Everything’s Rosy For Sony…

I don’t expect to have to defend something I’ve written when it is based solely on publicly available data and doesn’t ‘fiddle’ or manipulate any figures in an attempt to convey a particular message.  However yesterday’s update in the ongoing narrative of worldwide hardware sales I write for TSA has proved contentious so let me address some of the issues raised and throw in a bit of extra free analysis to boot.

If you want to have a serious, or even jovial, discussion with me in the comments then fine but yesterday some went further and directed unjustified comments towards TSA itself, which in my book is out of order.

Xbox 360 Extends Lead Over PS3

Let’s get one thing out of the way first, the headline.  I gave the post the headline of “Xbox 360 Extends Lead Over PS3” because in the context of the post, a quarterly update on the worldwide hardware sales situation, it is entirely factually correct.

Is the 360’s lead bigger than it was a year ago?  No, it isn’t, but the post isn’t comparing the situation to a year ago, it’s comparing the situation as at the 31st March 2011 to how it was at 31st December 2010 when I last looked.  It includes a year’s worth of data because without that it is impossible to provide any context to the latest quarter’s data.

Was the headline intended to be attention grabbing, you bet it was.  It worked too didn’t it.  That does not make it any less correct though when taken in context.  Can you get that context just from reading the headline itself, no, the context comes from the content of the post.  The headline is intended to get you to read the post.  It’s what headlines are for.

Shipped vs. Sold

This is an age-old weapon used by the side on the defensive in the console wars.  They argue that the figures from the manufacturers cannot be considered sales as it does not necessarily reflect the number of consoles actually purchased.  Therefore they’re not really losing.

We are looking at the manufacturers figures though as they are the most accurate gauge we have as to the number of consoles being purchased.  Both Microsoft and Sony call them sales in their financial reports, see here and here, so to call them anything different would be wrong on my part.  I will not change the data provided by the manufacturers or the terms in which it is put.  To do so would be dishonest and misleading.

In their reporting Nintendo do call their figures “units shipped”, so I often include a disclaimer of some sort about how I’m mixing shipped and sold figures depending on the manufacturer even though they may well mean the same thing.  Admittedly, I didn’t include such a disclaimer yesterday, but I thought shouldn’t have to.

Some suggest that for reliable sales data you should trust sites like VGChartz or rely solely on figures from the NPD Group or Media Create.  Well I’ve got some news for you, those numbers aren’t reliable, they’re estimates.  They are all based on a relatively small amount of real-world data which is then extrapolated from using mathematical models filled with assumptions about our buying habits.

The only places that can count all the consoles being sold, into the supply chain, are the manufacturers themselves.  They know how many are coming off their production lines and leaving their warehouses.  Will some of those consoles be sitting in wholesale warehouses and on retailers shelves?  Of course they will, but we have to trust the fact that market forces mean the nobody wants to hold more stock than they can sell in a reasonably short period to keep those, impossible to count on a global basis, stockpiles as small as is practical.

Yes, I’ve happily reported on the NPD and Media Create figures myself, but that’s because there is interest in those numbers and outside of the quarterly updates from the manufacturers they’re the only indicators we have to go on.  Additionally for Microsoft’s and Sony’s consoles they are the only indication we get of how well the consoles are doing in the different regions as only Nintendo offer that breakdown in their data.

But you need to subtract all the RRoD’d Xbox 360s

We have no accurate data on the number of 360s that have been permanently disabled through suffering the Red Ring of Death.  Similarly we have no accurate data on the number of PS3s that have suffered the Yellow Light of Death.  All we have are fanboy anecdotes and guesstimates from various sources who cannot back up the figures with hard evidence.

We can all extrapolate RRoD/YLoD figures from your own experiences, so maybe I should try that.  Personally I have had a 360 RRoD on me twice.  Both times it went off to Microsoft for repair came back working and still is to this day.  Even though that’s two RRoDs the console is still in use so it makes no difference to the figures.

With my PS3s on the other hand I had a YLoD outside of warranty which Sony were therefore not interested in and I ended up buying a replacement.  So based solely on my own personal console failure experience I could take a stab in the dark and halve Sony’s figures to extrapolate the number of PS3s in use around the world?

That would be stupid though wouldn’t it.  I think we should all be able to agree on that.  If I extend the supposition to include every gamer I know in real life, while many of us have experienced either or both RRoDs and YLoDs the numbers still do not favour Sony.

I could conduct a poll on The Internet to try and determine the situation using an even broader dataset, but I think we all know how those kinds of polls work out.  Think back to how the fanboys descended on the Forza vs. Gran Turismo polls a while back.

