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PS3 and 360 Price Cut Excitement Wore Off Quicker Than Anticipated - EEDAR

With the September video game sales data now available analysts are digging into the numbers. While it's true that the industry finally experienced a sales bump after months of decline, the overall picture is still somewhat disappointing, if you ask EEDAR analyst Jesse Divnich. He sees positive comps in October now as "extremely unlikely" and he says "It is pretty clear that a greater force, likely consumer mindset on the poor health of the overall economy, continues to play a role in hindering growth in the video game industry."

The problem with September's results is that the excitement generated by the hardware price cuts on PS3 and Xbox 360 lost steam too soon, Divnich believes. "What we witnessed during the last week of September was a large drop-off in core hardware and software sales, indicating that the excitement over the PS3 and Xbox 360 hardware price cuts wore off quicker than anticipated.  In addition, the number of games purchased in conjunction with these hardware sales was lower than usual," he said. "This data suggests that most of the industry’s revenue for September was driven largely on the crutch of hardware price cuts.  This is disappointing as it indicates that consumers are not being driven to purchase on key software titles– a significant driver for overall holiday performance.  With this data now visible, it is most likely that October sales will be weaker than previously expected. Additionally, while the Wii had its price cut the last week of September, many consumers skimped on additional software purchases. Lastly, sales of the PSPgo were respectable, but keep in mind that retail software attach rate for the PSPgo is 0."

It seems that the weak economy is still affecting consumers' purchasing habits. "What is not shown in the data is that September sales were not spread equally across the weeks. The first half of September produced sales much greater than the second half, and is an indication that the sales from new releases, such Halo: ODST, Guitar Hero 5, and Rock Band Beatles, declined week-to-week at a much greater rate than typical AAA titles in a healthy economy," Divnich said.

Brian Fritzen
5 months ago

And what world do you live in that saw a 135% increase in sales over the entire month for the PS3 is indicative of the "excitement wearing off."

You guys are so misinformed it isn't funny. Go back to college and take an economics course! If you are going to cover the "biz" then don't you think you should know something, anything about it?

indysurfn
5 months ago

In what world do you see a 135% increase disappointing? Did you read all of the article, slowly? They pretty much spelled it out. You see in counting monthly sales in revenue for most companies, usually the last week, or the end of quarters depending on industry is the BIG ONES. Instead of them seeing a big one at the end, they saw a LITTLE one. Meaning the sales should have increased at the end of the month but they didn't, in fact they had a large DECREASE. If you have not noticed, most of the bigger titles are release middle to around the END of the month. And more titles release around the end of the month for this very reason. Some times analyst make obvious mistakes to the point that gamers start judging all of them wrongly, based on assumptions, this is one of those times. If these guys saw a decrease in numbers on the last week of the month, that is not a good sign for either of the systems.

nikos
5 months ago

May I also add that the effects of the economy have affected the way the definition of an AAA title has changed. For example, I don't think music genre titles are AAA titles any more, (even if they are releases of a great magnitude such as The Beetles). Maybe they are still considered AAA titles by many, but that changes quickly. Data from the next couple of months on music genre titles will support that idea. Halo ODST on the other hand, a solid AAA title, sold close to 1.5 million copies. I am curious to see Uncharted 2's numbers next month, another AAA title that has had excellent reviews and it is, admittedly, one of the best games ever.

Brian Fritzen
5 months ago

Indy,
Nice condescending voice there. I read the article. Else I wouldn't have commented. These guys call themselves "Industry Gamers" but (similar to your post) they don't even understand the basics of simple economic systems.
But in lay terms, 1) that week you claimed was a big decrease was actually an increase from last year at this time. When looking at how something is selling, we don't base trends on week to week, we base it on month to month or year to year. I would never invest in a company focusing on such a tiny snapshot of its sales. 2) Also announced recently was the Final Fantasy bundle, which isn't out as of these numbers. And the Uncharted 2 Bundle (also not part of these numbers.) Consumers will by those two. They are system sellers. 3) Again, 1 million PS3s in 3 weeks is an incredible number of sales. 4) Sales figures tend to decrease at the end of most months because rent/ mortgages are due (in the US at least). Do I need to go on?

I won't. Not because my point wasn't simply made. It is just that you missed in and in your own POV you think yourself more knowledgeable of an industry (perhaps you work for this bogus site,and nikos as well?) than me. It is obvious that you don't because you focus (as did the article, hence the criticism) on week to week sales. Of course, you will take this all the wrong way, no matter how much evidence is placed in front of you and you won't back down and just admit that, "Hey, someone actually knows more about this than I do, and I really shouldn't be offended, I should just read what they have to say without the feeling that somehow I have been attacked."
See, one day you will realize that the internet is full of people who are full of crap. Many of them write articles about which they know nothing (this article: case in point.) This is not the first erroneous article I have read here, nor, I fear, will it be the last. Is it so much to ask people who call themselves "industry gamers" to at least have an inkling about the "industry?"

Nikos: It doesn't matter what you "think" what a triple A title is. It is how the industry defines it. Other than that, I agree with that, I am interested too.

nikos
5 months ago

To the dude without a name: The industry defines a title as a AAA title, if that title generates strong sales. IDG defines AAA titles as those ranking among the top 5 titles based on unit sales of the year. Music titles have not made the top 5 for several months now (except for The Beatles, which barely made it in September [No5], but I bet you, you wont see that happen again for the rest of the year. In fact, The Beatles generated about 594,000 sales in all three platforms 360, Wii, and PS3 combined, hardly enough to be called a AAA title.) On another note, you keep bashing IndustryGamers, and James Brightman in specific, for a report THAT HE DID NOT PRODUCE! The article just reported EEDAR analyst Jesse Divnich's opinion. No, I do not work for IndustryGamers (at least I've never received a check from them), and I don't even know the people who run this site. I think that if you are as knowledgeable and as insightful as you claim you are, maybe you should try to enlighten us a bit without launching attacks against the author and the people who are willing to share their opinions on this site. just my 2 cents...

Brian Fritzen
4 months ago

My name, as is yours, is right next to my comment. But it appears as if you are referring to me.
If you are claiming this is all EEDAR and it is erroneous, then isn't it the fault of the site who reproduces the fault as well.

You stated, "I think" when referring to what a AAA title is. It wasn't an attack on you. And I think all that I said was meant to enlighten. Basically that you should not measure fiscal success on a week to week basis. Also, it appears as if this very site now has an article showing that, indeed PS3 has not lost momentum but is actually gaining some.

Not really meant as an attack, and I explain that it would probably be misread. Oh well. This is Industry Gamers. And while I appreciate an article on the industry, it should reflect more than a quote and interpret style, without any critical analysis of the source or even a counterpoint...

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