Microsoft Respond To Sales Figures

The monthly NPD games and hardware sales results from America are always followed within hours by the responses from the big three. Whatever the numbers appear to say execs from Sony, Microsoft and Nintendo can be heard explaining how the numbers show that they have had a great month.  September’s NPD numbers had the PS3 winning the home console fight for the first time so for a change it was not Sony trying to explain why it does not matter that they are not top of the month’s sales chart.

While it is good that Sony has some positive news for a change you will be able to tell from the title of this post that that is not what this is about.

This post is also not about having a pop at Microsoft for spinning their NPD numbers in their follow-up statements.  The big three as well as the other major game publishers can all be found doing that every month.  They are all as good at this as each other and are only doing their jobs.

What this is about is highlighting some statements and comments that Microsoft’s spokesman David Dennis made in a post-NPD conference call.  For those of you who like to read only part of a post before diving straight into the comments I will list the main points now.  For the rest of you who are prepared to read a bit further I will add some explanation and context to them.

  • Xbox 360 “contributed the most to industry unit and dollar sales”
  • “Our accessory attach rate is higher than anyone’s”
  • 360’s HDD is expensive because it is “exhaustively tested” and has to pass “quality and safety compliance checklists”
  • “people generally think the Xbox 360 games look better”
  • “I don’t foresee a scenario where we’re going to double the price of LIVE any time in the next couple months”

For those of you still reading here is the expanded list.

Xbox 360 “contributed the most to industry unit and dollar sales”

Here Dennis is just looking beyond the hardware numbers.  Of the $1.28 billion that was spent in America on video gaming in September Microsoft was the recipient of $404 million.  That’s a third more than either Sony or Nintendo with other publishers like EA and Activision trailing even further behind.  Capturing a third of the month’s entire video game revenue is a pretty strong performance and something MS can justifiably by proud of.

Microsoft’s lead in September’s unit sales (hardware and software) is mostly due to shipping over 1.5 million copies of Halo ODST.  That one title alone sold around 50% more units than the other four Xbox 360 titles that appear in the top ten combined (Madden NFL 10, The Beatles: Rock Band, Marvel Ultimate Alliance 2 and Guitar Hero 5).

“Our accessory attach rate is higher than anyone’s”

This comment in interesting because whenever I have heard Microsoft talk of attach rates in the past they have been boasting of how the software attach rate is much higher on the 360.  Could it be that the PS3 is finally beginning to close the gap to the 360 in terms of the number of games sold per console?  I have tried, and failed, to find some recent and reliable software attach rate numbers so I cannot be sure, but that is the implication.  Dennis notes that Microsoft are still leading in software attach rate but does not say by how much.

He quotes attach rates for accessories as “4.1 for us, 2.2 for PS3, and 3.4 for the Wii.”  That makes me wonder how ‘accessories’ are counted and defined.  Does the sale of Xbox Live Gold membership count as an accessory?  What about AV cables?  Or less seriously, does a box of 15 plastic sports-related add-ons for your Wiimote count as one accessory or 15?  Unfortunately NPD does not detail accessory sales and simply notes that of the $157 million Americans spent on them last month, five of the top ten were Microsoft accessories.

360’s HDD is expensive because it is “exhaustively tested” and has to pass “quality and safety compliance checklists”

Following on from talk of the accessory attach rate, Dennis was asked about the criticism that Microsoft receive about their accessories’ high prices. He says that, yes, prices are something we hear “a lot about from consumers” and that Microsoft “go to great lengths to ensure the accessories we’re selling are high quality”.

It was his next comment about the 360’s famously expensive HDD add-ons that made me glad I was not drinking when I read it, “A lot of the price comparisons you hear have to do with the hard drive, but your average off-the-shelf PC hard drive isn’t as exhaustively tested or run through the same quality and safety compliance checklists we employ.”

Given the reliability of the “average off-the-shelf PC hard drive” that you can buy for a significantly less ‘per gigabyte’ cost than MS’ I just find that hard to believe.  Why do Microsoft think their current pricing is okay?  First-party loyalty, says Dennis. “The fact that people continue to purchase our accessories over a lot of third-party alternatives in many instances shows that people do gravitate toward the ones they know they can trust.”

I would suggest that in the case of the HDD (and soon memory cards as well) it is because there is no third-party alternative.  Perhaps if they had made the 360’s HDD user upgradable and back-up-able (I know that is not a word, but you know what I mean) they would find out what people really think of their HDD pricing.

“people generally think the Xbox 360 games look better”

This was stated in the context of third-party multi-platform titles.  With the odd exception such as Burnout Paradise, it may have been true to date but is it true now and will it continue to be so?  Of course it is subjective and often ‘discussed’ in fan-boy flame-wars all over The Internet.

With third-party developers beginning to get a firm grip on how to wring better performance out of the PS3 it will be interesting to see how some of this season’s big third-party titles such as Modern Warfare 2 and Assassin’s Creed 2 compare.  I am expecting (and hoping) that differences between 360 and PS3 versions will be minimised.

“I don’t foresee a scenario where we’re going to double the price of LIVE any time in the next couple months”

This last comment is perhaps the one of most interest to anyone who already owns a 360 and pays for Live Gold Membership.  It came about because TSA’s favourite analyst, Michael Pachter, suggested that Microsoft could as much as double the cost of Live Gold within the next couple of years and that it was desirable for them to do so.

When asked about that, Dennis’ response was as quoted above.  The obvious point of interest is that he did not say that MS do not plan on raising the price.  Of course Microsoft would like to.  It is just a question of when they believe that we would pay more.  How attached are you to your online 360 gaming?  If MS put the price up by 10% would you really say “sod them” and stop paying and playing?

He may have just confused the “next couple months” with Pachter’s “couple of years”.  It could mean that come next year we will not be safe from a price increase to our Live Gold memberships.  We were not anyway, but could a price rise just have become more likely…