Bloomberg News

U.S. Video-Game Hardware Sales Jump as New Consoles Debut (1)

December 12, 2013

U.S. sales of video-game hardware jumped 58 percent last month, the first four-week gain in more than two years, after Microsoft Corp. (MSFT:US) and Sony Corp. (6758) released new consoles.

Hardware sales increased to $1.33 billion from $839.1 million a year earlier, Port Washington, New York-based NPD Group Inc. said yesterday in an e-mail. They have been on the decline since October 2011, according to Liam Callahan, an NPD video-game analyst. Sales rose in January this year due to an extra reporting week.

The industry is closely following Sony’s PlayStation 4 and Microsoft’s Xbox One to gauge whether the slump of the past two years was driven by gamers waiting on the new consoles or a more permanent shift by consumers to smartphones and tablet play. Total industry sales rose 7.2 percent to $2.74 billion last month, held back by a drop in software, NPD said.

“People are buying less current-generation software but it’s clear that with the new consoles finally out, December will be huge,” said Michael Pachter, an analyst with Wedbush Securities in Los Angeles.

Microsoft, based in Redmond, Washington, sold 909,132 Xbox One consoles in the U.S. in the first nine days after its debut on Nov. 22, the company reported in a separate e-mail. Sales averaged more than 101,000 consoles per day, “significantly outpacing the nearest competitor,” it said. The Xbox One, priced at $499, has sold more than 2 million units globally since going on sale.

‘Incredibly Strong’

Sony, which has said it sold 2.1 million consoles from its debut on Nov. 15 through Dec. 1, didn’t break out U.S. sales.

The PS4, priced at $399, was the No. 1 selling platform in the U.S. in November, the company said in an e-mailed statement.

“PlayStation 4 sales in North America and worldwide have been incredibly strong since launch,” Jack Tretton, president and chief executive officer of Sony Computer Entertainment America, said in the statement. “Demand continues to overwhelm supply.”

Both companies gained bragging rights. While the PlayStation 4 led hardware sales in November, the Xbox One was the leader on an average per-week basis, NPD said. Sony may have seen supply constraints which are typical in the second week of a product’s release, NPD said.

“Right now, we’re in a supply-constrained environment and they’re both selling out,” said Wedbush’s Pachter. “By February or so, when demand takes over and people look at the extra $100 for Xbox One, Sony will pull ahead.”

Dead Heat

Microsoft has focused its message on applications and exclusive content, including the games “Ryse: Son of Rome” and “Dead Rising 3,” and an upcoming TV show from Steven Spielberg.

Sony is trying to differentiate its PS4 by offering a wider selection of franchise and eclectic titles, including “Octodad: Dadliest Catch” by the independent studio Young Horses Inc.

The two companies are in a dead heat on a worldwide basis, said Colin Sebastian, an analyst with Robert W. Baird & Co. in San Francisco. He estimates they will sell between 5 million and 6 million units each through the end of March.

Industry software sales fell 24 percent to $1.09 billion in November, breaking three straight months of gains, NPD said yesterday, as Ubisoft SA shifted the release date of its latest “Assassin’s Creed” title into October this year.

Nintendo Co. (7974)’s 3DS handheld console sold almost 770,000 units last month, the company said in a separate e-mail. Sales of Wii U consoles increased by more than 340 percent over sales in October after it cut the price of the unit in September.

The Kyoto, Japan-based home of Pokemon and Donkey Kong is counting on new versions of “Super Mario Bros.” and “The Legend of Zelda” to bolster sales of the Wii U and portable 3DS during Christmas.

“The battle among the three consoles hinges on content,” said Tomoaki Kawasaki, an analyst at Iwai Cosmo Holdings Inc. in Tokyo. “Users won’t buy them if they’re not fun.”

To contact the reporter on this story: Cliff Edwards in San Francisco at cedwards28@bloomberg.net

To contact the editor responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net


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