3^rd Party Sales – A Comparison Between All 3 Consoles – WITH NUMBERS

http://www.scei.co.jp/corporate/data/bizdataps3_sale_e.html

http://www.nintendo.co.jp/ir/en/index.html

http://www.microsoft.com/msft/default.mspx

Based on the recent press releases by both Nintendo and MSFT regarding third party software sales (though I think that was all North America and not worldwide), this analysis will set out to determine the following:

Which company sells the most 3^rd party software in total?

Which company has the highest attach rate for 3^rd party software?

How do 3^rd party software sales compare head to head for all 3 consoles?

The numbers and analysis that we will find out will NOT be the EXACT and DEFINITIVE answers.  However, they would most likely be very reasonable and close to the actual situation.

Below is a table of the numbers that we can use, based on actual financial reports.

Other numbers will be assumed or inferred (*)

You can't quite see the totals, but rest assured they are correct numbers.

NINTENDO

As of the end of Mar 2008, the total software sold by Nintendo is 148.44 million units.

In the Supplementary Information for the Fiscal Year, Nintendo provided a list of “million sellers” for the Wii.  This consisted of 12 titles.  The total LTD sales of these 12 titles was 64.58 million units (includes Wii Sports and Wii Play).

With these numbers as a guideline, 1^st party software comprised of 44% of all Wii software sales.

However, there are other titles published by Nintendo that were not on this list.  Adding their lifetime sales via VGChartz data, as well as some approximation, the ratio that we will use would be 47.5% of LTD software sales (as of end of March 08).

Given that Nintendo continues to publish new titles, as well their older titles selling well, the 47.5% ratio will be applied to all software sales til the end of Jun 2008.

As per Nintendo’s own reports, total software sold is 188.85 million units.

52.5% (3^rd Party) of sales = 99.1 million units

Wii’s sold LTD = 29.62 million

3^rd Party Attach Ratio = 3.35

Your chart is off...

PLAYSTATION 3

I don’t have actual data on the percentage of 1^st party vs 3^rd party software sales on the PS3.  Therefore, I will have different scenarios, each with their own set of numbers.

Total SW sold (LTD Jun 2008) = 94.0 million

Total PS3 sold (LTD Jun 2008) = 14.42 million

Scenario 1:  3^rd Party Software = 90%

Total 3^rd Party SW sold (LTD Jun 2008) = 84.6 million

3^rd Party Attach Ratio = 5.87

Scenario 2:  3^rd Party Software = 80%

Total 3^rd Party SW sold (LTD Jun 2008) = 75.2 million

3^rd Party Attach Ratio = 5.21

Scenario 3:  3^rd Party Software = 70%

Total 3^rd Party SW sold (LTD Jun 2008) = 65.8 million

3^rd Party Attach Ratio = 4.56

Yeah, I didn't have time to look for individual quarters.  Though I need just the totals after Dec 06.

Thanks.

Xbox 360

For the X360, it is much harder to come by actual software data since MSFT does not report any software information.

However, they do report a “record attach rate” of 7.5 for software.  Now, this is NPD’s figures and may be for “sold to consumers” data – and most likely for North America only. 

However, given that 3^rd party software vendors sell to retailer, not to consumers, as well as taking into account retailer inventory, in transit inventory, etc, I think that 7.5 attach rate is reasonable to use as a basis for total software sold worldwide.

7.5 attach x 20.3 million units = 152.25(*) million units of software (LTD Jun 08)

Similar to the PS3, I can only calculate different scenarios for the X360, as I do not have actual data with regards to 1^st party to 3^rd party software sales ratio.

However, I do think most people will say that Sony has a higher percentage of 1^st party sales than MSFT.  If this assumption is wrong, please let me know.

Scenario 1:  3^rd Party Software = 90%

Total 3^rd Party SW sold (LTD Jun 2008) = 137.0 million

3^rd Party Attach Ratio = 6.75

Scenario 2:  3^rd Party Software = 80%

Total 3^rd Party SW sold (LTD Jun 2008) = 121.8 million

3^rd Party Attach Ratio = 6.00

Scenario 3:  3^rd Party Software = 70%

Total 3^rd Party SW sold (LTD Jun 2008) = 106.58 million

3^rd Party Attach Ratio = 5.25

RESULTS

Total 3^rd Party Software

Since LAUNCH, X360 has sold the most TOTAL 3^rd Party Software, anywhere between 106 to 137 million units.

Since LAUNCH, the Wii has sold approximately 99.1 million units of 3^rd Party Software in TOTAL.

Since LAUNCH, the PS3 has sold approximately 66 to 85 million 3^rd Party Software in TOTAL

3^rd Party Attach Ratio

Wii has a 3^rd Party attach ratio of approx. 3.35

X360 has a 3^rd Party attach ratio of approx. 5.25 to 6.75

PS3 has a 3^rd Party attach ratio of approx. 4.56 to 5.87

HEAD TO HEAD COMPARISON

I would like to compare Head to Head, how 3^rd Party software sells on each system.

For the PS3 and Wii, this is simple, as the numbers from the above analysis clearly can be compared, due to the same launch period for both consoles.

However, for the X360, I would have to discount the fact that they had a year’s head start.

As you can see from the above table, before the launch quarter ending Dec 06, X360 has already sold 5.9 million consoles.

Basically, I would ONLY DISCOUNT 3^rd Party Software sales made till the end of that Quarter (Sep 06).

The reasoning is simple:  Gamers have either a limited time or budget to buy games.  Therefore, one can not argue that the 1 year headstart will make those gamers purchase additional games above and beyond every other gamer who purchased the consoles at a later date.

To put it another way, if I was the “average” customer who purchased a X360 on November 05 and bought 1 game per quarter until the end of Sep 06 (total 4 games) – the games I would purchase from the Quarter ending Dec 06 to Jun 08 will not be more or less than a customer who purchased their console in Nov 06.

My total software purchase would be more, because of the earlier start date, but my purchase for the next 12 month (or whatever time period), would not be more or less than the average.

It is the same argument for the Wii and PS3.  On average, those who purchased the consoles in Dec 06 will not necessarily buy more games than those who purchased in Dec 07 on a monthly or quarterly basis.

So the weekly, monthly or annual software sales going forward, should be fairly consistent, taking into account some seasonality and blockbuster releases.

Therefore, we can analyze on a quarter to quarter basis, how well 3^rd party software (in total) sell for each platform.

We will compare only the most recent quarters (past 12 months).  I think that would be a good indication going forward.

For the X360, since there are no actual software data, I would assume that worldwide, it sells approx. 25% more software than the PS3 during the same period, due to the size of its install base.  If this assumption is incorrect or unreasonable, please let me know.  However, the methodology should still be the same.

Total PS3 Software Sold for the same period = 76 million

X360 Software @ 25% more = 95 million

Does this make sense?  Probably. 

The PS3 sold 76 million or 81% of its LTD software totals

The X360 sold 95 million or 62% of its (*) assumed LTD software totals.

@80% 3^rd Party Sales Ratio = 76 million

For the X360, the software sold for the past 12 months should be less in terms of percentage because it has been out longer.  Give or take a difference of +/- 5%, I think these numbers are reasonable.