Sony Still Strong in Game Sales

While the entire videogame industry remains in a summer slump, Sony's PlayStation 2 and PSP managed to top hardware sales in the U.S. for May, according to The NPD Group. In what was a horrible month, in general, for all companies, the six year old PS2 beat out Microsoft's Xbox 360 in the sales department by 232,000 to 221,000 units sold. Given that PS2 sells for $130, compared to Xbox 360's $300 and $400 price points, it's not that amazing a feat. But it does show that Sony's 10-year plan for PS2 is working. On the portable front, PSP sold 160,000 units in May, thanks to the lower price point. Nintendo's Game Boy Advance, which is cheaper than PSP, sold 152,000 units, and Nintendo DS sold 146,000. By taking the two-pronged approach, Nintendo still dominates the portable gaming space that it invented back in 1989.

Sony has sold 4.7 million PSPs in the U.S. since it launched last March. As a gaming system, Sony is the first company to enter Nintendo's turf and successfully launch a competitive product. PSP has a strong line-up of games available now and some great titles that were shown at E3. The lower price point, and the ability to play games and movies through regular TVs (thanks to a Nyko TV Adaptor) makes the portable a more attractive buy to consumers.

NPD data also showed that PS2 led May sales on the software front, selling more than 3.5 million units, while software for Microsoft’s Xbox sold close to 1.2 million units and software for Nintendo’s GameCube sold close to 1.0 million units.  For May 2006, PlayStation 2 sold more than four times the amount of software sold for the Xbox 360, which sold just under 853K units.

While Sony made a mistake last fall by not reducing its PS2 price, the reduction this year has seen results. And Sony has not even dropped the PS2 price down to the truly mass market rice of $99 yet. Once that happens, which could be as early as this Christmas, the system should get a large boost in sales that will allow Sony to support its system for another four years. This is important given the fact that PS3 will be in short supply this fall and it will take some time, especially at the $600 price point, to grow its installed base. Sony has two additional revenue streams to take it through the transition.

In contrast, Microsoft has abandoned Xbox completely, so Xbox 360 is it in the games space until the company decides to enter the portable game space. Nintendo has always had its portable games to fall back on. GameCube is a dead system, but Wii will have Nintendo DS and GBA to back it up this Christmas and beyond.