This has got to be somewhat troubling for Sony. Sony's estimated decline for the PS2 was 20% for the fiscal year. If these stats are accurate, the PS2 is performing much worse than that.
http://biz.gamedaily.com/industry/feature/?id=17847
PS2 On its Way Out for Good; EA to Reduce Pricing on Underperforming Sports Games?
While Sony's PS3 continues to struggle, the PS2 has maintained solid hardware sales. Deutsche Bank analyst Jeetil Patel, however, thinks the aging console may be "on its way out of the industry for good." In addition, Patel foresees price cuts on EA Sports titles due to slower sales.
Following the September NPD results, Deutsche Bank analyst Jeetil Patel weighed in on a number key data points beyond Microsoft's Halo 3 juggernaut.
Perhaps the most interesting part of Patel's report involved the state of the PlayStation 2 business, which Sony plans on stretching out to ten full years. While the PS2 has been a real workhorse for Sony and continues to put up solid hardware sales each month, it's time may be up, according to Patel.
"PlayStation 2 software sales fell 47%Y/Y to $85mn, representing a deceleration from the 33% Y/Y decline last month. While this substantial decline was inevitable, it is currently unclear whether the drop reflects consumer transition to next-gen software or weak spending patterns amongst the low-end consumer. Needless to say, with tougher comps ahead for PS2 software sales, we think that the PS2 may finally be on its way out of the industry for good," Patel declared.
Another interesting point is the decline in EA Sports' business. Key franchises such as Madden and NCAA Football didn't fare well compared to last year's iterations, and Patel believes that price drops may be necessary soon.
"Electronic Arts' sell-through decreased 6%Y/Y (after a 16%Y/Y increase last year), and its market share declined to 16.9% (vs. 26.4% in Sept-06). More importantly, both Madden 2008 and NCAA 2008 football franchises underperformed considerably in the month, putting into question whether EA will need to reduce pricing to drive sales in coming months," Patel said. "Specifically, Madden 08 sold 619k units (vs. 1.19mn last year), down 48% Y/Y, while NCAA Football 2008 units of 113K was 23% below the 147K sold in Sept-06. Offsetting some of this decline is Skate, which we had expected good results from our checks, sold $10mn on 174k units through the channel in Sept."
"We think the relative underperformance of Electronic Arts' two well-established titles represents a major concern for two reasons. First, if the company's proven and well known franchises (with exclusivity on its side) are struggling to grow YoY, especially in a relatively light month (competitively-speaking), it does beg the question whether the company's newer titles will be successful this holiday season during a very competitive retail environment (with blockbuster titles from the likes of Activision, Ubisoft, Microsoft, Sony and of course Nintendo)," Patel continued.
"Second, should these weak sell-through trends continue, we think that EA may look to reduce software pricing on these titles to stimulate sales volumes. While it is premature to lower prices now, we think that if sales remain lackluster following several upcoming game launches, then the company may look to alter its pricing strategy in mid-November. This obviously could pressure gross margins and potentially operating margin longer term. Either way, we think the risk profile surrounding the December quarter is increasing given that Madden and NCAA football titles are underperforming currently."
