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April 2016 NPD Thread! Hardware and software up!

Forums - Sales Discussion - April 2016 NPD Thread! Hardware and software up!

Haven't paid much attention to NPD lately. How long has MS been down YoY with the X1?



method114 said:
Haven't paid much attention to NPD lately. How long has MS been down YoY with the X1?

I made this for you:

 

2014 2015 2016
January 141,000 150,000 132,000
February 258,000 276,000 248,000
March 311,000 229,000 242,000
April 115,000 187,000 168,000


Farsala said:

Eh the PS3/Wii/360 had a whopping 0 total pricecuts after any next gen console released. While the PS2 had at least 2 pricecuts, maybe even more after the next gen released.

PS1 also had pricecuts during PS2's lifetime. It hardly affected PS2, and in fact may have strengthened brand awareness for PS2.

I think the same for PS2. After people bought a PS2 in pricecut form in 2005-2009, lots of people intended to stay with PS which lead to strong late gen sales of PS3.

You might be right about profitability, but for total hardware sales and brand awareness I think the pricecuts would have been beneficial.

Almost 70 million units have been sold in the U.S. between the 360 & PS3. I'd say brand awareness isn't a problem. What set the PS3 & 360 apart is that by time they passed their peaks, there weren't nearly as many potential buyers left as there were when the PS2 passed its peak. Their sales potential was getting close to exhausted, and as a result they were guaranteed to have weak post-peak legs:

method114 said:
Haven't paid much attention to NPD lately. How long has MS been down YoY with the X1?



Shadow1980 said:
Farsala said:

Eh the PS3/Wii/360 had a whopping 0 total pricecuts after any next gen console released. While the PS2 had at least 2 pricecuts, maybe even more after the next gen released.

PS1 also had pricecuts during PS2's lifetime. It hardly affected PS2, and in fact may have strengthened brand awareness for PS2.

I think the same for PS2. After people bought a PS2 in pricecut form in 2005-2009, lots of people intended to stay with PS which lead to strong late gen sales of PS3.

You might be right about profitability, but for total hardware sales and brand awareness I think the pricecuts would have been beneficial.

Almost 70 million units have been sold in the U.S. between the 360 & PS3. I'd say brand awareness isn't a problem. What set the PS3 & 360 apart is that by time they passed their peaks, there weren't nearly as many potential buyers left as there were when the PS2 passed its peak. Their sales potential was getting close to exhausted, and as a result they were guaranteed to have weak post-peak legs:

graphs


 

You misunderstand, I am saying 360 and PS3 did fine with the PS2 pricecuts during their reign. But XB1 and PS4 late gen sales may suffer since last gen never got pricecuts. People who adopt consoles or 2nd consoles late, may never have done that with 360 and PS3 and then those people bought XB1 and PS4. Which leads to inflated early gen sales and a short tail end. Brand awareness will then suffer for next gen PS5.

Of course the dynamics of PS4 neo and NX will probably change these thoughts as well.



Shadow1980 said:
Farsala said:

It seems the huge lack of pricecuts for last gen has negatively affected effective total hardware sales this gen. I honestly was expecting PS3 to get price cut years ago and leg out to 100m, but it is apparent without price cuts that it would be impossible. This has also slightly helped the new gen sales early gen.


And by slightly I mean that without software early gen these consoles don't move as fast as a late gen pricecut would.

I'm not sure how many more units they could have sold had they cut prices more. I think the main reason the 360 & PS3 have had such poor post-peak legs is because they had already sold a ton of units. By the end of 2011, their peak sales year, they had already sold over 52.6M units combined in the U.S., about three-quarters of their current lifetime tally of just under 70M. Meanwhile, the PS2 peaked in 2002, and by the end of that year it had sold only about 15.9M in the U.S., which is only 34% of its lifetime total of about 46.7M (I would have factored Xbox sales in there as well, but it died quickly after the 360 was released). The PS2 still had a lot of life left in it even after it peaked, and while sales did steadily decline over the years it had good legs thanks largely to very strong software support. Meanwhile, the 360 & PS3 took a while to really get going, and once they peaked they had already sold to the vast majority of households that were willing and able to buy a console. Further price cuts might have helped a little bit, but probably not by much. The PS2 had several price cuts following its peak, but any effects they might have had were modest, and once the PS3 was reduced to $400 that took the wind out of the PS2's sails rather quickly. Reductions to $200 might have helped the 360 & PS3 a bit in 2012 & 2013, perhaps slowing the decline a bit, but once the PS4 & XBO were released that still would've been it for them. Reducing them to $200 might have added at best several million units combined between the two for post-2011 sales, but that would have come at the expense of reduced revenues and profits. I think by time Q2 2012 rolled around and it was obvious both systems were past their peak, both Sony & MS were already working on getting the PS4 & XBO out and they probably figured it would be more profitable to refrain from heavily discounting their older systems, which weren't going to be around much longer anyway once their replacements were out. The 360 has already been discontinued, and the PS3 isn't too far behind it.

