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Marketing Push Drives Video Game Growth

14 Dec, 2006 By: John Gaudiosi

The PS3 and Xbox 360

With the dual launches of Sony's PlayStation 3 and Nintendo's Wii and the marketing blitzkrieg for consoles new and old, U.S. game sales for November were up 15% to $804 million, according to The NPD Group.

This year, Nintendo had plenty of Wiis to go around, selling 476,000 in November, while Sony sold 197,000 PS3s. Microsoft hardware sales for Xbox 360, which is plentiful in supply, beat both consoles in November with 511,000 units sold. But Sony won the console hardware war with its PlayStation 2, which sold 664,000 units in November.

On the portable front, Nintendo DS was the top seller among all game hardware, selling 918,000 units. Nintendo's Game Boy Advance sold an additional 641,000 units. Sony's PlayStation Portable hardware sales came in at 412,000 — less than half of Nintendo DS's total, but up significantly from Sony's October sales.

In total, U.S. retailers sold $771 million worth of video game hardware last month, which is up 69% from the $456 million the industry tallied November 2005, when gamers were looking for Xbox 360 or waiting for PS3 or Wii.

“The PS2 numbers really stood out to me,” said Anita Frazier, video game analyst of The NPD Group. “Until the inventory situation is resolved, the numbers don't say anything really about the PS3 and Wii performances, other than to give an indication of how much supply Sony and Nintendo delivered to retail. It will be a few months into 2007 until we get an idea of how the two new systems are truly performing.”

Frazier said Microsoft sold 42,000 HD DVD drives for Xbox 360 in November. She said that's an attach rate of more than 1% of the U.S. installed base of 3.4 million Xbox 360s.

“This could be a good seller in December, if people think of it as a good gift-giving item for the Xbox 360 owners in their lives,” Frazier said.

Frazier said PS3 and Xbox 360, even with the HD DVD drive, are gaming machines first; the movie-playing function is a bonus.

She said the real winners so far this fall are the game systems priced less than $150: PS2, Nintendo DS and GBA. That's been the case all year.

In the hardware department, Microsoft's Gears of War, which broke the million-unit mark and generated more than $65 million in revenue, was the winner in November. (See chart above for Top 10.)

Despite the strong performance of Gears of War, portable game sales were up 28% to $185 million, compared to the 11% increase in console sales to $618 million. While Nintendo is dominating the portable space, Sony's PS2 is the top-selling console for software by a wide margin.

“With five of the top 10 games for the month, this workhorse will continue to deliver results for the industry for a long time to come,” Frazier said. “The Xbox 360, Nintendo DS and GBA were all neck and neck for November in terms of software unit sales by platform, but with the premium price point of Xbox 360 software, it outperformed in dollar terms.”

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