Console Wars - Who is really winning?

Some representatives of the big trio involved in the console war agree (partially) with NPD’s data, others disagree. Statistics don’t match. What to believe?

What is even more confusing is that when I contacted the ESA (Entertainment Software Association), the PR manager there, Mr. Jeff Woodbury, sent me a link to NPD Group, stating that “The ESA does not have the information you are requesting (which is odd, considering that among others the ESA organizes game shows like the defunct E3 and is the leading representative for the gaming industry), and that “[…]I do not think the complete data for 2006 will be released until next week”. Must I mention that the link to NPD group’s page contained information from the beginning of 2006?...

But then again, big news sites like USA Today or Mercury News and PC Pro are quoting NPD or even interviewing its employees, so I tend to give them the credit for the data presented on their sites.

According to those data, December 2006 was extremely profitable for all the gaming industry in the US, with sales reaching an impressive $3.7 billion, up 28 percent compared to the previous year. Overall sales rose 19 percent in 2006 to $12.5 billion, NPD reported.

The analysis made by NPD also indicates that the launch of Nintendo Wii is clearly one of the most successful gaming console launches in history. Wii managed to sell in December 2006 approximately 604,200 pieces, clearly surpassing Sony’s PS3, which only sold 490,700 units. For the same month, Microsoft’s Xbox 360 was the leader, with approximately 1.1 million units reaching their owners.

However, Nintendo spokeswoman Perrin Kaplan declared that “Our numbers in terms of what we have shipped is definitely well above that (NPD) number. What NPD does not account for is the product that is in transit.” She also added that the company had a “robust” year. Now, what are we supposed to believe?

Previously, Sony’s spokesman David Karraker announced that Sony had met its goal of 1 million PS3 consoles shipped in the US (not sold, although you'll see him later in the article saying something different). But there are a few reasons for which we should consider Sony’s declaration as incorrect: Sony sold 466,716 PlayStation 3 units in Japan from its Nov. 11 domestic launch date to the end of December, according to a market survey released Tuesday by Japanese computer game publisher Enterbrain Inc. The figures fall short of the 1 million consoles Sony predicted it would ship domestically by year's end. Thus, the combined U.S. and Japan PS3 sales puts the company well below its global shipping goal of 2 million (considering NPD’s data for US as accurate). Sony Computer Entertainment of America Senior VP of Marketing, Peter Dille refused to comment though on the numbers speculated for Japan:”it’s 1 million in North America. What we’re not talking about today is the Japanese numbers, but we will be announcing those soon in the Sony announcement that will come out of Japan.”

Moreover, as underlined before, shipping 1 million consoles doesn’t necessarily mean having 1 million PS3 owners. Peter Dille confirms without a doubt: “What the sell-in number refers to is that we’ve shipped it, we’ve sold it to retail, and the fact that we got to a million was possible because we were air shipping these products in.”(gameinformer.com)

David Karraker disagrees of course: "To Sony, shipped has always meant 'sold and shipped to retailers,' " Karakker notes. "Microsoft views 'sold' as what has been sold to retailers but could be sitting on pallets in warehouses or stacked on store shelves. <> to Sony has always meant what the consumer has actually purchased.”

"I think many people have incorrectly viewed our competitor's <> figure to believe it was actually sold to consumers, which it was not," Karakker concludes. Confused yet?

Reality confirms though that the PS3 is no longer appealing to customers. "We have lots [of PS3s]. So does everybody else," an unnamed employee told Gametrailers.com, referring to other GameStop stores. He explained that Nintendo's Wii console was sold out nearly everywhere, and Nintendo is having difficulties meeting the explosive demand for the system. The GameStop in question had been receiving Wii shipments every week, according to the employee, but lately the shipments have shifted to bi-weekly with only a handful of consoles- four, in the case of his store.

The employee explained that the PS3 has seen a large number of returns since its November launch, mostly due to customers failing to attain huge resale rates for the consoles on eBay auctions.

On Ars Technica, another anonymous game retailer declares that "It's not that we've gotten more PS3s than Wiis, it's just that no one wants them."

"We've seen a few returned. We have four in the store right now," the employee told ArsTechnica. The piece also confirms that failed eBay auctions are triggering a deluge of PS3 returns from would-be resellers hoping to recoup their PS3 purchase costs.

Sony is still benefiting though from the strong sales of PS2. Peter Diller told this to gameinformer.com: "Month in, month out, the PlayStation 2 continues to outsell Xbox 360. I think you see the consumers voting with their wallets on the PlayStation brand." With millions of Sony gaming products in the hands of gamers, the company is confident: "I would argue that consumers worldwide, to the tune of over 200 million PlayStations, PS2s, PSPs and PS3s, have decided whether or not Sony has the DNA to deliver hardware, software and services to suit this industry," Karraker told GamePro.

Since we’ve mentioned Xbox 360 and Microsoft, last Sunday, before the CES began, the Redmond behemoth boasted with the fact that more than 10.4 million Xbox 360 consoles were sold, the numbers exceeding the company’s most optimistic expectations. David Hufford, director of project management for Xbox, said the NPD numbers - which also showed Xbox 360 life-to-date U.S. sales of 4.5 million – “are very much in line with what we're seeing here.”

In December 2006, “Gears of War” sold 815,700 units, while “Call of Duty 3” sold 410,800 pieces. Recently, Capcom announced that its zombie smashing euphoria Dead Rising went gold, with more than 1 million copies sold by the end of 2006. There were 823,800 wireless controllers for Xbox 360 sold in December and 224,600 Play and Charge Kit.

Nintendo seems to be by far the most profitable company last year in the gaming biz, with 1.6 million DS and DS Lite consoles sold for the mentioned period, 850,700 units of Game Boy Advance and 604,200 units of Wii.

In the end, I cannot advise you to completely trust what the big gaming trio is saying, but I also advise you to take NPD's reports with a grain of salt...