Nintendo, Sony and Microsoft Battle for Top Position in 2011
Locked in a challenge akin to the games they produce entertainment titans Microsoft, Nintendo and Sony vie for a lead position in 2011. With 43.7 million current generation consoles being sold world-wide in 2010 and an equally dizzying number of game titles, sights are set for the summer of 2011 which promises to shake out the winners from the losers.
When I was first assigned this story I begrudgingly began reviewing financial reports. Could there be anything more painful than rows of numbers, line charts and endless graphs? Surprisingly, a very human story emerged on the way to the bottom line. The timing, tone and presentation of these financials reveal dominance as well as vulnerabilities – for some humility, for others confidence. Each word carefully crafted as not to upset the driving forces of the world markets. In the end I found three distinct corporate personas in a never ending pursuit for market supremacy.
Nintendo was humbled by slow sales figures for the 3DS and record growth for Xbox 360 devices in the US and globally; Sony too by the devastating Great East Japan Earthquake and the very unfortunate security breach of the PlayStation Network. That’s not to say that Sony isn’t a player; though clearly in third place today, the Sony PlayStation3 console and network has a fighting chance in 2011. And then there is the ever confident Microsoft – the behemoth, which celebrated a good 2010 and strong early 2011. In a global market it is not so easy to call a winner. Each company seems to have it's strongholds. As 2010 events remind us, unforeseen forces can have devastating effects. If anything, 2011 will be an interesting year for these gaming giants.
Nintendo Celebrates 35 Million in US Sales
Nintendo’s Wii remained the top seller with over 17 million units sold in 2010. By February Nintendo had sold over 400,000 Wii consoles and celebrated reaching 35 million in US sales faster than any other console in US history. In 2011 however, Nintendo will go head to head with Microsoft as the Xbox 360, with new motion sensor experiences, seems the sweetheart of the US market. The Xbox 360 was the number one selling console in the US for the first two months of 2011 selling over 500,000 units. To counter this Xbox explosion and aside from the WII U revelation at E3, Nintendo President, Satoru Iwata announced a concentrated effort to release a new Wii title every month in 2011. And what would be the most appealing Wii title in the US market today? Third party software, Just Dance 2, by Ubisoft remains the number one software sold in the US for the Wii. The impact of hit dance games in the US is exemplified in high sales numbers for Ubisoft titles, Just Dance 2, and Michael Jackson – Experience and Zumba Fitness by Majesco. Wii Party is steadily growing as well in the US market.
Nintendo’s 3DS Hits the Market.
Though 3DS made a big splash in the US, selling over 400,000 units in its 1st week of release, sales numbers were lower than expected. Some attribute this to the low number of software titles ready at release. Nintendo expected to sell 4 million by March 31st but squeaked out a mere 3.61 million. Which leaves me wondering just how bad that can be? With record sales surpassing all their other handhelds and solid numbers despite the software lag; it’s hard to be sympathetic to Mr. Iwata’s disappointment.
Nintendo President, Satoru Iwata discussed the dip in 3DS sales in his
Financial Results Briefing. According to Mr. Iwata, potential players cannot comprehend the glassless 3D image or the augmented reality features unless they actually experience them firsthand. In addition, personal depth slider adjustments are necessary for an optimal 3D experience. Iwata’s presentation was cautiously optimistic as he discussed his disappointment in lower than expected 3DS sales, the impact of the East Japan earthquake and the success of Nintendo’s rivals. He countered by reporting on the company’s 2011 plans for the many beloved Nintendo title collaborations including Kirby, Legends of Zelda, and the joint development project with Sega scheduled to launch Mario and Sonic during the London Olympic 2012 games. This presentation took place before the E3 so little was discussed about the Wii console successor – Wii U.
Their intense focus on the 3DS release caused a noticeable dip in game title releases and lost Nintendo key ‘top 10’ game title positioning in Japan however the rest of the global market kept Nintendo titles within the top five. Pokemon Black and Pokemon White were extremely successful beating out Diamond, Pearl, HeartGold and SoulSilver since its release in the US in March 2011.
Sony’s Determination to Recover from a Terrible, Horrible, No Good, Very Bad Year.
The PS3 platform continues to build momentum despite Sony’s misfortunes. The devastating earthquake and PSN breach would have knocked lesser companies out of the running. As reported by
Lydia Sung on Neoseeker, Sony estimates a $3.2 billion loss due to the earthquake and PSN security breach. Sony’s resolve is witnessed in their April 2011 announcement stating that as of March 29th 2011, 50 million PlayStation 3 consoles were shipped globally. Add that to their growing network,home to over 75 million registered users in 59 countries and PlayStation Move sales reported to have surpassed 8 million units worldwide and you just can’t help but want to cheer them on. In the game but still in 3rd, rounding the corner and looking to stabilize in 2011.
According to Sony they are on track, "despite the impact of the Earthquake, we still expect to achieve approximately 200 billion yen in operating income, 6.3 times the previous year’s amount and in-line with our February forecast.” However there are many who feel Sony’s losses are too great, according to
The Curious Capitalist’s Bill Saporito, the damage to factories and other facilities in Japan by the East Japan Earthquake, and the disruption of the electrical grid by a partial nuclear meltdown in Fukushima was more than enough. Throw in a serious security breach lasting several weeks and costing the company $170 million in losses and what you end up with is a very injured giant. Let’s hope investors grow a conscience and assist in the recovery rather than circle in for the kill. Don’t hold your breath.
Microsoft May Take The U.S. But the World Belongs to Nintendo
In contrast to Sony’s 2010, Microsoft had little in the way of obstacles reporting significant growth in 2011 in large part due to Kinect sensor, Xbox Live Subscriptions and Xbox games. According to the Microsoft press release, April 28, 2011, the Entertainment and Devices division grew 60% year over year "fueled by Kinect for Xbox 360, the fastest-selling consumer electronics device in history, continued strong Xbox 360 console sales and growth of Xbox Live." The Xbox division generated more than $7.4 billion in revenue amounting to $1.3 billion in profit. Microsoft has sold 55 million Xbox consoles in 38 countries and remains in the lead in the US console wars in 2011. As with the PS3. the top title for the Xbox 360 in the US market is Blizzard’s Call Of Duty – Black Ops.
It looks like Nintendo and Microsoft will be the top competitors atleast in the US market with Microsoft showing a strong lead in 2011. As for the rest of the World, I don't think so. Nintendo peaks in titles and console sales in Europe and Japan. Microsoft may take the US but the World belongs to Nintendo.
Additional Sources:
Redmond, Wash. - April 28th 2011 Press Release
Bloomberg - Microsoft Leads Nintendo, Sony as US sales of DS videogames slump - Cliff Edwards - Jul 16, 2010
Sony Financial Report March 2011