If there were accurate, non-anecdotal data on the true numbers of consoles that have fallen out of use for one reason or another since they were purchased that would be fantastic.  I for one would love to know, but there is no such data.  Even Microsoft and Sony cannot tell us for certain as they don’t know.

(Before anyone else brings it up, that “more active PS3s than 360s” report from the other month was also based more an guesswork than anything else, but that’s a story for another day.)

More graphs, or why PS3 needs to up its game

Before going any further let me get one thing out in the open.  I’m a fan of gaming in general whatever platform I happen to be playing on at the time.  Beyond that general interest I am a PlayStation fan.  Like many of you who have been around here for a while I originally came to TSA as a great source of PlayStation news and content.

In my personal day-to-day life when I am not writing for TSA I’m pro-PlayStation, something friends would be happy to confirm.  When I put together a set of numbers for TSA though I do my utmost to leave any bias or favouritism behind and try to look at simply what the numbers are saying.  Right now the numbers are not looking that good for the PS3.

The numbers below, as in the previous post, are all taken directly from the quarterly data from Microsoft and Sony which you can all go and fetch for yourselves if you want.

With data spanning two years in the following graphs and tables I am going to use the quarter designations that Sony use as a kind of date-shorthand, which I did not do yesterday as I was only looking back 12 months.  Microsoft use different designations but these are Sony’s:

Hopefully that’s clear enough, so let’s now go on to look at how the sales (as reported by the manufacturers) gap between the two consoles has changed over those two years.  Here are the life-to-date sales figures from Sony and Microsoft for each of those last eight quarters:

From that set of data it is but a simple matter to draw a graph of the gap between the two consoles.  For example, in FY09 Q1 the 360 had a lead of 7.7m (31.5 – 23.8).  The graph of all eight quarters looks like this:

For the five quarters prior to FY10 Q3 the PS3 was steadily catching up at an average rate of 940,000 consoles per quarter.  Had it been able to continue that trend the gap would now be down to just 1.12 million consoles.  However the gap has increased to 3.6m.  One quarter may not make a trend but I would argue that the turnaround in the last two quarters does indicate a change in the trend and the beginning of a new one.

It’s not just a Kinect-powered bounce

While Kinect is undoubtedly helping drive Xbox 360 sales at the moment, it is just a contributory factor.  Let’s look at some numbers which do show clear trends and are the most damning for Sony’s PS3 and its prospects.

Here are the sales figures for each individual quarter of the last two years for both the PS3 and 360 with the calculated year-on-year per quarter change in sales growth.  It’s not a complex calculation, you can do it yourself, just subtract the FY09 quarter’s figure from that for FY10:

Yeah, they’re just numbers, nothing significant to look at.  That is until we plot those year-on-year, per-quarter changes in sales on a graph so the trends become apparent.

Now hopefully it is obvious that a negative number means that for that quarter in FY10 fewer consoles were sold compared to the same quarter in FY09.  The converse is also true.  Given that we are comparing the same quarter from each year it does not matter whether a particular quarter was a holiday quarter or not.

Trend 1:  The sales growth that the PS3 was experiencing has slowed (Q2) and then reversed so its quarterly sales are shrinking.  It is selling fewer now than it was a year ago.

Trend 2:  The 360 was already experiencing sales growth greater than the PS3 (Q2) before Kinect was released and that growth has accelerated.  It is selling more now than it was a year ago.

I cannot make it any clearer than that graph, PS3 sales are shrinking, 360 sales are growing.

Do you think the PS3 is likely to be growing its sales now?

Are we likely to see a turnaround in the next quarter?  No.  There are a number of factors that are likely to provide a drag on PS3 sales such as the Japanese earthquake and globally the problem that the general console-buying public have been informed by all the mainstream news outlets that your personal data is not safe with Sony.

Sure Sony’s actions have somewhat mollified us PSN users who were affected but Sony will somehow need to find a way to address the public perception of their leaky network.

With the anniversary of the launch of the Xbox 360 S coming in the next quarter to be reported on (i.e., the one we are currently in) it will be interesting to see if Microsoft can again record sales growth over the next few months.  That launch was late in the quarter, so I suspect they will.

I predict that once we know the next set of figures that the 360 will once again extend the sales gap between it and the PS3.  Probably all that Sony can do to attempt to arrest their slide is drop the price of the PS3 and erode their margins.  They won’t want to but shrinking sales may leave them no choice.

Try to leave your bias and preconceptions at the door

All I’ve done in these posts is collate the data from the financial reports of the manufacturers, put it into tables and draw graphs based on those tables.  There are all sorts of tricks I could employ to put a spin or bias on those numbers and graphs, but that would be dishonest.  The numbers aren’t always good news for a given faction but that doesn’t change them.  All I’m doing is pointing out whether they are good or bad news.  Currently they happen to be (very?) bad news for Sony.

