Thursday, May 17, 2007

2,5 million PS3 units shipped and unsold by March

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)


Metaldave said...

Well some of the games Sony is making for the PS3 look pretty good (Heavenly Sword) but other than that? Nothing. Also the price is too high. Exclusives are going to the Xbox 360 (FFXIII, MGSIV you know they will) so it could really be dead by the end of 2008 if all goes to hell. NPD sales are released in a couple of hours and it could be a sub-100k month for the PS3 in the United States, that right there looks like disaster to me.


cameronm said...

I would not could the PS3 out just yet.

First off SONY was taking the long view the with PS3.

They knew it wouldn't take off right away. The price was wrong, few people had HDTV's, and it would take a long time for there AAA titles to start coming out.

Now they did totally underestimate the Wii, like just about everyone else. But we need to remember the Wii and the PS3 are not direct competitors.

The real competition is between the 360 and the PS3. The 360 has done well, but the whole Xbox project has lost MS a ton of money. Also it still isn't popular in Japan, which will keep the 360 from gaining support of some of the best development studios.

Things do look back for Sony right now, but just wait. They still have some exclusives, and with how fast technology moves now i think a price cut will happen sooner rather then later.

In the end, i think this generation will have Wii be the overall winner with 360 and PS3 pretty much splitting the rest.

Ansis said...

Falafel, Sir.

Long time reader.
First time poster.
Nintendo stock owner.

Games only look and play great if your development team spends a lot of time working on it.
It's just a fucking fact.
Im not talking sales.

(im sure spiderman 3(if you haven't yelled at activision for shoveling this garbage onto us gamers then you should) for wii will sell a truckload)

My impression of Sony over the years is that their games are unpolished and made for a market who will blindly buy whatever is available.

I've always loved that official Nintendo releases are generally quality.

Resident Evil 4(who owed a favor to Nintendo and made this gem) is an example of a development team really working hard and pushing hardware boundaries.
Good things comes from hard work. Always.
Hence the continued praise and sales.

Why is Sony crashing so badly?
Is it arrogance on Sony's part?
Is their policy of making shitty games that are a guaranteed sell an reflection of the assumption that the public will buy PS3?
I mean it's too expensive and the games suck.
What the hell were they thinking?


Arsenis said...

they were thinking that whaever worked with PS 2 will work with PS3.

easy as that.

Falafelkid said...

Hi Cameronm. Thanks for bringing up some valid points.

First off SONY was taking the long view the with PS3.

They knew it wouldn't take off right away. (...)

Things do look back for Sony right now, but just wait. They still have some exclusives, and with how fast technology moves now i think a price cut will happen sooner rather then later.

Your comments make it seem as if Sony had all the time in the world. They don´t.

Every week of poor sales for the PS3 is a great week for the Wii and a good week for the Xbox360. The further these platforms drive their installed hardware base, the more resources are being diverted to them, away from PS3, and the more irrelevant this platform will become.

Most of the big exclusive deals are already off. The next step will be that PS3 versions will be canned altogether. Why spend good money on a port when there are only three million potential customers? And current tie ratios are still below 2, I believe. Of course, a number of people have bought the PS3 mainly as a Blu-ray player. So it´s no wonder that game sales are relatively sluggish.

Third party support is all about two factors: installed hardware base and tie ratio. How many potential customers are there and how likely are they to buy my games? And if both these figures suggest I should skip the PS3, I will. Whether my name is Square Enix or Electronic Arts.

And let us look at sales. Sales in Japan are abysmal with the current weekly count slipping noticably below the five-digit threshold at just 8.872 (-44%). That is only 6.500 units more than the Xbox360... in Japan!!!

In the US, there are 1,5 million units left unsold in the last financial year. Warehouses are full and noone is buying the damned things at the rate they are being produced. We might see Sony slowing down PS3 production soon - a move that heralded the decline of both the Gamecube and the Dreamcast.

Ultimately, Sony has a huge responsibility to their shareholders. The new financial year better be a good one. The last was a complete reversal of the status quo: Previously, SCEI pulled the rest of Sony Corp. out of the red. Now the tv business is actually doing very well and we have had some big Sony blockbuster movies, but the PlayStation3 is dragging that down. They won´t stand idly by while SCEI ruins what could be the just rewards of years of restructuring and investment in other fields.

So, turning to the last ace up Sony´s sleeve, by the time Blu-ray wins the format war (if, indeed, it does win, at all), the PS3 might be no more than a souped-up Blu-ray player with no game software. This really could be it. This really could be game over for Sony.

Anonymous said...

Sony is taking a long view with the PS3.