Lack of price cuts on last gen is the culprit here IMO. When you are looking at less software support and closer price ranges to currentky supported consoles of course fewer people would see value in that. Contrast that with the PS2 that continued to see price reductions as low as $99 after the release of PS3 and it's clear that the lower price point along with a substantial existing software catalog ensured the PS2 continued to sell at an impressive clip even years into the life of the PS3. Unfortunately PS3 cannot lower cost die to the higher manufacturing costs associated with its unique architecture. It just wouldn't be profitable. 



Farsala said:

You misunderstand, I am saying 360 and PS3 did fine with the PS2 pricecuts during their reign. But XB1 and PS4 late gen sales may suffer since last gen never got pricecuts. People who adopt consoles or 2nd consoles late, may never have done that with 360 and PS3 and then those people bought XB1 and PS4. Which leads to inflated early gen sales and a short tail end. Brand awareness will then suffer for next gen PS5.

Of course the dynamics of PS4 neo and NX will probably change these thoughts as well.

I don't think there's any causal link between late-gen price cuts for older systems and sales performance of their next-gen counterparts. In fact, I've never seen a case where anything having to do with an older system had any bearing on the sales of a newer system. Now newer systems do have an effect on older systems, as once the new system is release the system it is replacing typically experiences a sudden drop in sales. The main reason PS3 & 360 sales had such a late peak had nothing to do with PS2 or Xbox sales and everything to do with factors specific to the 7th generation. Likewise, there nothing in the sales data to suggest that the pricing of the 360 & PS3 will have any bearing on the future performance of the PS4 & XBO.



Farsala said:
Shadow1980 said:

Almost 70 million units have been sold in the U.S. between the 360 & PS3. I'd say brand awareness isn't a problem. What set the PS3 & 360 apart is that by time they passed their peaks, there weren't nearly as many potential buyers left as there were when the PS2 passed its peak. Their sales potential was getting close to exhausted, and as a result they were guaranteed to have weak post-peak legs:

graphs

 

You misunderstand, I am saying 360 and PS3 did fine with the PS2 pricecuts during their reign. But XB1 and PS4 late gen sales may suffer since last gen never got pricecuts. People who adopt consoles or 2nd consoles late, may never have done that with 360 and PS3 and then those people bought XB1 and PS4. Which leads to inflated early gen sales and a short tail end. Brand awareness will then suffer for next gen PS5.

Of course the dynamics of PS4 neo and NX will probably change these thoughts as well.

Hmm that's an interesting theory but I don't know if it holds much water. Especially if the rumors of a mid cycle refresh are true. The OG PS4 and XB1's could become the price conscious entry points for the brands and the newer boxes could then reap the rewards of that brand awareness as they slowly become more affordable/attractive to that consumer base. It's an exciting time for the industry and I'm really excited to see how this shift towards scalable models pans out in the eyes of consumers. 



RexNovis said:
Farsala said:

You misunderstand, I am saying 360 and PS3 did fine with the PS2 pricecuts during their reign. But XB1 and PS4 late gen sales may suffer since last gen never got pricecuts. People who adopt consoles or 2nd consoles late, may never have done that with 360 and PS3 and then those people bought XB1 and PS4. Which leads to inflated early gen sales and a short tail end. Brand awareness will then suffer for next gen PS5.

Of course the dynamics of PS4 neo and NX will probably change these thoughts as well.

Hmm that's an interesting theory but I don't know if it holds much water. Especially if the rumors of a mid cycle refresh are true. The OG PS4 and XB1's could become the price conscious entry points for the brands and the newer boxes could then reap the rewards of that brand awareness as they slowly become more affordable/attractive to that consumer base. It's an exciting time for the industry and I'm really excited to see how this shift towards scalable models pans out in the eyes of consumers. 

Honestly I think it will always just be a theory. And even if I am right with sales trends, a generation is affected by many things. So I would never be able to prove it explicitly. But I personally feel the lack of pricecuts is affecting the industry negatively. But it is for a good reason for the console manufacturers and big publishers, as they will see more profit.



RexNovis said:

Lack of price cuts on last gen is the culprit here IMO. When you are looking at less software support and closer price ranges to currentky supported consoles of course fewer people would see value in that. Contrast that with the PS2 that continued to see price reductions as low as $99 after the release of PS3 and it's clear that the lower price point along with a substantial existing software catalog ensured the PS2 continued to sell at an impressive clip even years into the life of the PS3. Unfortunately PS3 cannot lower cost die to the higher manufacturing costs associated with its unique architecture. It just wouldn't be profitable. 

