Early returns show strong holiday video game console sales

Microsoft said its Xbox 360 had the strongest holiday season of its lifetime, while Sony and Nintendo both tout their own sales success.

Daniel Terdiman Former Senior Writer / News
Daniel Terdiman is a senior writer at CNET News covering Twitter, Net culture, and everything in between.
Daniel Terdiman
6 min read

Updated at 5:28 p.m. to include additional data and analyst perspective.

Though the retail economy suffered what appears to be one of the bleakest holiday seasons in recent memory, it looks as though the video games industry bucked that disastrous trend.

That's one conclusion that can be drawn from holiday Xbox 360 sales numbers released by Microsoft Monday, in which the company reported that its console business had the most successful holiday season in its history.

All told, Aaron Greenberg, director of product management for Xbox 360, said Microsoft boosted the Xbox's worldwide sales lead over Sony's PlayStation 3 to 8 million units, explaining that, based on internal data, the Xbox has now sold 28 million units globally, compared with the PS3's 20 million.

A big part of the success of the Xbox 360 during the holiday season likely comes from the September drop in price of the console to $199, the lowest-price next-generation console. Microsoft

Microsoft said its holiday data came from internal sales numbers and weekly sales data available in some regions, like Europe, as well as past years in which December console sales are typically twice that of November, which in turn are typically twice that of October.

In November, Microsoft sold 836,000 Xboxes in the United States, suggesting that if Greenberg is right, the company moved about 1.67 million of the consoles in December.

No official North American video game sales numbers are available yet for December. They are expected to be released on January 15 by industry analyst the NPD Group.

To be sure, it can be confusing comparing North American sales numbers with global figures, especially when the numbers are simultaneously based on different kinds of sources.

But there does appear to be ample evidence that the video game industry is proving more resilient to the economic crisis, if not outright recession-proof, than other industries, and data provided by Microsoft, Sony, and Nintendo seem to be at the heart of it.

Nintendo, for example, sold 2.04 million Wiis in November, and while reports of shortages of the console seem less prevalent than in 2007, it is likely it did extremely well during the holidays. While nonscientific, of course, if Greenberg's formula is correct, Nintendo would have sold about 4 million Wiis in December.

For its part, Sony said recently that sales of the PlayStation 3 between January 1, 2008, and November 30, 2008, were up 60 percent from the same period a year earlier, though the company has not yet released any kind of figures for December.

"We've had a solid holiday season and have delivered consistent growth throughout this year. Two thousand eight was a pivotal year for PlayStation with the best software line up in the industry, a dramatic expansion of PlayStation Network including the launches of the video delivery service and the beta of the PlayStation Home," Ian Jackson, vice president of sales for Sony Computer Entertainment America, said in a statement. "Early internal data points to an increase of more than 130 percent of PS3 hardware sales for the holiday season--since Black Friday--and we're also seeing a growth of nearly 40 percent in total PS3 hardware sales for the calendar year. We remain confident this momentum will continue into the new year."

However, the PS3 was the only one of the three next-generation consoles to see its November 2008 sales drop from a year earlier. According to NPD, sales of the PS3 fell 18.8 percent, from 466,000 to 378,000. By comparison, Wii sales skyrocketed 108 percent, from 981,000 to 2.04 million and the Xbox grew 8.6 percent, from 770,000 to 836,000.

But Sony said that the November sales drop was an anomaly due to "an abnormally strong month due to a price cut (with) the introduction of the 40GB PS3."

"From a hardware perspective, I think the clear (holiday) winner is Nintendo," said Colin Sebastian, an analyst with Lazard Capital Markets, "and Microsoft has also benefited by cutting the (Xbox) price in September."

Sebastian added that Sony must address the challenges it faces this year, among them that the price of the PS3 is significantly higher than its competitors, as well as the fact that the console's internal Blu-ray drive has not driven the kind of sales Sony had hoped.

In the early days of the next-generation console wars, it was generally assumed that it would be a three-way race between the Xbox, the PS3 and the Wii. But because of the massive popularity of the Wii, Sony and Microsoft no longer compare their consoles' performances to that of Nintendo's.

The rationale seems to be that the Xbox and PS3 are completely different types of machines than the Wii, given the former's reliance on high-quality graphics and superior performance and the latter's focus on more casual games intended to appeal to a broad audience.

Whether that is semantics is a question neither Sony nor Microsoft seem eager to answer. In fact, both frequently make the point that Wii owners often also own either an Xbox or a PS3, if not both.

Of course, that is music to Nintendo's ears, and its growing confidence is borne out by the tremendous sales of the Wii since its launch in November 2006.

And to many, the most remarkable thing about the Wii's success is that it continues unabated.

According to Nintendo, the Wii has sold 15.4 million units since its launch, with 8.02 million of those consoles selling between January 1, 2008, and November 30, 2008. That means more than half of all Wiis bought in the U.S. were sold in 2008.

For the Xbox, the biggest strategic move to date has been the lowering of the console's entry-level offering to $199, making it the cheapest next-gen console, lower even than the $249 Wii. By comparison, the most inexpensive PS3 costs $399.

Interestingly, though, a recent study conducted by Nielsen Media Research, the clear winner among all consoles when measured by minutes played is neither the Wii, the Xbox 360 nor the PS3. In fact, the study concluded, the venerable PlayStation 2, still the most successful console of all time, continues to dominate players' time, even now.

All told, fully 30.2 percent of console minutes played were on the PS2, according to the study, more than twice the third-place Wii's 13.5 percent. The Xbox 360 came in second, with 18.3 percent, while, in fifth place, with 7.7 percent, the PS3 was embarrassed by the fourth-place finish of the original Xbox.

It's not surprising that the PS2 would come in first in such a study, given that there are more than 100 million of the consoles in players' hands.

But the runner-up finish by the Xbox was a victory of sorts for Microsoft, and a vindication of the efforts it has put into its Xbox Live service.

In fact, Greenberg said Monday that Xbox Live grew to 17 million members by the end of 2008, from 14 million at the end of October.

And the service--which offers members thousands of downloadable games, as well as movies and TV shows--also saw its revenue jump 84 percent, Greenberg said.

To Sebastian, the biggest advantages that Microsoft and Nintendo have over Sony is that the video gaming market has shown a clear preference for the more casual play that the Wii and Xbox Live offer.

"Sony has not been able to capture much of that market," Sebastian said.

Next week, NPD will release its December U.S. sales data, and it is certain that Sony, Nintendo and Microsoft will all issue press releases touting the successes of their respective platforms.

But asked why it decided to release its global lifetime sales numbers Monday, rather than wait until next week, Greenberg said, "All this data is based on our own sales data. This is (information) we have available, so we'd rather share this data now, rather than sitting on (it)."