What the Latest Japanese Sales Numbers Mean for Sony and Nintendo's Next Consoles
It's been a long time since encouraging sales numbers have come out of Japan. The most recent tracking data from Media Create has made its weekly debut, and as usual, hardware and software charts are stacked with troubling indicators.
At this point, calling the Japanese numbers disappointing suggests a comparison to Western sales or previous expectations, as soft performance from the traditional gaming segment has become standard. The Japanese audience is increasingly satisfied with mobile offerings from the likes of Google , while Sony and Nintendo remain in competition for remnants of a rapidly eroding market. What do this week's numbers suggest for the two Japanese hardware makers' next consoles?
The hardware breakdown
Nintendo's 3DS, again, claimed the top position on the hardware charts. The week ending June 29 saw the console move approximately 28,000 units. Sony's PlayStation Vita assumed its usual runner-up position, delivering better-than-usual sales of approximately 25,000 units. This performance was aided by a rare, high-profile release from Sony's Japan Studios. The Nintendo Wii U took third place on the hardware chart, selling approximately 10,600 units in the week. Meanwhile, the PlayStation 4 continued its Japanese struggles, moving just over 8,000 units. The performance was just good enough to edge out the PlayStation 3, which sold approximately 7,500 units.
Decent software sales fail to meaningfully move the hardware needle
The best-selling game for the week was Sony's Freedom Wars on PS Vita. The game debuted to a relatively impressive 189,000 units in its first tracking period, but failed to drive the Vita to hardware numbers befitting of a healthy platform. Second place on the software chart went to the PS4 version of Ubisoft's Watch Dogs, with approximately 64,600 units sold. The game did better than its PS3 counterpart at approximately 31,000 units sold, but its effect on hardware sales was negligible.
Google grows as dedicated market shrinks
The dismal state of hardware and software sales in Japan highlights the need for a change in strategy if future platforms from Sony and Nintendo are to be successful in the region. Despite price cuts, an abundance of bundles, and the release of high-profile software, year-to-date sales of Wii U are down approximately 14% compared to the same period in 2013. Sales of the 3DS are down approximately 45%. PS Vita may be up approximately 20%, but 2013's numbers were poor, and the extent of its growth has been shrinking as the year progresses.
Recently released information from mobile tracker App Annie shows the extent to which mobile companies like Google are gobbling up the Japanese market. Japan now spends more money through the Google Play platform than any other country. While portable gaming is preferred in the Land of the Rising Sun, the company is also looking to gain a bigger share of the home market. An official controller for Android TV was spotted at Google's recent I/O conference, and images of the device were also found in the Android L software development kit.
How will Japanese sales shape future hardware releases?
Nintendo's recent indications that its next handheld and home console hardware will receive similar versions of the company's games come partially in reaction to the state of the Japanese gaming industry. The territory is more important to Nintendo than to competitors Sony and Microsoft, and the divergent tastes of Eastern and Western markets pose a much greater threat to its livelihood.
A unified hardware ecosystem will allow Nintendo to develop the same games for portable and home console markets and give the company's software a better chance of reaching a wide audience. Of course, the move will also open Nintendo to the possibility of selling less total hardware, a major concern, given the company's current business model.
The global success of PlayStation 4 means Sony doesn't have to worry as much about the declining Japanese market, but its gaming empire is still at risk. Google's plans to claim a bigger slice of the home market represent a serious threat to Sony, and the Internet giant isn't the only one aiming to disrupt the traditional console industry. This year has already seen the release of Amazon's Fire TV, a set-top box that features versions of many popular games that users might otherwise choose to buy on Sony's platforms.
Convergence devices threaten to make dedicated hardware unsustainable
As non-dedicated gaming alternatives become more popular and capable, there will be less incentive to release games exclusively on platforms like PlayStation 4, Wii U, and Xbox One. The trend toward feature convergence and strides in mobile and cloud technologies suggest that console makers like Sony, Microsoft, and Nintendo will have an increasingly difficult time staying ahead of the curve.
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The article What the Latest Japanese Sales Numbers Mean for Sony and Nintendo's Next Consoles originally appeared on Fool.com.Keith Noonan has no position in any stocks mentioned. The Motley Fool recommends Google (C shares). The Motley Fool owns shares of Google (C shares). Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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