January Game Sales Explode; Wii Dominates

February 21, 2007 | By: James Brightman

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Yes, there was an extra week for NPD's January data period, but even after subtracting that contribution it was a fantastic period for the gaming industry at a time that's often considered a lull after the holiday. It's even more fantastic for Nintendo, as the Wii outsold both the 360 and PS3, beating Sony's system almost 2-to-1.

The NPD Group has finally released its data for the month of January, and it was yet another stellar period for the U.S. video game industry. Software sales totaled $549 million, up a whopping 53 percent. Year-over-year comparisons aren't totally valid, however, because NPD's January reporting period this year does include an extra (fifth) week. Nevertheless, as Wedbush Morgan Securities analyst Michael Pachter points out, even on a "normalized" basis, sales were still up a very healthy 22 percent. And Lazard Capital Markets analyst Colin Sebastian estimates that on an apples-to-apples basis sales were up around 30 percent.

Software sales were down 68 percent following the December/holiday sales period, but that's generally to be expected. Even so, January's results blew away practically all analysts' expectations. The big contributors (besides the extra week of sales), according to Sebastian, were Xbox 360 and DS titles, with some contributions from the Wii, PS3 and PS2. Pachter, however, noted that "the upside was primarily attributable to dramatically higher than expected sales of 360, Wii, and PS3 games." Overall, unit sales in January were up 46 percent, with 10 games selling more than 100,000 each. The average selling price of all games for the period was up 4.5 percent to $32.75.

Next-gen and portable (DS and PSP) combined for software sales of $310 million. Current-gen software sales didn't decline as much as expected, totaling $239 million. This was largely due to the fact that PS2 software sales were up 16 percent. Even on a calendar adjusted basis, "PS2 software sales were down only 7%, suggesting that strength on this platform may be sustainable well into 2007," Pachter explained. This could have huge implications for the video game industry, if the PS2 can keep performing. "Our full year forecast (created last year) presumed a decline of 50% for PS2 software; if demand declines by only 30%, it is likely that overall 2007 industry sales growth could approach 20%," Pachter said.

Looking at hardware, for the first time in a while, the DS didn't steal the show. That said, Nintendo still took the spotlight. The Wii sold around 436K units, easily beating the 360's 294K units and the PS3's 244K units. And the PS2 also continues to outperform the PS3; Sony's six-year-old system sold 299K units. Nintendo's DS still managed to sell another 239K units in January after selling like hotcakes in November and December. This beat out the PSP's 211K units. Trailing the pack were the GBA with 179K units and the GameCube with just 34K units.

On a cumulative basis through January, Xbox 360 hardware has sold through 4.8 million units in the U.S., followed by the Wii with 1,516,000 units and the PS3 with 933,000 units.

Microsoft was sure to point out to Reuters and other news agencies that they had a "fantastic" January and "feel great about [their] position in the marketplace." The 360's 294K units represents an 18 percent increase year-over-year and is a nice jump from the pre-holiday levels of 200-250,000 per month. Moreover, analysts such as Todd Greenwald of Nollenberger Capital Partners continue to believe that "recent forecast cuts were not as much a reflection of end demand as they were a need for Microsoft to clear out the supply chain in preparation for either a price cut or a new version (larger hard drive, HDMI port, etc)."

It's interesting to note that the average 360 and PS3 selling prices were $392.40 and $598.68, respectively, indicating that consumers are almost exclusively buying the high-end models of these consoles. Wii's total software sales reached almost a million units at 977,225, while total PS3 software sales came in at 662, 847. Overall sales for the two platforms came in at almost $87 million, with tie ratios of over 2 for each platform.

The top games during January were primarily recent releases from the holiday period, including Microsoft's Gears of War, Activision's Call of Duty 3 and Guitar Hero II, Nintendo's The Legend of Zelda: Twilight Princess and Warioware, Electronic Arts' Madden NFL 07, Ubisoft's Rainbow Six and Sony's Resistance Fall of Man.

The top selling games on each platform (by retail dollar sales) were as follows:
PS2
GUITAR HERO 2 W/GUITAR (Activision)
MADDEN NFL 07( Electronic Arts)
WWE SMACKDOWN VS. RAW 2007 (THQ)

Xbox 360
LOST PLANET: EXTREME CONDITION (Capcom)
GEARS OF WAR (Microsoft)
TOM CLANCY'S RAINBOW SIX (Ubisoft)

PS3
RESISTANCE: FALL OF MAN (Sony)
MADDEN NFL 07 (Electronic Arts)
FIGHT NIGHT ROUND 3 (Electronic Arts)

Wii
WARIOWARE: SMOOTH MOVES (Nintendo)
LEGEND OF ZELDA: TWILIGHT PRINCESS (Nintendo)
RAYMAN RAVING RABBIDS (Ubisoft)

Handhelds
NEW SUPER MARIO BROS (Nintendo)
MARIO KART (Nintendo)
NINTENDOGS: DALMATIAN & FRIENDS (Nintendo)

GameCube
LEGEND OF ZELDA: TWILIGHT PRINCESS (Nintendo)
NARUTO: CLASH OF NINJA 2 (D3Publisher of America)
LEGO STAR WARS II: THE ORIGINAL TRILOGY (LucasArts)