I truly hope that Sony can turn the PS3’s sales fortunes around.  I wish they hadn’t had to strip features like backwards compatibility from it in a effort to get the costs down to manageable levels and compete on price, but they did.  I wish they were winning the console sales race, but they’re not.  (Though I do know how to manipulate the numbers to make it look like they are and back that up with a rational argument.)

I don’t want any one console to run away with the lead as all of us gamers benefit from the competition in the market and the innovations that each manufacturer brings.  Without the Wii there could well have been no Move or Kinect.  Without the high standard for online services set by Xbox LIVE do you think the PSN would be any better than the half-hearted online service on the Wii?  Ideally I’d like to see Sony win the sales race by a small margin, but we won’t know the answer to that question for many years to come.

And to think I thought that most people reading the post yesterday would be more interested in the graph comparing the fortunes of the current crop of consoles to those of yesteryear.  Shows what I know.

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109 Comments

  1. Well said Watchful. I always appreciate the research you put behind all the sales figures articles and love reading what the industry situation is like, regardless of who is “winning”.

    • Actually no, he continues his sensationalist nonsense.

      Clearly he needs to read up on Microsoft’s channel stuffing exploits. Too see how easy it is to fool people. Microsoft have been channel stuffing XBox and Kinect units like crazy (the 10m Kinect sold headline was actually shipped from manufacturer, without even a retail buyer behind them).

      http://n4g.com/news/34743/microsoft-channel-stuffing-and-desperation-old-tricks-for-a-new-era

      • Methinks someone needs the dictionary definition of “nonsense”, as this entire article (and the one preceding it) dealt with nothing but cold statistical fact.

      • think what he’s getting at is that the “facts” put out by MS aren’t always what they’re cut out to be.

      • Lewis, don’t you realise how much you are embarrassing yourself here?
        If you have a point to make, be polite and give your reasons. Starting your comments with pejoratives and insults just removes any credibility from the rest of it.

      • I agree with 3shirts, but I’d also like to add that to go on and reference n4g is like trying to argue that toasters cause cancer while waving a copy of the daily mail in someone’s face

      • I’m sorry but your sources are as reliable as the rapture

      • I’m going to make ‘pejoratives’ my word of the day….

        ;)

  2. Great read! Same here, wishing that sony could turn it around.

    • Turn what around?

      PS3 has consistantly outsold the XBox every year since launch, at a higher price.. That’s how they closed the 10m gap and Microsoft’s 18month headstart….

      Seems some people here have selective memories… or REALLY bad maths skills.

      • Here’s an analogy.
        It’s a football match, and the home team goes 4-0 up.
        If the away team suddenly starts playing well, and gets the game to 4-3, then the home team is still winning, but not by much.
        That’s the situation here. And Microsoft are currently attacking, having won this quarter, and presumably the next (because of the PSN hack). But the match isn’t over, and Watchful is only commentating on what is happening now, as he sees it.
        Does that explain it for you?

  3. its not the end of the world bring on E3.

    • am with you

    • no that was last week and look how that went.

      • Consider this sentence “liked”!

      • Ha, brilliant moshi. :) DrNate where’s Hobbes gone, I’m missing him already.

      • I thought I would give in to my Calvin side for a while, Hobbes will be back though as I was rather fond of him as well!

  4. Didn’t read yesterdays article, just read through all this. I can see all your points are valid, but for me i don’t bother with sales data, because there’s no point. So what if Microsoft have sold 3m more 360’s than Sony have PS3’s? Both are continuing to get a solid line of high quality games released for them, and that’s all that matters from the consumer side. If they are making money or not is the companies problem, not mine.

  5. I no longer give a toss about the relative sales numbers of the different consoles. They are all firmly established and there will me made games for all of them for the remainder of their lifetime. This generation was a draw.

    I’m more interested in what will happen to both portable gaming and the next generation of consoles when it arrives. I really hope the NPG (vita?) flies, so we’re not left with just DS and smartphone games. I also really hopes the next generation of consoles also ends up with 2 or 3 consoles dividing the market between them.

    Without competition innovation will stop, and it will become a lot less fun to be a gamer.

  6. Bravo. I read the original article and enjoyed it. I didn’t join in the comments as I knew the fanboy element (who are getting bigger) would run with it. Well said and well written.

  7. There are lies, damned lies and statistics. Watchful is guilty of all three, as well as being an appalling writer with little knowledge or understanding of grammar.

    • Wicked graphs though, right?

      • The graphs are awesome, they are a perfect illustration as to the extent of SONY’s current situation. Watchful is right, PS3 needs a price cut to compete on the sales front., And there was me thinking the PS3 would catch the XBOX360 :/

      • Nofi you should add a like button.

