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Armchair Analysis: July NPD observations and Vita post-Gamescom

Peter Skerritt's picture

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My analysis piece covering July's NPD sales period is now live. Considering that the piece ran over 1,000 words, I don't have a lot to add here without repeating too much from what I've already said, but consider these things:

  1. Nintendo needs to consider what to do about the Wii. Despite the likelihood of 3DS hardware sales growth over the next few months, Wii sales hit their lowest point ever and are poised to continue sinking without a bit of help. I'm a little surprised that Nintendo hasn't yet proceeded with a price drop to $100 to stimulate sales ahead of the WiiU landing in November. Adding a few more titles to the Wii Selects line for bargain hunters and selling the hardware at $100 could generate some positive movement and help to clear retail shelves ahead of the holiday season. Even a release like The Last Story this month will offer little fuel for hardware sales. The August numbers will be interesting to watch.

  2. Nobody's talking about it, but Pokémon Conquest (NDS) charted in the Top 10 Individual SKU list for the second straight month. It hasn't been a huge hit, but in a period of mediocre releases and with the Pokémon name affixed, this game is doing all right... especially ahead of Pokémon Black & White 2. We'll see if it charts for a third straight month with August's results.

  3. Max Payne 3 is pretty much dead after two months. It disappeared from both the Top 10 Combined and Individual SKU lists for July. The lackluster performance will undoubtedly affect revenue for Take-Two, which expected a lot more from the game than it got. Pressure is now on catalog title sales and the possibility of a Grand Theft Auto V release before the end of March 2013 to meet revenue projections for the fiscal year. (The possibility of a BioShock Infinite delay out of the fiscal year isn't helping Take-Two, either.)

With that said, let's talk about the Vita.

Sales are struggling, new games are still slow in coming, and the cost of entry is considered too high by at least some consumers. After word broke that fewer than 50,000 units sold in July, whispers of "Vita is dead" began to grow louder on message boards and in social media. Indeed, having sold fewer than 700,000 units in six months is a troubling sign. Having sold a third of those units in the first two weeks and then seeing a significant slowdown afterwards didn't help.

With Sony's presentation at Gamescom on Tuesday, Sony attempted to show that Vita is far from dead. New IPs, hardware bundles, a new Cross Buy initiative (giving buyers of PS3 games the Vita versions for free), and the first trailer for Call of Duty: Black Ops Declassified highlighted Sony's press event. These are all positive things, and I applaud them.

They also won't make much difference—if any—in new hardware sales.

The new IPs aren't far-reaching enough to recapture a significant casual market that's gone elsewhere. The hardware bundles are nice in that they offer a game packed in, but a minimum of $250 is still required... and that may or may not include a memory card, which is practically a requisite. The Cross Buy initiative is interesting, but memory cards come into play here. Downloading Vita titles will take up storage space, which is still pretty limited. There's nothing here that grabs consumers and says that the Vita is a must-own. Even the release of Declassified doesn't mean success, especially since the game has been farmed out to a different development team.

Vita has a very difficult road ahead. It's attempting to compete in a changing market climate that's seen revenue share for iOS and Android assume the lion's share. It's going head-to-head with the 3DS, a platform that's significantly cheaper, has a memory card included, and has a stable of first-party IPs that Sony cannot compete with. Take these two factors, add challenging economic conditions with rising food and fuel prices to the perception that $250 is already too expensive, and you have a mountain the size of Everest for Sony to climb.

What's worse is that Sony cannot afford to follow in Nintendo's footsteps and slash the Vita's price point like we saw with the 3DS last year. We know the financial damage that price cut caused Nintendo; in fact, it's still in recovery mode a year later. I don't expect a price drop soon, either; Sony seems committed to the bundle idea as a value proposition instead of dropping the price outright, while hoping that new releases will woo new buyers.

Vita isn't dead. I don't believe anyone can call a platform that's only been available for 6-8 months dead unless the hardware manufacturer says otherwise. Vita is, however, a platform that's going to need more than these Gamescom announcements to be upgraded from critical condition and out of the video game industry version of intensive care. My projections for the platform for the rest of 2012 remain bearish, and don't see the Vita passing the one million mark LTD until November at the earliest.

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Platform(s): Wii   PS3   Vita   Wii U   Nintendo DS  
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