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Microsoft, meanwhile, sees some slowdown as it falls behind Sony, Nintendo in sales

The NPD Group, Inc. -- a top market research firm -- has released its latest console sales report for the month of May 2014.  With the exception of one small surprise (more on that in a bit), the message is the same -- Sony Corp.'s (TYO:6758) PlayStation 4 continues to dominate sales while Microsoft Corp.'s (MSFT) Xbox One remains a feisty, but struggling challenger.

I. Nintendo, Sony Win Big as Microsoft Struggles

The company's press release did not contain specifics on how many units each company sold, but it clearly indicated that Sony's console continued to dominate sales for a fifth straight month.

As of March 31 official sales numbers put Microsoft at 5 million units sold, Sony at 7 million units sold, and Nintendo Comp., Ltd. (TYO:7974) Wii U has sold 6.17 million units.  Nintendo's console launched in Nov. 2012; Microsoft and Sony's consoles went on sale a year later in Nov. 2013.
Sony PS4 controller
Sony has thus far controlled this generation of the console race.

Of the trio of console makers, Sony has thus far seen arguably the greatest success wooing third party content, while Nintendo has had the worst luck in courting developers.

The last year has been a rocky one for Nintendo, which suffered largely due to its slow response at publishing new titles in its most popular franchises, like Kirby, Mario, Mario Kart, Smash Bros., Zelda, and Donkey Kong.  It has been forced to cut its forecasts multiple times and saw sales drop early this year.  Now its looking reinvigorated.

Due to that, while Sony held the sales crown in May, Nintendo might be the biggest winner of last month for breaking out of its nearly year long slump.  Its return to growth was driven -- by its own accounting, even -- by the much anticipated release of Mario Kart 8.  Mario Kart 8 sold roughly 1.2 million copies, good enough for second place in the NPD Group's May 2014 top selling video games list.  The NPD Group report that many of those sales have come from the bundled copy, helping to drive Wii U console sales back to growth, as well.

Mario Kart 8 has been the fastest selling Wii U title in the console's young history.  It was in third place in U.S. sales (versus second globally), showing gains in a market where Nintendo struggled throughout much of late 2013 and early 2014.

Wii U Bundle

Nintendo's 3DS title Kirby:Triple Deluxe also performed admirably, earning ninth place on the list.  According to the NPD Group, the Nintendo 3DS outsold the Xbox One (let that one sink in, for a moment), earning the ranking of second best selling system for the month (behind only the PS4).

The best-selling game in May was Watchdogs, the new techno-thriller from France's Ubisoft Entertainment SA (EPA:UBI).  It was a relatively disappointing month for Microsoft in terms of content sales.  After Titanfall scored the top spot in sales last month, this month the Electronic Arts, Inc. (EA) title plummeted to eighth place in sales, behind newer releases.  Sony, meanwhile, scored a surprise hit with its exclusive MLB 14: The Show title, which launched for the PlayStation 4 (PS4), PlayStation 3 (PS3), and PlayStation Vita (PSV).

Speaking of the PlayStation Vita, Sony's portable -- while outsold by Nintendo's 3DS -- saw some progress of its own.  A Borderlands 2 PSV bundle has sold well.  The bundle introduced the American market's first major revision of the handheld.

II. A New Gaming Golden Age

Overall hardware sales rose to $187M USD for the month, up a whopping 95 percent from May 2013 ($96M USD).  Driven by 15 percent growth in video game point and subscription cards, interactive gaming toys, and gamepads, video game peripherals and accessories saw a modest 8 percent sales rise.

Game sales were also golden in May.  Downloadable content on consoles, smartphone games, and social network gaming continues to be a massive lucrative, but poorly understood channels.  In-game microtransactions, subscriptions, mobile apps, and social network game spending totaled $787M USD (est.) for the month of May.

That's well ahead of the $274M USD in software sales that the console and portable market saw (up 57 percent).  PC games, meanwhile sold an estimated $10M USD for the month.  Consoles and portables also saw $124M USD (est.) in rental and used game sales.

WatchdogsWatchdogs was not only the top-selling game for May, it also drove Ubisoft past rival EA in total sales.

In total, the NPD group estimates consumers globally may have spent nearly $1.5B USD on the gaming industry's wares.

Comments NPD Group analyst Liam Callahan on the booming month of May:

The last time overall new physical channel growth saw a month-over-month increase of this magnitude was June 2008, with a 53 percent increase... May 2014 marked the highest selling May data month for video game point and subscription cards on record.

As seen in prior months, the lift in hardware sales was driven by console hardware, which increased 137 percent in May 2014 (vs. May 2013).  While much of May 2014's hardware growth was due to Xbox One and PS4, there was also year-over-year growth for the Wii U, and PS Vita.

Collectively, May 2014 launches sold 800 percent more in dollar sales than May 2013 launches did their respective launch months. New launches represented 50 percent of dollar sales this month, which compared to only 9 percent for new launches in May 2013.

Ubisoft may not exactly be beloved by gamers as it at times is at odds with its audience, but many gamers would be pleased to know that on the success of Watchdogs, Ubisoft is estimated to have deposed EA as the world's biggest gamemaker, in the month of May.  (EA is regularly rated the "worst company" in regards to how it treats consumers.)

