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Sony Having Dual Successes with PlayStation

16 Dec, 2001 By: John Gaudiosi

With memories of last year's PlayStation 2 launch debacle all but gone, retailers are enjoying excellent hardware and software sales with both Sony's PS2 and PS One consoles. Based on sales reports covering the first holiday sales weekend, Sony Computer Entertainment America projects that total PlayStation category sales will bring inmore than $1 billion in retail revenue during December.

After selling 1.1 million PS2 units last year in North America, Sony has been able to supply the channel with a steady stream of hardware and is expected to sell through 5.7 million hardware units this year, giving it an installed base of nearly 7 million homes by the end of December. Sony sold 317,000 PS2s the week before Thanksgiving and an additional 321,000 Thanksgiving week, according to Port Washington, N.Y.-based video game tracking firm The NPD Group, bringing its total U.S. installed base to 5.2 million since its October 2000 launch. While these numbers were strong, December has historically been the biggest month for video game hardware and software sales.

Although the system is six years old, PS One continues to sell well, although it has taken a hit from Sega's $50 Dreamcast hardware price reduction at Thanksgiving. PS One sold 100,000 units the week before Thanksgiving and another 100,000 units the week of Thanksgiving, according to NPD, putting it on target for 2001 sales of approximately 2.4 million hardware units. This would bring the installed base of PS One in North America to 29.2 million by the end of this year.

"We experienced record-breaking sales for the PlayStation family of products during the Thanksgiving time period and expect this trend to continue throughout the holidays," says Jack Tretton, senior v.p., Sony Computer Entertainment America Inc. "For the first time since the introduction of PlayStation 2 in 2000, consumers have the opportunity to choose from multiple new console offerings. Competitive marketing efforts drove consumers to retail and many chose to purchase our products once they compared the benefits of each system. Overall in 2001 we forecast that 66 percent or two out of every three retail console dollars will result from sales of PlayStation products."

PS2 games like Sony's Gran Turismo 3, Konami's Metal Gear Solid 2: Sons of Liberty, Capcom's Devil May Cry, Activision's Tony Hawk's Pro Skater 3 and Rockstar Games' Grand Theft Auto 3 have been selling strongly and driving hardware sales.

Video game sales remain strong with recent overall hardware and software sales bringing in more than $101 million in the week ended Dec. 1, compared to $47 million in the week ended Nov. 10, according to Merrill Lynch analyst Justin Baldauf, who reviewed NPD data.

After strong shipments at launch, both Xbox and GameCube hardware sales declined 26 percent in the week ended Dec. 1 with GameCube much harder to find at retail than Xbox. For the week ended Dec. 1, Microsoft sold 182,000 Xboxes for a total of 738,000 units since launch and Nintendo sold 65,000 GameCubes for a total of 534,000 units since launch, according to Credit Suisse First Boston analyst Heath Terry, who studied NPD numbers.

Both Nintendo and Microsoft are claiming victory in race for No. 2 in the console wars. Nintendo issued a press release saying that its numbers were more accurate than NPD's numbers, since Wal-Mart stopped supplying video game data to the research firm. (Wal-Mart accounts for more than one-fifth of video game sales in the United States) Nintendo claims GameCube sales of 600,000 in its first 15 days, while NPD has sales of 534,000. Microsoft's press releases cite NPD numbers. Microsoft is winning the race to get hardware on retail shelves. Microsoft has shipped 1.1 million Xboxes to stores, using its manufacturing facilities in Mexico and Hungary to ensure product throughout the holiday season. The company will ship an additional 300,000 hardware units by Christmas.

"Since the launch, Xbox has driven tens of thousands of gamers into our stores," says Dan DeMatteo, president of GameStop. "Each Xbox shipment we receive sells out immediately, but the great news for gamers is that we're getting new Xbox systems multiple times each week."

While San Francisco retailers like Best Buy and Target have had Xboxes on store shelves, GameCubes have been in short supply. Both systems have been equally popular, but Nintendo has been slow in getting hardware to retailers after its initial launch shipments.

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