To hear Microsoft and, especially Sony tell it, their latest generation game consoles are going great guns. Sony said last week it had sold 6 million PlayStation 4 consoles through March 2, surpassing its projection of 5 million before its current fiscal year expires at the end of March.
Microsoft says it sold 3.9 million Xbox Ones through the end of January.
While impressive, the numbers may not be quite as fantabulous as the console makers would have us believe. In an item on TechCrunch over the weekend, Natasha Lomas compares sales of the new consoles with those of their immediate predecessors at a comparable point in their rollout and finds the new generation to be markedly slower out of the gate.
Here’s her rundown of NPD’s official data from January 2007 — the first January in which both the PlayStation 3 and Xbox 360 were available (the Xbox 360 had launched a year earlier, in late 2005):
And here’s the breakdown of the most recent January sales, based on unofficial leaked NPD data:
Wii U: ~49,000
The data for January 2014 are likely incomplete. But the difference between the two years is striking nonetheless. Lomas’ conclusion: the console market overall is contracting, and PS4 and Xbox One have not managed to reverse that trend, at least not yet.
Another sign of contraction: In its second week on the market in Japan last week, the PlayStation 4 turned in the worst performance for any new game system in recent history. Here’s the breakdown for the week of 2/24-3/2:
PS4 – 65,685
3DS – 38,013
Vita – 23,124
PS3 – 13,155
Wii U – 8,204
PSP – 3,652
Xbox 360 – 257
For comparison, second week sales for the PS Vita were 72,479 (after a debut weekend of 324,859 in December of 2011). Second week sales of the Wii-U were 130,653, nearly twice the performance turned in by the PS4.
And more: According to NPD, total U.S. game hardware and software sales in January 2014 actually declined by 1 percent compared to January 2013 (normalized for a four-week month), to $664 million, despite the recent launches of the PS4 and Xbox One.
Even net-top consoles are having a hard time gaining altitude. Crowd-funded startup Ouya said on Friday it is getting out of the hardware business and will focus instead on becoming an embeddable software platform for a variety of connected devices. The $99 Ouya box will be kept around strictly as a reference design.
These are, of course, very early days for the latest generation, or in Ouya’s case would-be generation of game consoles. But the early data tend to reinforce the view, which I discussed here in a research report last year, that both PS4 and Xbox One are launching into a much shorter and shallower cost-recoupment window then previous generations of consoles and that the ability of the consoles to generate ongoing revenue from sources other than game sales and licensing fees will be critical to their ultimate success.
Ironically, Sony’s and Microsoft’s anticipation of that shorter window, and the cost-cutting steps they took to improve their recoupment odds as a result, may have become something of a self-fulfilling prophecy. TechCrunch’s Lomas quotes an anonymous “veteran games developer, who has worked in the industry for more than a decade,” this way:
“The PS4/XB1 is the first generation to have technology that is worse than what is already out there. There are 2+ year old GPUs that outperform these boxes, and even budget GPUs releasing now in the $150 range outclass these machines. If you buy the highest end GPU on the market now, you have almost 3x the performance of these machines, and we are at the start of the generation. This is unprecedented.
“This means whilst the casuals are moving to mobile/web, the high end enthusiasts are moving to PC where games are better looking. The traditional consoles are caught in a pincer movement.”
Perhaps I’m being overly charitable here, but insofar as that was a witting and deliberate decision on the parts of Sony and Microsoft it was smart one. The clock would be ticking against them in any case, no matter how good their hardware was. Keeping hardware costs down and game-development costs low while focusing on capabilities other than the highest-end game play is a reasonable strategy under the circumstances.