III. Sony -- PS4 is the "Leading Next Gen Console"

Looking ahead, June should bring more glad tidings for the gaming industry.

Sony released a cheery statement on the NPD numbers.  Senior Vice President of PlayStation Brand Marketing Guy Longworth commented:

PlayStation continues to be the best place to play for innovative IP, as PS4 was the preferred platform for May’s biggest releases, including Watch Dogs and Wolfenstein: The New Order, and held four of the top five spots for next gen software sales. PS4 is the leading next-gen platform for sports, highlighted in May by the best-selling sports game, MLB 14: The Show.

Microsoft, after releasing comments emphasizing the positives on the last two months' NPD reports (where it got beat, but still one in some regards, such as with Titanfall's strong sales) was uncharacteristically silent, and has yet to release a comment on Xbox Wire.  It's unclear whether Microsoft will bother to say anything, given that it's virtually impossible to spin this month's sales figures in its favor.
A new Kinect-less SKU could boost the Xbox One in June. 

The Xbox One maker is likely looking forward to next month's numbers.  It's hoping that the new cheaper Kinect-less $399 Xbox One SKU, will finally manage to stem the tide of Sony's victory march.  If it can not, we're likely witnessing the two console giants reverse their roles of last generation, when Sony saw slow sales of the unprofitable PS3 and Microsoft saw booming sales of its Xbox 360.

However, it's a bit premature to come to such conclusions.  Holiday 2014 will likely decided decisively the winner(s) and loser(s) of this generation of consoles.  For now, though, anything could happen.

Sources: NPD Group, via Twice

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RE: neither
By OnyxNite on 6/18/2014 4:11:21 PM , Rating: 2
I agree both systems are underpowered but that is the natural result to the comparatively low spec Wii dominating in sales last generation (via excellent gameplay) and the most tech advanced PS4 costing so much to recoup the R&D (Cell) and bleeding edge tech (Blu-Ray drive) that they had to price them at a significant loss just to move them off the shelves.

Consumers have taught console makers that tons of R&D isn't worth the risk. Developers have made clear they don't want to learn complex new things, they want familiar hardware. So now we get slightly modified PCs. Minimal R&D is required for the console makers, familiar hardware for developers, everyone's happy now right?

That said the movie playback, DLNA, and UIs I believe will improve via software updates, it's still pretty early. Also games WILL get a lot better then last gen games but they aren't going to come close to PC games. Right now games are held back by the fact that most of them are still being made for the prior gen as well. When games go full next-gen (No PS3 or Xbox 360 versions) things should get better and actually the > 4GB RAM on the new consoles is even going to drive PCs to FINALLY start developing 64bit native games.

RE: neither
By nikon133 on 6/18/2014 5:26:25 PM , Rating: 2
Another good thing with moving consoles to x86 is easily achievable backward compatibility. Regardless of what AMD or Intel parts SONY and MS choose for next gen, you can bet it will be compatible with this hardware... so it's only down to "political" reasons if manufacturers will enable compatibility or not. I think they will, if it doesn't cost them much (or anything at all) - each new gen launch is always married with games shortage, so being able to fill the gap with playable last-gen games can only be good. At worst, developers would have to release patches to boost resolution and framerates, but that shouldn't require much effort. Developers could also start releasing (and selling) HD+ updates that would go further - improved light and shadows, HD texture packs, foliage density and geometry improvements etc.

Let me put it this way. I'm not planning to get GTA5 for PS4, even if some improvements look quite nice - since I completed game on PS3, it is not worth full price. But if I could pop PS3 version of the game in my PS4, purchade HD patch for reasonable price - I believe I would do that in an eye-blink.

RE: neither
By wallijonn on 6/18/2014 7:35:43 PM , Rating: 2
Consumers have taught console makers that tons of R&D isn't worth the risk. Developers have made clear they don't want to learn complex new things, they want familiar hardware. So now we get slightly modified PCs. Minimal R&D is required for the console makers, familiar hardware for developers, everyone's happy now right?

How so? It's the manufacturers that want us to buy their newest features (voice command control, gestures). What we want they won't give us - 1080p gaming and backwards compatibility. Why no backwards compatibility? - because the hardware isn't compatible. It's not a Catch 22, it's their way of making sure they sell more consoles. (If the hardware is so powerful, why can't it do emulation?) And this gen does seem to be selling better than last gen... But many of us who already own last gen consoles are less likely to rush-to-buy the newest gen. since some features have been removed (DLNA, MP3 playback, (we won't mention the green elephant in the corner called Linux) etc.)

Chances are that if I'm so addled that I can't juggle three or four remote controllers at the same time (TV, console, amp) then chances are I wouldn't be gaming.

RE: neither
By wallijonn on 6/18/2014 7:38:30 PM , Rating: 2
The fourth remove would be the cable/satellite controller.

"If you can find a PS3 anywhere in North America that's been on shelves for more than five minutes, I'll give you 1,200 bucks for it." -- SCEA President Jack Tretton

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