Monday, January 15, 2007

How Platform Holders Spin NPD Figures

Last night, after the NPD reported hardware and software sales for the month of December (and this morning saw the revision to some software figures) each of the platform holders issued press releases declaring itself champion of the holiday season. Who really won the hardware battle? It depends on who's talking.

Nintendo's press release titled "Nintendo Records Best Holiday Selling Season in U.S. Video Game History" champions the cumulative sales the platform holder enjoyed over Christmas, combining the Wii figures (604.2K) GBA figures (850.7k) and the Nintendo DS sales (1.6M) into a single figure resulting in their "Throughout the November/December holiday shopping season, Nintendo accounted for more than half of all videogame hardware systems sold in America" statement.

Where Nintendo focused on the combined shipment numbers for its products -- and the complete sellout of the Nintendo Wii -- Sony's reactions to the NPD figures focused on revenue: "Sony Computer Entertainment America dominated the US computer entertainment marketplace in December, scoring its highest first-party sales month in company history, as well producing the top-selling home system." Because of the huge sales for GBA and DS Lite, Sony inserted the caveat "top-selling home system" to assert its "dominance" (the system in question is the PlayStation 2, not the PlayStation 3). Sony also points out that the sell-through during the first two months for the PlayStation 3 was higher than either of its predecessors. Despite only posting 197k units sold in November, Sony's PlayStation 3 still sold 687k units during the holiday season. During the same period last year when the Xbox 360 launched, Microsoft sold 634k units (Nintendo's Wii sold 1.08M units during the same two-month launch window). However, Sony seems to be having more success manufacturing and shipping the hardware than Microsoft had during the 2005 holiday season.

Microsoft doesn't have the luxury of multiple hardware products (aside from the two-SKU set up for their Xbox 360) that Nintendo and Sony do, as a result, its take on the NPD figures is entirely different than the Japanese companies. Microsoft's press release, "Xbox 360 Outsells Wii and PS3 This Holiday," focuses strictly on the Gen-Now console war, eschewing discussion of the successes (or failures) of last-gen products and handheld technology. "Consumers have cast their votes and Xbox 360 was the best-selling next-generation console of the 2006 holiday season in the United States, outselling the PlayStation 3 and Wii combined in December and outselling all next-generation consoles in November and December. The Xbox 360 garnered a 51% market share in the United States for December 2006."

Because it has no handheld or noteworthy sales for their last-gen console (the Xbox has been left for dead), Microsoft is forced to rely on the sales figures for the Xbox 360. Like Nintendo, Microsoft claimed market share during December, but on completely different terms. Their 1.1M sales of the Xbox 360 surpassed sales of both the Wii and PS3.

Each platform holders' respective PR blast claims victory for the system during the holiday period, who really won though? Is Sony's continued championing of the PlayStation 2 (it sold 1.4M units in December) relevant to the console war? Similarly, are the 850k units of the GameBoy Advance really a decisive factor in Nintendo's assertion that they held the market share? Ultimately, the only ground where the three platform holders are on equal footing is in the home console market -- each platform holder has their Gen-Now systems on the market. Would that mean Microsoft won?

With Sony reporting that its shipped one million PlayStation 3's to North America, and NPD's reports of just-under 700k in sell-through in the U.S., for those numbers to reconcile there had to be a bulk of units in-transit at the conclusion of the NPD cycle in order for their "1M shipped" statement to hold.

A report from FOX News has Nintendo's Vice President of Marketing & Corporate Affairs Perrin Kaplan somewhat discount the NPD reports of Wii sales: "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." Speaking to Gamasutra, Wedbush Morgan Securities analyst Michael Pachter was confused by the lower-than-expected Wii sales figures: "Our Wii forecast of 1.3 million units in December (cumulative sales of 1.8 million since launch) was based upon a combination of Nintendo's statements and our own channel checks, as we were unable to locate surplus Wii units in the retail channel at any time through year-end." Nintendo promised 4M units worldwide by the end of 2006, at one point saying a "majority" of the consoles would be shipping to North American territories. Yet, NPD reports just under 1.1M units sold in 2006. Where Sony undersold the PlayStation 3, Nintendo simply couldn't supply enough units to the retail channel. The



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