UK Hardware: Christmas console sales drop

Down on Christmas 2002. Lower prices can't spur demand.

UK sales in games consoles are on the wane despite the reduction in price in all three formats, with the total units sold over the crucial Christmas period down by over 10 per cent year on year, ChartTrack figures have revealed.

PS2 dominates again

For the four weeks from November 30th to December 27th Sony's PlayStation 2 led the way, despite the machine enjoying its fourth Christmas and competing against two technically superior - and cheaper - machines that have been on sale less than half the time. Just prior to the period, Sony announced that UK sales had topped five million, and it was therefore perhaps even more surprising to see the console continuing to sell so rapidly.

Over the crucial last four-week period, the PS2 outsold the Xbox by 2.69 to one, and the sixty-pounds-cheaper Cube by 4.81 to one. However, compared to the same period last year, sales were down by around a third, but Sony UK will be more than happy that such an ageing machine is still thrashing the competition so comprehensively - a legacy of its huge and increasingly cheap back catalogue and backwards compatibility, as well as PS2-specific innovations such as the EyeToy and the Dance Mat phenomena.

Despite some bad press and disappointing software sales, Nintendo actually improved on its Christmas 2002 performance for both of its games machines, although it should be noted that the Cube was £50 cheaper in the comparative sales period with a range of budget software to match. For the four-week period, the cut-priced games machine sold around a third more than at the same point last year, but was still woefully behind its nearest rival, the Xbox, which outsold it by 1.79 to one. It should also be stressed that the Cube most certainly isn't 'doing a Dreamcast' by any stretch of the imagination, having more than doubled its installed base at a comparative point in the respective histories of the two machines. Nevertheless, with a slim release schedule, limited third party support, and fickle retail confidence 2004 will be a tough year for the console, and it's looking essential that Nintendo release its successor in 2005 to avoid losing further ground.

Game Boy Advances, Xbox recedes

The fortunes of the mighty GBA continue to go from strength to strength by contrast, and was the second best-selling games machine over the period, managing to outsell the Xbox by almost 10 per cent. Combined sales of both versions of the GBA were around 16 per cent higher than at the same four-week period in 2002, with the SP accounting for almost 90 per cent of all sales. It appears as if the old style GBA is no longer being supplied, with sales almost ten times less at the end of the month as they were at the beginning. Given that the SP has yet to receive a price cut, it's fair to say there's plenty of life in the machine yet - and the introduction of a budget range of software would doubtlessly be fantastically popular and help tap into the huge potential that exists in this market.

Microsoft, meanwhile, must reflect on a very disappointing Christmas, with a summer price cut and numerous fantastic value bundles failing to increase demand over the same point last year. Sales for the four-week Christmas period were around five per cent down despite an impressive surge during the last two weeks - and the Redmond giant would have been hoping for much better things in the consoles' second Christmas.

Traditionally, the second festive period is psychologically the make-or-break period for any machine, and the fact that the vast majority of consumers opted for a more expensive, technologically inferior PS2 over the Xbox is telling. Evidence in the UK software chart suggests that Microsoft got it badly wrong with its software line-up, with only Project Gotham Racing 2 performing anywhere near acceptably out of a ten-strong first party line-up, key third party exclusives conspicuous by their absence and Live failing to provide the crucial 'killer app' draw commercially that was hoped for. In fact, sales of Sony's broadband adaptor have vastly outstripped Live, although Sony isn't shouting about it in its usual understated fashion.

What Microsoft would have given for Halo 2 last Christmas? On the flip side, however, all the slippage it endured last year will give the company a huge boost in the first half of this year with some of this year's more interesting looking titles (Ninja Gaiden, Fable, et al) to come. Part of Microsoft's problem appears to be the fact that the Xbox offers little benefit when it comes to the vast number of popular multi-format releases from almost all the third party publisher with almost all of them (with the notable exception of Max Payne 2) looking identical to the PS2 version. With this in mind, it's hardly surprising consumers opt for the greater depth offered by Sony's machine. Not to mention GTA exclusivity.

Peaking early?

Copyright restrictions prevent the disclosure of exact ChartTrack figures (for more details head to www.chart-track.co.uk), but the overall picture clearly indicates that hardware sales have peaked a year earlier than some analysts predicted - meaning the next two Christmases will be even more challenging for retailers with discounted software likely to be rife as they battle for market share. Christmas 2004, in particular, will be tough with both the PS2 and Xbox likely to be battling it out in the sub-£100 category and the Cube is likely to be a giveaway £50 by that stage as the dreaded transition period starts to loom. Dreaded for the industry at least - the consumer certainly won’t mind the effect of competition.

An unexpectedly early release of the PSP might prop things up, but it's looking more likely that the market will have to sit tight until late 2005 before the launch of new hardware heralds the start of the fifth generation of console hardware and a new era of profitable machines to sell. It's possible that Microsoft or Nintendo will aim to release their next machines early in an attempt to steal a march on the early 2006 release of the PS3, but we're unlikely to know for sure until GDC and E3 reveals the intentions of Sony's rivals. Until then, Sony can look forward to its six million target...

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