Anyone who follows the gaming world knows that the “leaders” in game reporting are wrong just about 100% of the time and even when they are right they play on fears and ignorance to make the news as controversial as possible, showing only the most negative spin. This is a good thing! It means video game news is getting treated just like normal news.
Thankfully for the gaming world, I am here to serve as the level headed voice of reason and put some of the biggest news stories in gaming into perspective.
Wii U sales
By the time I’ve finished writing this, Nintendo will be out of business and Satoru Iwata will have committed ritual suicide due to the horrible, unthinkably failure that is the launch of the Wii U. It’s the worst thing that ever happened and hints to the death of the console game market as a whole.
Except
The Wii U sold 1.3 million units in 30 days. Compare that to the xbox 360 which sold around 1.1 million units in 30 days. Sony was extremely tight lipped on early PS3 sales (as they were horrible), but they are widely accepted to be between 300,000 to 400,000 in the first 30 days. It was over a year before Sony had reached the million sales milestone. The 360 sold just fewer than 4 million units in its first year, while the Wii U is on target for 4.4 million in sales by year’s end.
This makes the Wii U the second most successful console launch of all time, surpassed only by the Wii.
So what’s the deal?
There are two groups of investors; early adopts and late additions. You can see that as the people who get on board before the big thing and the people who get on board after. Or, put another way, the people who make a lot of money because they are smart and the people who lose money because they are stupid.
Obviously the majority of investors banking on the Wii U are the second group , having already missed the big thing that was the Wii, and not being all too bright they were looking for Nintendo to somehow repeat the success of that console. This was never possible. The Wii was the perfect storm of gaming; Sony and MS had just confirmed they would not be putting out anything new until at least 2012 (4 years from the Wii’s launch in 2008), motion control was a great gimmick, and the price was lower than the current hardware. So what we get is a knee jerk reaction to a product not living up to expectations that should never have been there to begin with.
This has become a common phenomena is business reporting where not living up to the hype is equated with failure. This just isn't how business works. The install base of the Wii U will be more than enough to get games made for it, and sales and attach rate numbers show Nintendo made a boat load of money last quarter off its launch. The fact that some people were expecting two boat loads doesn't lessen that achievement.
The death of the handheld market
Hand held gaming? Bitch PLEASE. I have a phone, I have all the gaming on the go I need. Zanga made 11 million dollars off Farmville and EA’s most profitable game is SIMs 3, obviously the casual market is where it’s at. So why would anyone, least of all the causal gamer, pay $250 for a system then $40 for a game when they can play angry birds for $1 on the system they already own? While mobile gaming sales drop, app sales have qur-doubled-trip-dupaled. Handheld gaming is deader than dead, right?
Except
Except everything. First the assumption that more people are playing mobile games on phones then gaming platforms is extremely suspect. There are almost 200 million DS units (including DS lite, DSi, 3DS, and the XLs of each), 80 million PSPs, and I think a few dozen people even bought the vita (ok, it’s like 10 million, but I can’t pass up a vita joke). So with 290 million handhelds out there, the install base is not too shabby … about double the home casual market.
Software sales are extremely strong as well with Nintendo pumping out a respectable billion units between its platforms, working out to about 200 million a year while Sony sold just under than 9 million units last year (with similar numbers for the last 6). I guess that’s why Sony is a bit less forthcoming then Nintendo with sales figures. Still, with an average sale price around $30, the 6 billion dollar a year industry that is the handheld market kicks the living piss out of the 2.1 billion dollar industry which is the application market (apple app store, Google play, Nokia and BB included). I don’t know where the idea this market is declining even comes from; sales of mobile games increased by almost 9% in 2012 while the rest of the video game market dropped like a stone.
On the hardware front, everyone talks about global markets and total units. Unfortunately, the “global market” for the PS3 and Vita is the UK, Japan, and North America (the only places you can buy one) while the global market for phones is actually global . So where 400 million smart phones were sold last year, the number that is going to people who have the option of using a handheld to game is much lower. This means the assumption that a dollar spent on a phone game is a dollar not spent on a mobile game is way off, and not supported by reality of software sales.
On the software side, only about 70% of smart phones are ever used to buy an app, and 30% to 40% of all apps ever bought are used once and never again. This number includes both games and productivity software, as I can’t find anyone who reports the numbers separately. The argument that people are even buying games on phones is hard to substantiate. The top 10 games on the apple app store and 8 of the top 10 on Google play as of the writing of this article are all ad supported free games. The argument simply doesn't work unless people are PAYING for games on phones, not simply playing them. Are people honestly trying to say that someone with $30 to spend on gods of death and dismemberment of the PSP or happy fun bunny play time for 3DS downloads a free game and decides to put that money in an RRSP instead? Unless someone else is taking that $30, he’s still going to spend it on the game.
So what’s the deal?
Phones are great and you can game on them. A lot of phones are selling. People are playing games on phones. All of this is true, but boring news that’s not going to get you on a gaming site. So they started spinning the story, equating money spent on phone games to money not spent on mobile games. When that got old, they started equating money spent on phones themselves to money not spent on mobile gaming consuls because they have kind of the same function. Like how no one in the world would consider buying a car if they already knew how to walk. It’s called sensationalism and it’s the bedrock of the modern media.
What do you think?
