An Early Look at the 2012 Video Game Market - NewsVGChartz Staff , posted on 31 December 2011 / 9,573 Views
With 2011 just about over, it is time to start looking at the type of year 2012 will be.
In 2010, 79.6m units of video game hardware sold globally. That figure has declined in 2011 even with 3DS (and Vita to a much smaller extent) leading to a pretty substantial rebound late in the year for hardware. In 2008, when Wii and DS were peaking globally, hardware sales were 97m. Final figures are not completely in for 2011, but it looks like the drop from that generational high to 2011 will be by around 20m units. Through December 24, 2011, including PS2, just over 73m units of hardware had been sold.
The final week of 2011 will certainly not add more than 10m units to that figure. It looks like the 2010 to 2011 transition will be a decline of 5%. Figures below are in millions of units globally.
It is important to note that pre-3DS hardware (i.e. PS2, DS, PSP, X360, PS3, and Wii) dropped almost 20m units from 2010 to 2011 - mainly because of DS collapsing and no pre-3DS hardware growing at a significant clip. The growth in HD hardware, despite the first full year of Kinect and Move, and another substantial price cut (from Sony) and major holiday titles essentially amounted to a rounding error - 28.7m in 2011 vs. 28m in 2010 - 2.5% growth. That figure was not even enough to offset the massive Wii decline which also had a substantial price cut - let alone DS, PS2, or PSP, which each dropped by large amounts from 2010 to 2011.
Software has also dropped by a huge amount from 2010 to 2011, as Wii, PS2, and PSP shrank a bit, while 3DS and Vita have, even combined, a single digit share of the global software market. With the slow 'next-gen' portable software growth, and big time drops for DS games, total software dropped quite a bit from 2010 overall. X360 and PS3 software remained just about flat even with nearly 30m more users.
Nonetheless, 2012 could easily see a rebound in overall figures from 2011 as more platforms release and the 3DS grows. Figures below are global estimates in millions of units worldwide.
The Western markets are likely to be slightly down again in 2012, as all three consoles have more room to drop than in Japan, while the portables will be slower to grow to massive figures. In Japan though, 2012 should be a year of substantial hardware growth following a fairly solid 10% improvement in hardware sales from 2010 to 2011.
J. Mazel: Moreover, while a global launch for PS4 and X720 is increasingly unlikely for 2012, there is still the possibility of a Japanese launch for either or both devices in late 2012, as the software markets and hardware markets for the HD systems are exhibiting much older behavior than in the US (X360) and Europe (PS3). The average Japanese PS3 owner bought 1.7 games in 2011, compared to around 2.5 games globally, while the average X360 owner bought around 1.2 games in Japan, compared to around 2.3 games globally.
Publishers dependent on software sales in Japan are likely pushing pretty hard for new systems given the slowdown of all pre-3DS systems in Japan has considerably narrowed the options for where games can be released at a healthy profit. The console market should improve a fair bit in 2012, as Wii U releases, and Wii / PS3 are sustained to some degree by price cuts (Wii in particular is way overdue for a price cut in Japan - the last one was in September 2009).
S. Parker: I agree with Jacob about the PS4 and X720 not launching in 2012, especially in Japan in the case of the X720 (this will be the last main region it launches in). It's far too early for a PS4 in Japan, especially whilst the PS3 is still selling very well. With most software development moving to the WiiU, it's unlikely the Wii will see anything that will shift hardware. Again, it seems price isn't the problem with the Wii, a price cut (especially in the middle of the year, again) could prove fruitless for Nintendo.
The US market, unlike Japan, should decline in 2012 from 2011, just as 2011 was down from 2010 (based on figures to date).
J. Mazel: Current data on VGChartz shows PS3 will end up barely increasing from 2010 in the US despite another price cut. Microsoft should still see excellent X360 figures next year after seeing the best X360 year ever in 2011, but a price cut probably won't help much in 2012 until the end of the year. Wii U demand may also hurt both systems a bit at the end of the year.
Wii will continue to decline, but it's hard to imagine a rapid decline just yet when substantial software, including several million-sellers are still set to arrive in 2012 - Rhythm Heaven, Mario Party 9, Xenoblade, Dragon Quest 10, Pokepark 2, Just Dance 4, Epic Mickey 2, and The Last Story all should arrive by next December. With Just Dance 3, Zelda, Zumba 2, Mario & Sonic, and older Nintendo games and genre kings still performing well, and a price cut to $100 likely at some point in 2012, it's hard to see Wii rapidly falling off until 2013 or later.
S. Parker: As with the UK, the PS3 is seeing a trend in which it doesn't really sell much differently from the previous year. Whilst it's debateable whether this is good or bad, what with price cuts, software releases, etc. I think the fact that the PS3 is well past the supposed 3rd year peak means that merely staying flat year over year is an achievement. With that said, the PS3 slightly increased on last year's total thanks to the $50 price cut in August, so 2012 should be roughly flat again (expect a further $50 cut August next year to help sustain sales), or perhaps slightly down.
The X360 is also seeing a trend where, despite a baseline price cut since 2008, it is still increasing year over year, and with 2011 it achieves its highest year to-date by quite some margin. 2012 brings with it plenty of software that appeals to the US audience - Halo 4, Star Wars Kinect (both with limited edition consoles), as well as the next Call of Duty, all on top of a probable price cut which will mean the X360 shouldn't fall below 2010 figures. I would only expect a $50 cut (Microsoft won't cut more than they need too), however if they do cut $100 then it stands a good chance of surpassing this year's 8 million.