    • Haha. Sarcasm doesn’t come across well in text but I could definitely pick it up from you.

  8. But in the article you linked (about the YLoD ps3) you say you are in your fourth Xbox 360 (“I am on my fourth Xbox 360 in just three years and now my PS3 has died”). In this one you say your xbox 360 still alive after 2 YLoD. Not accusing you of anything, but is quite odd.

    • After 2 *RRoD*, I mean.

    • Yeah, two RRoD replacements and I bought an Elite.

      • Not an attack on you Watchful, very interesting article as always, but doesn’t that go against what you say in the article?

      • How? The one that has been replaced twice is still running.

      • Hehe, Got confused by what Pedromr is saying. Answer his question then ;)

      • Don’t get me wrong, but I think the way the article was written is a bit misleading. When I read this article, the idea it passes me is that you had one and only one xbox 360, which got fixed twice and still up and running, but from what you posted, you had an 360, it got replaced, then the replacement got replaced again and then you bought and Elite. It’s hardly as the same. Anyway, is a great article, just a bit confusing depending on how you read it.

      • “How? The one that has been replaced twice is still running.”

        Now I got it! My mistake, then. Thank you!

  9. Yeah, charts and graphs hold weight…if they reported failed units also. How can you claim non-bias, when this glaring fact is staring everyone in the face? Plainly put, for the first 3 or 4 years of the 360’s life, you had a 30% chance of it dying, by just hitting the power button.

    And given I’ve never met a single person, who hasn’t had their 360 die, well, whatever numbers the media regurgitates are simply meaningless tripe.

    • That’s not important towards the actual sales figures. In the end, Xbox 360 has still sold more and its sales right now are bigger than the PS3

      Secondly, you are doing exactly what Watchful said not to do in the article. I personally have never met a person whose 360 has died.

      • you must not no many 360 gamers then I had 3 brake on me & I have had 2 PS3 no problems.

      • Yeah, I actually use real-life information, as opposed to someone who simply claims something on a website. Of the friends I know who stupidly bought a 360 (Don’t get me started, you won’t win), they’ve all died, at least once. All of them. Nate, Jason, Matt, Seth, Dylan, Mark, Justin, Dan…etc… people I know, and can actually trust.

        No offense, I don’t know you, nor would I ever claim to. Additionally, I’d never claim that anything spoken by you, is truth, either.

      • I don’t care what Watchful said to do, if he’s saying I should ignore the obvious, then that’s just not going to happen.

        Secondly, Microsoft’s inability to divulge failure numbers, gives me no reason to believe that they wouldn’t just lump in replacements with units sold.

      • When I read your comment I thought you were saying all your friends who have bought 360’s have died at least once.

        “XBOX 360 kills people double-dead”, now that’s an attention grabbing headline.

      • @ JBolton: LoL, priceless. Yeah no, none of those friends are dead. All living quite happily. Most have gaming PC’s now, instead of 360’s though.

      • It just goes to show how different the health of Xbox 360’s can be, which is why you can’t use RROD/YLOD’s as a factor for total sales.

    • Hi, meet the 1st person you have met that has not had his 360 die. I don’t play it often but it has not died.

      • I’ve never met you, sorry, but your word simply doesn’t mean anything to me. And I do mean sorry, I’ve simply had too many people claim too many things online that turned out to be the biggest load of crap. Fool me once, shame on you, fool me twice, shame on me. Not gonna happen again.

      • Did the Prince of Nigeria not share his fortune with you after your up front payment?

    • Surely it doesn’t matter. If your Xbox dies, and you buy another one, that’s 2 sales for MS, and more money in their pocket.

      And for the record, I own a PS3 and an Xbox and neither have died of their own accord (though my original PS3 met an unfortunate water related accident so was replaced).

      • if your console breaks then you get another one there is a false in there really.

    • When you get our of your box we can have a proper discussion about this. Until then, perhaps pipe down.

      • Hmmm, no? Yeah, I think that’s the appropriate answer.

    • Neither my 360 or PS3 have ever skipped a beat …..?

  10. Good to see writers defending their articles when there’s nothing wrong with them. You were right about the sales and Sony certainly has to step up their game a bit, not in terms of actual games in my opinion but in advertising. For example, here in Holland both the MW3 and LA Noire commercials aired during the final on saturday (I don’t know about other countries), both said: “Now available on Xbox 360”. No mention of the PS3.

    • It does seem that here in Europe Sony’s marketing could be better, but I do wonder whether it is just the usual reason that their budget per language is smaller. I presume the Sony adverts in Holland on the TV and in the printed media are all in Dutch?

      • English. All Xbox commercials are English whereas Sony has horrible Dutch voice-overs.

      • Wow, Dutch is what I mean. So yes that could be plausible.

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