December 2011 NPD Analysis Part I: Hardware

Note: The following analysis has been prepared using the full NPD report for December; however, per NPD reporting policy, numbers that have not been shared publicly as of press time will not be shared here, either. Armchair Analysis thanks NPD for its hard work and for sharing some data with the public. Please understand that Armchair Analysis and its author are unable to reveal any additional numeric data without obtaining permission from NPD or the specific companies that it tracks. 

December 2011 is a month that, upon review of the NPD report, continues the slide that the console video game industry has seen for much of the year. Hardware sales were down 32% from a December ago, with weaker Wii and PlayStation 3 sales leading the decline. It's important to note that Wii sales are still sliding from extraordinary plateaus during the height of the console's popularity, so the YOY decline appears precipitous.

Gathered from publicly released (and confirmed) data, here are the hardware rankings and unit sales (where available) for December:

1. Xbox 360: 1,700,000+ units sold (-8.6% YOY)
2. Nintendo 3DS: NO PUBLIC DATA RELEASED [NPD report confirms 2nd place, however]
3. Nintendo Wii: 1,060,000 units sold (-55.0% YOY)
4. PlayStation 3: ~936,000 units sold (-22.6% YOY) [via NeoGAF extrapolation, close to actual]
5. Nintendo DS (Legacy): NO PUBLIC DATA RELEASED [NPD report confirms 5th place]

Microsoft led the way once again, closing an impressive year for the Xbox 360 as it finished 2011 as the best-selling platform of the year and logged the best YOY comparison (+7.3%) of 2011. This December wasn't as strong as last year, which is somewhat disconcerting given that there were supply constraints a year ago and the economy was arguably worse in 2010. That's the only blemish on what is a decent performance for the last month of the year. Expect the Xbox 360 to maintain its momentum in 2012, although I do expect YOY comparisons to stay flat or show slight declines for at least the first 6 months. 

While unit sales for the 3DS remain under wraps, it's worth noting that an extrapolation of 1,500,000 units isn't far from the actual number. The extrapolation can be made subtracting 2.5 million units (as of November 2011 NPD) from Nintendo's boasted PR figure of 4 million units installed. It's an increase of nearly 50% over November unit sales. Two Mario titles-- Mario Kart 7 and Super Mario 3D Land-- have helped to lead the 3DS' charge over the hump. With the release of the PlayStation Vita a little over a month away, it will be interesting to see how 3DS sales change. Nintendo will need to keep delivering first-party software and rely on strong third-party offerings (like Metal Gear Solid 3D and Resident Evil: Revelations) to keep numbers strong.

Wii sales are continuing their declines from where they once were, and that shouldn't surprise anyone. Lagging Wii sales are the biggest reason why hardware sales comparisons continue to bleed red. Having said that, seeing Wii outsell the PlayStation 3 is a bit of a surprise, given where the platforms are in this console generation. The Wii's December performance helped to nudge it ahead of the PlayStation 3 for overall sales in 2011 by less than 20,000 units, despite posting a -36% full YOY comparison versus 2010. Expect declines to continue in 2012 leading up to the WiiU launch, most likely sometime after August 26th.

It's tough to put much of a positive spin on the PlayStation 3. The platform is a sales enigma, unable to break 1,000,000 in unit sales in either November or December and in spite of attractive bundles, free online play, strong first-party exclusives, and Blu-ray capability. The 23% December YOY decline follows a lesser decline of 11% from 2009 to 2010. One bright spot for Sony is that the PlayStation 3 sold more units in 2011 than in 2010 (+4.3% YOY). A price cut for the second straight year seems to be in the cards for Sony, especially if the company seems to be shying away from next-generation console plans as Kaz Hirai indicated during CES this week. 

Troubling hardware sales numbers in December don't necessarily mean a bleak future. Microsoft and Sony likely have room for price cuts this year, if sales decline enough. It's also nearly impossible for YOY comparisons to be fair indicators of the health of the industry, given the anomalous sales cycle of the Wii. Take Wii out of the equation and the results have less gloom to them. 3DS has finally caught on, and despite being long in the tooth, Xbox 360 hardware is still selling at a decent clip. Results from Q1 2012 will be closely watched; if YOY figures for the Xbox 360 and PlayStation continue to be in the red, perhaps previous notions about playing the waiting game for next-gen hardware may need rethinking; however, it's also a risk given the tenuous state of the economy and smaller amounts of disposable income. Some consumers may be ready for the jump to the next generation, but is that number going to be enough? That's what we'll watch. 

Look for Part II of this feature soon, as Armchair Analysis covers the NPD software results. In the meantime, your feedback is always welcome. Feel free to talk about the format, the data, the predictions, or even offer your own interpretation on the numbers that we've been given.