Despite its price cut (which was for the majority of the year), the Wii is down ~1.7 million. Even $99 Wii's on Black Friday couldn't put it close to the X360 for the week and even the PS3 outsold it for the month. This is perhaps a sign that price isn't an issue with the Wii. Turning to software, only Just Dance 4 looks to be the system's potential hardware shifter. Games like Xenoblade, Pokepark 2, Epic Mickey 2 and The Last Story will sell to the existing userbase, and struggle to reach the 1 million mark lifetime in the US (if at all).
J. Mazel: Excluding launch week, 3DS sold on average 30,000 units per week in the US before its price cut in August, and Vita will be launching with a higher price point - and so barring a huge price cut of its own or an unforseen wave of killer apps, Vita should sell around 300,000 - 500,000 in February, and then 100,000-150,000 per month until November. Call it 125,000 * 8 (March to October) in addition to 400,000 units sold in February, 350,000 in November, and 750,000 in December and you can see where the 2.5m comes from. The growth of Vita and 3DS will also all but completely kill off the remaining DS and PSP market - PSP should be completely off American shelves by the end of 2012, with DS down to a very a meager presence.
S. Parker: Vita launches in the US during early 2012, not the ideal launch frame but there we go. Vita doesn't have the luxury of the market presence the 3DS had (due to the huge DS userbase), yet it's launching the same price as the 3DS did. Where the 3DS had the market almost to itself, Vita won't. Sony will be reluctant to cut the price given they're already losing money on Vita, but it's likely we'll see even lower figures post launch than the 3DS. A late 2012 price cut and compelling software would see them through to the end the year on a high note though. If they resist, and keep the Vita priced $250, then it could do much worse than the 3.0 million estimated.
The European market has declined only slightly from 2010 to 2011, but should erode more quickly in 2012.
J. Mazel: The later launches for PSP, DS, and PS3 in Europe compared to the rest of the world means that those systems should hold up a bit better in Europe than elsewhere in 2012 even with new systems arriving. Vita and 3DS will likely see most of their shipments go to Japan and the US in 2012, but still reach respectable numbers in Europe. Nintendo probably isn't prepared for 3DS to achieve 'DS-peak' status in each market at the same time anyway, either in terms of game-releases or manufacturing capacity, given that the DS once sold 8.5m in a year in Japan, 12m in a year in the US, and 12m in a year in Europe - each at different times.
Europe and the US are largely mirror images for the PS3 and X360. PS3 is set for a very strong year in Europe in 2012, given the size of the market, and how the market has reacted to Move and Kinect compared to the US. The US market however is still Sony's weakest market, as in Japan Sony once sold 2.2m PS3s in a 12-month period, the US equivalent of which is roughly 6.2m PS3s based on the 2011 ratio of total US Hardware to total Japanese Hardware. It doesn't look like PS3 will ever reach that level in the US, even though the European performance of PS3 has reached the market adjusted equivalent of the Japanese high (2.2m * 2.5 ratio EU: JP HW = 5.5m) during 2011.
X360 has the same issue that PS3 does in the US, but in Europe. Adjusted for market size, X360 should have reached about 7m units in Europe at its peak based on 2011 US sales - but it looks like X360 will end up peaking at just above 4m per year instead. Wii is also weaker in Europe than US figures would indicate, and has been for a couple years now, but the markets performed pretty similarly adjusted for size up until 2009, while X360 has always been substantially weaker in Europe than in the US, and PS3 has always been substantially weaker in the US than in Europe.
S. Parker: I disagree with Jacob about the later launches affecting the PSP, DS, and PS3 in Europe. This has been a longer than normal generation, and it's been 5 years since PS3 launched this coming spring. The launch date in each market isn't really going to affect the numbers they achieve in each region. I don't believe US and Japanese performances have any bearing on how well something does in Europe; just as with Japan and the US, it's a region with its own story.
If the Yen Vs. Euro situation is flat this time next August, or dare I say worse, I think Sony will hold out on a price cut for the PS3 in Europe, resulting in a drop YoY that will see figures on a par with 2010. Despite no price cut, and Kinect not being the hottest item in most regions of Europe, the X360 managed to stay flat. A price cut is overdue and so figures should only be down slightly, perhaps even flat again. As with everywhere else, the price cut for Wii didn't prevent big year over year losses, and 2012 will be no different, price cut or no price cut.
J. Mazel: Going forward, there should be increasing pressure on Microsoft and Sony to release new information for their new consoles, as it is difficult to imagine PS3 & X360 hardware sales not declining next holiday even with price cuts given how cheap X360 and PS3 are now. Slim models have been released, motion-control games have been added - there just isn't much more that can be done if price cuts don't boost demand anymore. Software rates per individual user are also still declining rather quickly too for both platforms now - and that will be magnified with any slowdown in hardware sales.
While there is no rush to put out new systems in 2012 for anyone but Nintendo, it probably would be a mistake for Sony and Microsoft to wait past 2013, which will be the last time software purchasing rates will still be over one game bought per HD user per year. March to September 2013 looks like a better timeframe than either late 2012 or late 2013 for both new systems with Wii U likely for next November.
S. Parker: Whilst Nintendo are in the habit of releasing information early on for hardware, it's unlikely Sony and Microsoft will reveal their new consoles this year if they're to launch late 2013. Both consoles are still selling well, and the Kinect + X360 combo has yet to see its first price cut (a $199 bundle would keep respectable sales up until late 2013). Another $50 cut will see the PS3 finally hit mass market price, and so should also sell well for the next 2 years.