Ten years, as my second-favorite gaming-realted dumbfuck Jack Tretton has suggested (seriously, that guy's a douche), is a fucklong time, and the PS3 WILL BE OUTDATED by then. No doubt about it.

If the best Sony can offer is Goddess of War, possibly multiplatfor Metal Gear and (more criplelingly) Final Fantasy, Second Life 1.01 and a game that is obviously targeting the Nintendo faithful to kill the "Wii60" mantra, then fuck 'em.

I'll have no part in it.

Falafelkid said...

Also, can I just say that I just got ´The Godfather: Blackhand Edition´ as a UK import - and it´s one great game. If any of you are - justifiedly - complaining about a current Wii game drought, this is one must-have title. The controls have never been put to such intuitive, as well as... shall we say: emotionally involving use.

Falafelkid said...

Check out the US sales figures for April from NPD, just in via Kotaku:

* Nintendo DS - 471K
* Wii - 360K
* PlayStation 2 - 194K
* PlayStation Portable - 183K
* Xbox 360 - 174K
* Game Boy Advance - 84K
* GameCube - 13K

Top 10 Software Sales For April

01. Pokemon Diamond (DS) - 1.045M
02. Pokemon Pearl (DS) - 712K
03. Super Paper Mario (Wii) - 352K
04. Wii Play (Wii) - 249K
05. Guitar Hero II (Xbox 360) - 197K
06. Guitar Hero II (PS2) - 142K
07. Spider-Man 3 (Xbox 360) - 117K
08. Spider-Man 3 (PS2) - 105K
09. God of War II (PS2) - 101K
10. MLB '07: The Show (PS2) - 79K

It´s true, just like MetalDave said. The PS3 significantly slipped below the six-digit threshold. The beginning of the end? I honestly think so.

Jarod said...

If Sony expected the PS3 to sell so slowly (3 million in its first 6 months) why did they go to such an enormous effort to produce 6 million consoles? The reason was because they didn't expect it to sell so badly this early.

I think it is possible Sony execs thought that blu-ray and Cell would give the PS3 a long life even should it sell poorly at first. If they did they really are rivalling Nintendo's epic arrogance of a decade ago. 3rd parties will not lose money to put games on Sony's console just because it has SONY PLAYSTATION 3 stamped on it.

By the time this mythical future arrives GTA 5, DMC 5, Tekken 7, FF XV, DQ X, and countless new games will be on the Wii and/or the 360. We'll be getting the first info about the Super Wii and Xbox 720 which will leapfrog the PS3's Cell at the same or lower price. The PS3 in 2009 could very well look like the Dreamcast in 2003.

Anonymous said...

Personally i think its far too early to be saying the PS3 is dead. There are many games currently in production that are too late to be cancelled due to poor console sales. Not to mention its far to early in the game to be predicting such a thing. If you look at N64's sales through 4 months and it was phenomenal but the system ended up beign a dissappointment.

Arsenis said...


Personally i think its far too early to be saying the PS3 is dead. There are many games currently in production that are too late to be cancelled due to poor console sales. Not to mention its far to early in the game to be predicting such a thing. If you look at N64's sales through 4 months and it was phenomenal but the system ended up beign a dissappointment.

You do have a point, but the PS3 is a N64 with poor sales in the first 6 months.

Anonymous said...

According the 1st graph falafel posted. PS3 is having a better start then the xbox360 had. The line in the graph is allmost paralel to the 360s sales-graph. Ofcourse the story about the gamedevelopers giving sony less support doesn't sound like a good thing for them. But with things like 'little big planet' and the whole secondlife-thing could still hype the machine when things are done right. Yes it sounds like they need a little miracle. Ónly there I disagree with falafel. Miracles do exist!

Super Wii sounds nice to me ;-)

Falafelkid said...

Hi Anonymou.

PS3 is having a better start then the xbox360 had. The line in the graph is allmost paralel to the 360s sales-graph.

Yup, you are quite right. You can look at all launches aligned. It is pretty similar. But the big difference was that Xbox360 had a significant headstart. While titles like ´Kameo´ and ´Perfect Dark Zero´ clearly underdelivered, the games portfolio had picked up just in time for the competitor´s launches.

Back then, a week of poor Xbox360 sales was just that. If the PS3 had had a head-start, it would have done well in time. Now, like I said, every week of poor PS3 sales is a week of excellent Wii sales. Also, Microsoft has more money than Sony by far.

Anonymous said...

thanks falafelkid. i was having a bad morning... and now i'm good. ;)

-"superfan" tactics.

Grandmaster B said...

I dont think its dead but it is certainly dying. They need quality software and they need it now. But alas its not coming so its dying.

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