Article written by Greg Aldridge.
Published on 07/08/2011 at 04:30 PM.
The format of this month’s Japanese sales retrospective has been tweaked somewhat. Having been writing these for the best part of two years now a minor refresh is long overdue. Your feedback and suggestions are welcome in the comments as long as they are polite.
One thing that will not be changing is that these blogs begin with a look at some aspect of the Japanese video game market. In previous months this has been topics like taking a look at how the 360 is performing in Japan as it approaches a sales milestone or contrasting this year’s hardware sales with last year’s. Given recent news stories the decision of what to look at this month was a no-brainer.
How Well Is The 3DS Selling?
(Image credit: http://www.ft.com/)
From the 11th August the 3DS’ manufacturer’s recommended price will drop from ¥25,000 ($249.99) to ¥15,000 ($169.99), with the European price dropping by a third. Existing owners, if they visit the eShop before the 11th, will be enrolled in the Ambassador program which will eventually give them 20 free games in compensation for being early adopters who paid the higher price at retail.
The repercussions of the worse than expected financial performance and 3DS price cut, as is so often the case in our always-on world, were immediate. Nintendo’s stock dropped 21% as shareholders considered the much reduced profit margin on 3DS hardware sales and the company’s President, Satoru Iwata, told shareholders that he would take a 50% pay cut and that other directors would also take significant hits to their salaries.
All of which seems pretty catastrophic and makes you wonder just how badly the 3DS has been selling. Fortunately that is something we can take a look at. The perceived wisdom is that it is tanking at retail with some less informed comments even going as far as to suggest it is failing to the degree the PSPgo has. Let’s deal with that latter misconception first.
Japan is the only territory that we can obtain unit sales figures for the PSPgo from, though anecdotal worldwide reports and Sony’s discontinuation of the console suggest the worldwide picture was similar. Back when the 3DS launched in Japan we produced a graph comparing its first month sales to those of the PSPgo. Here is an updated graph providing a normalised comparison of how things have gone since:
3DS in red, PSPgo in blue
If you hear someone comparing the 3DS to the PSPgo and suggesting they are both a failure of a similar scale please feel free to correct them. Is the 3DS a sales failure at all though? It used to be that a new console from a manufacturer would immediately replace its predecessor at retail. That is no longer the case so the 3DS is competing, to a degree, against the DSi and DSi LL/XL, much like the PS3 was competing against the PS2 at its release.
Let’s look at that latter Sony sales competition first. In it’s first four quarters on sale, worldwide unit sales for the PS3 were 1.7m, 1.8m 0.7m and 1.3m for a total of 5.5m. During those same four quarters the PS2′s sales were 6.7m, 2.4m, 2.7m, and 3.2m for a total of 15m.
In its first ‘financial year’ on sale the PS3 was outsold by the PS2 by a ratio of almost 3-to-1. Yes, there are a lot of factors contributing to the differences between those numbers but they are an example of overlapping console lifetimes for which the numbers are readily available. Sony were not outwardly showing signs of ‘panic’ a few months into the PS3 lifetime, they knew they were playing the long game with the PS3.
Nintendo’s reaction to the 3DS’ early-life sales looks like that of a company that has become used to its consoles being instant hits at retail. Its shareholder have also come to expect that and so the perception that the 3DS is failing at retail has had to be addressed.
Is it failing though? We took a detailed look at 3DS’ sales performance at launch compared to the DS and Wii once it had completed its launch in all regions. Here is the comparison graph from that earlier post:
When you consider that the overall video game sales market has been contracting for several years now, that the economies and consumer spending in the ‘developed’ countries are still suppressed, and that the 3DS launched at a much higher price than the DS (even taking inflation into account) then it is difficult to say its launch performance was poor.
Nintendo’s latest quarterly financial update gives us the data we need to take at look at how its consoles have sold worldwide for the months of April through June. What that data does show is that the 3DS is really struggling in Nintendo’s largest market; America. Here’s another graph for you lucky people:
In Japan the 3DS is outselling the various DS’ by about 2-to-1. In ‘Other’ (Europe, Australia, etc.) that ratio is reversed. In America however, the DS’ are outselling the 3DS by 5-to-1. That’s not the only area where America stands out, look at the DS’ sales. You can see why Nintendo has not yet discontinued the DS Lite in America; it still makes up almost 50% of all DS sales there during the quarter.
Those numbers from America provide all the explanation we need about why Nintendo has slashed the price of the 3DS so soon after launch in an attempt to “create momentum for Nintendo 3DS and accelerate its market penetration toward year-end sales season, when the lineup for the applicable software shall be enriched”.
If the 3DS was performing at retail in America as well (or as badly, depending on your perspective) as it is in the other non-Japanese territories then it would be unlikely that Nintendo would have seen the need to drop the price so aggressively. As it is, all of us who have already or will in the next six months purchase a 3DS are benefiting from its staggeringly poor sales performance in America.
Japan’s July Hardware Story
The overall relative performance of each of the consoles currently on sale in Japan is fairly well established, so each month we will just look at any cause of significant changes in relative sales and perform our usual quick overall corporate pie-sharing exercise. The regular set of graphs and table will feature in a gallery, like so:
Topically, the middle of July saw Japan’s 3DS sales leap upwards enough for it to outsell the PSP-3000 for a couple weeks and take the overall monthly handheld top-spot by a whisker. We only have to look as far as Fox McCloud for the reasoning behind the sales spike as it was the release of Star Fox 64 3D that sent 3DS sales barrel-rolling into the stratosphere.
The over notable deviation from normal sales levels was the Wii’s performance in the latter half of the month. The software driver behind those sales was Rhythm Heaven which topped the software charts for those two weeks, a feat unusual for Wii games in recent months.
Now for our regular quick look at comparative performances. Across the month the PS3 outsold the Wii by almost 50% (90,269 vs. 62,651) while Nintendo’s handhelds beat Sony’s by about 33% (156,985 vs. 116,506).
Overall shares of the month’s console unit sales saw Nintendo just manage to come out on top. Out of the 439,106 consoles sold Nintendo accounted for 50% (219636), Sony 48.4% (212,558) and Microsoft 1.6% (6,912).
Source: Media Create (For Japanese sales data, see in-line links for others.)