Sony has shipped 5,5 million PS3 units worldwide by the end of March. According to various estimates (detailed below), the company has managed to sell only 2,97 million of those, within the given timeframe.
This leaves 2,53 million units unsold - almost half of the entire stock - either waiting in stores or in transit. Sony also fell short of their target of shipping six million consoles.
This information is based on Sony´s Q4 earnings release (PDF document). Alternatively, an audio webcast is available.
The release does not give any official sales figures for the PlayStation3. But there are various estimates. Originally, Videogame Charts estimated that Sony had sold three million units by the end of March. The more recent, individual sales figures given below second that. But let us examine the figures in more detail.
SCEI breaks down the shipment numbers into the three regions:
PS3 units shipped
Japan: 1,26 million
America: 2,62 million
Other: 1,62 million
Total: 5,50 million
And here are the total sales figures for the PS3 up until the end of March:
PS3 units sold
Japan: 0,81 million
America: 1,2 million
Other: 0,96 million
Total: 2,97 million
Please note that the European figure given is the current one (no data up until the end of March could be found). So the figure includes an additional one-and-a-half months of sales.
Matching both sets of figures from above (subtracting units sold from units shipped), we get the following picture:
PS3 units shipped and not sold
Japan: 0,45 million
America: 1,42 million
Other: 0,66 million
Total: 2,53 million
The report also detailed that Sony´s quarterly losses turned out as bad as expected. Operating profits were down by 68,3 percent.
Is the PlayStation3 dead? I have resisted answering this question until now. But this figure - almost half of the entire PS3 inventory remaining unsold until March - is nothing short of disastrous. Sony excluding sales figures from their earnings release is proof of how embarrassing those figures are.
Meanwhile, the Wii is off to the best possible start and the Xbox360 has used its headstart reasonably well, building an impressive games portfolio with more to come this year.
Videogame Charts offers detailed graphs, illustrating sales figures for each console. The trend is clear: while the Wii is on a high level and gaining, the PS3´s sales have been poor and are in decline.
Consider the following graph showing weekly sales. Evidently, the PS3 failed to cash in on the sales spike in the run up to Christmas. And since, the sales have been on a steady decline.
The sales figures paint a clear picture: the PS3 is a distant third and is set to stay in last place.
System sellers like ´Metal Gear Solid 4´ and ´Final Fantasy XIII´ are likely delayed until 2008, while both competitors are sporting a fantastic line-up (the Wii certainly is) which will become available by the end of the year.
The downward spiral - dwindling hardware sales causing developers to allocate resources away from the PS3 causing even worse hardware sales - is in full effect and there seems to be no way out. With Sony losing hundreds of dollars with each unit sold and the company posting record losses, I rule out a price drop as a viable option for this year.
Blu-ray, Sony´s trojan horse, has not emerged as the clear winner in the format war. It seems likely that the war will continue to rage well into the next year. If it does win, Blu-ray will undoubtedly push PS3 sales. But by that time, the console may already have died as a gaming platform (much like the PSP has died as a platform for movies but continues to sell as a gaming device).
Still sceptical? Remember that a PlayStation3 game costs around ten million dollars to develop and, as a consequence, must sell at least 500.000 units in order to break even, as Namco president Takeo Takasu told Bloomberg in late November. Developers will be glad to drop the PS3 from their portfolio if there is a reason to do so. And, currently, there is not a single reason that might persuade them otherwise.
In conclusion, I am going to go out on a limb here and am now daring to say what I have previously been too cautious to admit: the PlayStation3 is dead. It would take a miracle for Sony to turn this disaster around - and there are no miracles. There, I said it.
EDIT Game Daily writes that Sony sold 3,6 million PS3 consoles, citing the recent financial documents as the source for that number. I have contacted them and asked for verification, since I cannot find that number in any of the documents. I will update this article as soon as possible.
EDIT I have found the source of the figure mentioned above. Sony´s Chief Financial Officer Nobuyuki Oneda said 3,6 million consoles actually sold, Bloomberg writes. This figure diverges from the estimates by almost 700.000 units. That is some discrepancy. If true, though, the amount of consoles that went unsold in the last financial year would be down to 1,9.
As far as my predictions in the commentary go, I stand by them.
EDIT Game Daily´s lead business editor just sent me a link to Business Week, who also mention the figure of 3,6 million consoles, but in an ambiguous context.
Although the company had forecast global shipments of 6 million machines by the Mar. 31 end of its fiscal year, its factories made and sent off just 5.5 million. Worse, the actual number of PS3s in stores was closer to 3.6 million.
The remaining 1.9 million were either sitting in warehouses or en route to stores, leaving as much as $1.1 billion in inventory. Perhaps that's why the company chose to stick to a more conservative sales forecast of 11 million units this year.
The quote does not note 3,6 million units as having been sold, but rather as "in stores".
It is also interesting that the article does not consider the remaining number to simply be sitting on store shelves, giving rise to the assumption that that is all they are talking about. A misunderstanding, perhaps? Perhaps, the 3,6 million units do not relate to sales but only to consoles actually shipped to stores. I hope to be able to clear this one up soon.
EDIT Game Daily´s lead business editor has just cleared up the confusion, it seems. He writes about a possible misunderstanding:
It's possible, but it depends on how you define sold. Some of these companies actually define sold as "sold into retail" not actually sold to consumers.
If that is indeed the case, all my original calculations still stand.
EDIT I have just finished listening to the 40 minute Q&A of the audio webcast. 34 minutes 20 seconds into the stream, an analyst with NCL asks about the actual PS3 sales. The answer is given as follows. Excuse the poor English translation.
PS3 production shipment is 5,5 million. The so-called sell-in that we book ourselves is about 3,6 million units. Therefore the difference of the two can be explained as inventories. It´s in shipment, on boat, above the sea.
The above theory is hereby confirmed. ´Sell-in´ relates to the units sold to retail. ´Sell-through´ relates to the units sold to consumers. Those numbers have not been officially released by Sony.
Source: Q4 earnings release (PDF document)