US - The Wii has now surpassed all gains that the HD Console market made before the tiny-white-system-that-could went on sale. Combined, the XBOX 360 and the Playstation 3 have a 3.01 million system lead on the Wii--a little less than what they started with when the Wii launched.The HD systems (referenced by the intelligentsia of gamderdom as "Next Gen") looked to be gaining momentum against the onslaught of Nintendo's mass-audience appeal, and at one point had a 5.4 million system lead on the Wii.
Now, that lead is disappearing just as quickly as copies of Wii Fit are moving off the shelf. Why is such a nebulous number important? Because analysts, including this one, have suggested that perhaps the combined numbers of HD system sales were keeping 3rd parties from making serious games for the Wii.
That argument barely holds water at this point. The HD-to-Wii ratio has been dropping nearly every month for the past year and still the Wii looks to be the stepsister of western-focused genres. The current and probably most accurate statement at this time is that 3rd parties have whole-heartedly dismissed the Wii as an "outside the hardcore" demographic and are treating it accordingly.
This latest news, though, might begin the turnaround of that perception. The Wii continues to sell despite the down economy, generally something one would expect for systems with a harder-core following. Japanese companies are committing to it, including titles like Madworld, Monster Hunter, and Dragon Quest X (a little further off).
Perhaps that will change in the west as well. EA has supposedly started to focus its energies on the Wii platform despite the majority of its catalog selling millions of copies on the 360 and PS3 (see: Madden, Burnout, etc). Maybe by focus, they mean, "make quality games for it." That would be an interesting change from the what many 3rd parties have done so far.
(click to enlarge)
10 comments:
Worldwide, the HD consoles are gonna start increasing the gap with the Wii starting in February. In Japan, the HD consoles are already outselling the Wii, and the gap is gonna increase.
In Europe, the HD consoles combined outsold the Wii in the December quarter, mostly from solid near doubling of 360 sales in the December quarter, and all indications are that the trend is coninuing this January, given that 360 sales have been doubling year on year since the 360 had a orice cut in Europe back in September last year.
If the PS3 has the expected price cut in April, the HD consoles will simply accelerate the rate of increasing the gap with the Wii, with the Wii having little to no chance of ever catching up.
By the end of this generation, the HD consoles combined should be comfortably ahead of the Wii.
So, you mean Wii CAN'T get more market by cutting prices?
Quite smart of your part....
It's not like Wii hasn't lost ground to the HD consoles before. As the image shows, it's very much been an up-and-down process.
Though the biggest change in the pattern recently is that the norm in 2006 and 2007 was that Wii would lose ground from November - February before making up a little for the rest of the year. This time it gained about a million on the HD consoles during that period, and as PL pointed out is for the first time in a better position than launch month.
"So, you mean Wii CAN'T get more market by cutting prices?"
In theory, anyone can cut prices, but then with the very high Japanese Yen chopping away at Nintendo's profits, I doubt it very much if Nintendo will cut Wii prices this year.
Bloomberg:
"Jan. 29 (Bloomberg) -- Nintendo Co. forecast its first annual profit drop in five years as the deepening recession undermined demand for the best-selling Wii game console.
.....
Net income fell 46 percent to 67.7 billion yen in the third quarter ended Dec. 31, according to figures derived from nine- month earnings Nintendo reported today"
http://www.bloomberg.com/apps/news?pid=20601080&refer=asia&sid=aTtkM_ybSHJI
and
"Jan. 30 (Bloomberg) -- Nintendo Co. fell the most in at least 18 years in Osaka trading after the company forecast its first annual profit drop in five years as the worsening recession hurt demand for its Wii game console"
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aqTPO832KabE
While the high Yen is good for Microsoft, it's bad news for Nintendo.
JJ :"It's not like Wii hasn't lost ground to the HD consoles before. As the image shows, it's very much been an up-and-down process"
The difference here is, the Wii used to consistently outsell the HD consoles combined by up to 300,000 per month in Japan. Today, that advantage is no more there . Instead, its the HD consoles combined, that are outselling the Wii there. Add in Europe where the HD consoles outsold the Wii in the December quarter, and are probably doing so now, and the fact that even in the US, not only is the Wii no more sold out, its not ven the top selling item at Gmamestop, plus likely big PS3 sales increases from the inevitable PS3 price cuts this year, and I just don't see the Wii catching up to the HD consoles, let alone overtaking them ..ever.
Wii at Gmamestop, constantly available since January's last week, and now dropped down to #5, from the instant # 1, it used to be at:
http://www.gamestop.com/browse/search.aspx?N=0
Anonymous: "In theory, anyone can cut prices, but then with the very high Japanese Yen chopping away at Nintendo's profits, I doubt it very much if Nintendo will cut Wii prices this year."
They're absolutely in the best position to cut prices if they need to to boost sales. Certainly at the beginning of this generation I doubt they realized they'd be able to go a record time without a price cut; certainly their profits aren't going to drop from the billions to the red by making $50 less profit on each Wii when the time finally comes.
Anonymous: "The difference here is, the Wii used to consistently outsell the HD consoles combined by up to 300,000 per month in Japan. Today, that advantage is no more there ."
Wii isn't outselling the HD consoles like it used to in Japan, but thus far the increase in the US has been more than enough to make up for it. Let's look at the last few months and their equivalent of a year before. I'll use the NPD data and the Media Create data most closely matching it.