Prior to the 360 & PS3 at least, how strong a system's legs are seems to have to do more with overall software support rather than pricing. The Wii had terrible legs, but that wasn't because it wasn't cheap. In 2011 it had its price reduced to $150, comparable to the PS2's cut to $130 in 2006 (and when you take inflation into account, it's actually much closer). What set the Wii apart from the PS2 wasn't price. It was games. The system had terrible long-term support, and even before the Wii U came out it was not getting many major releases. As a consequence, its legs were weaker than the PS2's:

We see the same thing with other systems. The N64 was actually doing better than the SNES in the U.S. early in its life, but it had weaker legs. By time it turned three years old it was already only $100, comparable to the $90 the SNES was by its third anniversary (and again about the same when you take inflation into account). Just like with the PS2 vs. Wii situation, the N64 had inferior long-term software support compared to the SNES, and that's almost certainly what caused this:

While the SNES continued to live on for a while after the N64 was released, the N64 died quickly once the GameCube was released.

Could the 360 & PS3 have had better legs if they had been cut to $200 by time the PS4 & XBO were released? Possibly, maybe even probably. Would they have been good legs? Not really. Would any potential boosts from such a price cut be enough to really be worth it from a business perspective? Probably not. In fact, I'd argue that the rapid shift away from the 360 & PS3 to full-on support of just the PS4 & XBO probably would have negated any effects of a price cut. Not only were the 360 & PS3 close to their absolute saturation points by the end of 2013, but the relative lack of post-next-gen support wasn't going to help things either. I don't see any case where the 360 & PS3 would still b doing well right now, regardless of how much they cost, and they probably wouldn't have done much better in 2012 & 2013 with additional price cuts, either. The PS2 was still getting games all the way up to 2013, seven years after the PS3 was released. There was no way in hell the PS3 & 360, after such a protracted generation, was going to get that kind of support after their replacements came out. After a certain point, price cuts just don't matter as much from a sales perspective, but long-term software support does. The delayed peaks of the 360 & PS3 essentially sealed their fates in regards to late-gen sales legs.



Shadow1980 said:
RexNovis said:

Lack of price cuts on last gen is the culprit here IMO. When you are looking at less software support and closer price ranges to currentky supported consoles of course fewer people would see value in that. Contrast that with the PS2 that continued to see price reductions as low as $99 after the release of PS3 and it's clear that the lower price point along with a substantial existing software catalog ensured the PS2 continued to sell at an impressive clip even years into the life of the PS3. Unfortunately PS3 cannot lower cost die to the higher manufacturing costs associated with its unique architecture. It just wouldn't be profitable. 

Prior to the 360 & PS3 at least, how strong a system's legs are seems to have to do more with overall software support rather than pricing. The Wii had terrible legs, but that wasn't because it wasn't cheap. In 2011 it had its price reduced to $150, comparable to the PS2's cut to $130 in 2006 (and when you take inflation into account, it's actually much closer). What set the Wii apart from the PS2 wasn't price. It was games. The system had terrible long-term support, and even before the Wii U came out it was not getting many major releases. As a consequence, its legs were weaker than the PS2's:

We see the same thing with other systems. The N64 was actually doing better than the SNES in the U.S. early in its life, but it had weaker legs. By time it turned three years old it was already only $100, comparable to the $90 the SNES was by its third anniversary (and again about the same when you take inflation into account). Just like with the PS2 vs. Wii situation, the N64 had inferior long-term software support compared to the SNES, and that's almost certainly what caused this:

While the SNES continued to live on for a while after the N64 was released, the N64 died quickly once the GameCube was released.

Could the 360 & PS3 have had better legs if they had been cut to $200 by time the PS4 & XBO were released? Possibly, maybe even probably. Would they have been good legs? Not really. Would any potential boosts from such a price cut be enough to really be worth it from a business perspective? Probably not. In fact, I'd argue that the rapid shift away from the 360 & PS3 to full-on support of just the PS4 & XBO probably would have negated any effects of a price cut. Not only were the 360 & PS3 close to their absolute saturation points by the end of 2013, but the relative lack of post-next-gen support wasn't going to help things either. I don't see any case where the 360 & PS3 would still b doing well right now, regardless of how much they cost, and they probably wouldn't have done much better in 2012 & 2013 with additional price cuts, either. The PS2 was still getting games all the way up to 2013, seven years after the PS3 was released. There was no way in hell the PS3 & 360, after such a protracted generation, was going to get that kind of support after their replacements came out. After a certain point, price cuts just don't matter as much from a sales perspective, but long-term software support does. The delayed peaks of the 360 & PS3 essentially sealed their fates in regards to late-gen sales legs.

Oh software is definitely an important factor of the equation bit o think it's also a bit of a chicken and the egg style conundrum. I feel as though software support is a natural product of strong HW sales. When you look at the software support for the Wii and when it started falter it's clear that software declined as the sales fell. A similar arguement can be made for other systems as well. I'm of the mind that the increase in sales that would've accompanied regular price cuts would have led to continued software support for the 360 and PS3. Obviously I can't prove causation here with sales leading to software support butI do think the data suggests a strong correlation between the two it's just a matter of which you think is the driving factor. I believe it's HW sales and you believe it's Software sales. I believe it's the egg and you believe it's the chicken so to speak. We have no way of saying conclusively either way.