launches this year, and grows for a number of years as DS did, Nintendo will also have an easier time justifying Wii and DS price cuts - and so the time for Sony and Microsoft to try to slow the Wii down is now. With PSP2 not releasing until 2011 (or so it seems) Sony will not have the same option this year. From that perspective, the most pressure should be on Microsoft, because if Kinect doesn't do real well in 2010, Nintendo and Sony will both be more flexible in 2011 due to new products.
Contact Vgchartz at jmazel@vgchartz.com
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good read and nice graphs for all the old consoles,obviously technology moves fast and i'm no expert but i don't see new home consoles coming out for at least 2 more years
@Silver-Tiger
GBA still sold like hot cake for almost 2 years after DS was launch and also you should know that DS price has not gone below $100 price level yet of which price cut will occur on the various DSes during 3Ds launch.
I think it's rather interesting if NDS can really outsell PS2 as the best selling console of all time.
Before the 3DS release margin everybody said, "of course, only matter of time", but when you look at a late 2010 Japan and early 2011 Europe/America release, I'm not so sure if that's really going to be the case.
Sure, the PS2 sold very well after the PS3 was launched, but just because it had limited and later no Backwards Compatibility and was rather very expensive.
The 3DS will launch at a price of $200-250, and will have full Backwards Compatibility, so no reason to buy a DS anymore, since you play all games of the DS and all future 3DS games on it.
Anybody got information on how well the GBA sold after DS launch?
So looks like Gap between Ps3 and 360 is getting bigger BUT Sony may have something up their sleeves due to 15M Mark... with that they will be at Top 10 HW Consoles... the remain question is if above or below 360. Only time can tell.
Amazing article as usual.
It can't at the price it has with the current slate of content. 10% penetration by March 2011 is negligible for Wii I think. Same for PS3. I really don't expect a Wii successor any later than 2012 so I don't see why its a problem when Nintendo can just ride out pricing advantage for the next few years. Now that PS2 is just about dead in the USA, Western Europe and Japan, Wii is the "low end" console for the mass market once it drops below $199. Kinect / Move are too expensive for that. It is possible that Kinect / Move could change the dynamic within two years, but its not really an issue for this fiscal year. Nintendo just has to be careful in 2011.
Great analysis and forecast, keep up the good work.
I like that article!
Well written i think.
Thank you.