---
November 2007
Wii: 1.18 M
HD: 1.44 M
Change: +.26 M HD
December 2007
Wii: 2.23 M
HD: 2.38 M
Change: +.15 M HD
January 2008
Wii: 0.43 M
HD: 0.67 M
Change: +.24 M HD
Three month total change: +.65 M HD
---
November 2008
Wii: 2.18 M
HD: 1.35 M
Change: +.73 M Wii
December 2008
Wii: 2.68 M
HD: 2.44 M
Change: +.24 M Wii
January 2008
Wii: 0.80 M
HD: 0.63 M
Change: +.17 M Wii
Three month total change: +1.14 M Wii
---
Even with the Japan downturn, the November-January period has been 1.79 million units friendlier to Wii than the year before in those two regions. The HD consoles may have outsold Wii in Europe, but I kinda doubt they did so by 1.8 million more than they did the year before.
One can say "It will all change in February!", but until the data's in there's little more reason to take that very seriously any more than theories that Halo 3 or MGS4 would push their respective systems to new stratospheres, or that with increased holiday supply last year there was no way Wii demand would keep up.
@ JJ, thanks for taking the time to reply.
"They're absolutely in the best position to cut prices if they need to to boost sales"
Not quite.
In the December quarter alone, Microsoft made a massive $4.2 billion in profits, that is approx twice what Nintendo is gonna make for the entire year, going by their own profits predictions. And Microsoft has a massive over $20 billion in cash in the bank right now.
And while Microsoft's profits were down 11% in that quarter, Nintendo's profits in the same December quarter were down even more, at 46%.
If Microsoft were to make a price cut of $100 on the 360, and sell the same 10 million units they sold last year, their annual profits wil be down $1 billion, but they'd still be making over $15 billion in profits per year.
On the other hand, if Nintendo made a similar $100 price cut on the Wii, and sold the same over 20 million units they sold last year, their entire annual profits would be near wiped out.
That would decimate their share price, which is already down over 55% in the last year alone{http://www.bloomberg.com/apps/quote?ticker=7974%3AJO}
Remmember, even when Microsoft was making big losses on the XBOX1, they still managed to make record profits in the billions every quarter for Microsoft as a whole.
Of course whether Microsoft or Ninetndo would go about cutting prices in that fashion, and take down their profits and share prices, is another matter altogether.
@ JJ:"Wii isn't outselling the HD consoles like it used to in Japan, but thus far the increase in the US has been more than enough to make up for it.
December 2008
Wii: 2.68 M
HD: 2.44 M
Change: +.24 M Wii"
I'll take your December figures 2008 as an example, because I am not sure if your December figures are for 2008 or 2009.
The thing is, in December 2008, the Wii oustold the HD consoles by over 200,000 units in Japan, which is not the case right now. In the first 2 weeks of February, the HD conoles have outold the wii, and all indications are that the Wii hasn't finished falling in weekly sales, so the HD consoles will only increase the gap with the Wii.
"One can say "It will all change in February!", but until the data's in there's little more reason to take that very seriously "
Data's already in there for Japan.
"any more than theories that Halo 3 or MGS4 would push their respective systems to new stratospheres"
It's not even a matter of of the HD consoles "risng to the stratosphere", it's more a matter of the Wii falling from the statosphere. Nothing continues to stay in the sttratosphere for ever. The law of gravity catches up sooner or later.
"or that with increased holiday supply last year there was no way Wii demand would keep up"
The Wii is now in full supply everywhere, and has been constantly in suply at Amazon and Gamestop since the last week of January{http://www.amazon.com/Wii-nintendo/dp/B0009VXBAQ/ref=pd_ts_vg_3?ie=UTF8&s=videogames} {http://www.gamestop.com/browse/search.aspx?N=0}, yet even when you add December and January sales, it still doesn't add up to the over 3 million units that people like Pachter and Neogaf average were predicting for December sales alone.
There's no reason to believe Wii would drop immediately from $250 to $150. Surely it will make at least a stop at $200 along the way. $230 and $180 could even be stops--hard to say. There's also that software sales continue to increase as the userbase does.
Really, I just find it impossible to take seriously that a company that was profiting hundreds of millions of dollars even at a time when they were selling GameCubes and GBA SPs for $100 is going to have a problem six years later when their successors are selling much more at a higher price, and aren't incredibly expensive to produce.
"Nothing continues to stay in the sttratosphere for ever. The law of gravity catches up sooner or later."
What comes up must come down, true. However, historically it's been the top console that falls last. PS2 is of course way down from what it used to do, but it's also clearly doing a hell of a lot better than GCN and Xbox.
Japan is a small piece of the whole pie. Not to say it doesn't matter, but HD consoles having a slight lead is pretty negligible to the worldwide situation since Wii is doing better elsewhere. Wii could've sold 0 units in Japan in January and still done better in a Japan+US measure than the year before.
"yet even when you add December and January sales, it still doesn't add up to the over 3 million units that people like Pachter and Neogaf average were predicting for December sales alone."
:) Haha. You're right that it was below many expectations, but I tend to blame too-high expectations after that massive November. I actually had one of the few under-two-million predictions for Wii, and so came in near the top. NOA flat-out said they'd have about 50% higher holiday supply than the year before. When the dust settled, the shipment number for the quarter was 54% higher than 2007, and the NPD sales number was 60% higher. Expecting much more was folly.
Just wanted to say this is probably the best series of comments I've yet read on ChartGet. Keep up the great work!
Anon--sign your posts or get a google account!
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