Thursday, May 14, 2009

Console Post of the Week: NPD's, Sony Earnings

April NPD numbers:

Wow. That is a dramatically horrible month. Look at numbers for April 2008 in comparison:

Here's how bad that 340,000 is for Nintendo: excluding severe supply issues in January 2008, it's the first time since July of 2007 that the Wii has sold less than 400,000 units in the U.S.

Here's how bad that 175,000 is for Microsoft: it's the worst month they've had since July of 2007, and while it's not their worst month ever in the U.S. (that would be May 2007, with 155,000 units), it's not far away. It's the first time they've had similar sales number to the April-July 2007 period (which was when everyone was screaming for a price cut).

Here's how bad that 127,000 is for Sony: In the last 17 months, that's the worst month Sony has had--by 58,000 units. Those are pre-price cut numbers.

In short, April was a disaster for everyone. For one company, though, help is on the way soon (not "this fixes everything" help, but "it's better than nothing" help). Please keep reading.

Sony released their FY08 earnings report today, so let's take a look.

Overall, they lost $1.299B, but that's not really our area of interest, so let's keep moving.

The game division lost $597M. That's a considerable improvement over FY07, though (a loss of $1.245B).

Worldwide individual platform sales:
PS2 (7.91M, down by 5.75M)
PS3 (10.06M, up by 0.94M)

Worldwide software sales:
PS2 (83.5M, down 70.5M)
PS3 (103.7M, up 45.8M)

Sony's announced target for the PS3 was 10M, so they made it--a staggering growth rate (tongue firmly in cheek here) of 10%.

Software, though, is a much better story, with significant growth, and while the PS3 software library certainly still pales compared to the 360, it is improving.

More interesting, though, are the forecasts for FY09.

At the company level, Sony is forecasting a loss of $98.9M. Again, not our thing, so let's keep moving.

In the gaming division, PS3 sales are forecast at 13M, or up almost 30%.

There you go. There's your price cut verification right there, although it's a double-edged sword. It's 100% guaranteed that Sony is going to cut the price of the PS3, because they're not going to grow 30% (or at all) at the current price, but it also means that the PS3 probably only drops to $349, because a drop to $299 (and the equivalent worldwide) would result in growth far higher than 30%.

Interestingly, they project total software sales (PS3, PS2, PSP) to be essentially flat compared to FY08, but I think that's mainly due to loss of PS2 sales. So PS3 software sales will increase (but since they don't break out the forecast by platform, there's no way of knowing what they expect at a platform level).

Again, Sony is strangely passive when it comes to the PS3. Yes, 30% growth sounds reasonably impressive until you consider that it's 30% growth from the position of being #3 (last, in other words) worldwide. They're basically conceding that they're still going to be #3 in terms of installed base in March, 2010, and will make up little or no ground on Microsoft.

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