Comment: Did the Xbox 360 really kill Christmas?
Rob Fahey 15:14 04/01/2006
As the industry contemplates the stark reality of a Christmas season which showed negative growth, many accusing fingers are being pointed at Microsoft. Rob Fahey asks whether the criticism of the Xbox 360 launch is justified.
After weeks of concern over slow sales and price cutting, "the Xbox 360 has killed Christmas" was the stark and accusatory summary of the situation on the High Street in the UK from one owner of a large retailer we spoke to just before Christmas.
It is, perhaps, a slightly melodramatic way of phrasing matters. It's also somewhat inaccurate; it's not the Xbox 360 that killed Christmas, so much as the lack of it, and there were many other factors to take into consideration as well.
The blame for one of the toughest fourth quarters ever experienced by the videogames sector cannot be laid entirely at Microsoft's door. The PS2 didn't get the price cut many retailers had hoped for, the PSP software line-up failed to impress, and Nintendo didn't give the Cube the shot in the arm many had hoped for in the form of Legend of Zelda: Twilight Princess.
Certainly, the Xbox 360 launch has certainly caused more headaches for many retailers and publishers than it has caused jubilation - even to the extent that Electronic Arts fingered the low volumes of the console available at launch as a key factor in its own failure to meet expectations for sales in the holiday quarter, with other firms such as retailer GameStop hinting at broadly the same thing.
Third party publishers, however, are notorious for pointing their fingers at platform holders when the stock market comes looking for explanations for poor performance. Let's not forget that even if the Xbox 360 volumes were lower than expected, most publishers didn't expect to sell that many units on the platform anyway. Their sales have been weak on all other platforms too, and for the reasons for that, they need to look at the quality of their software line-up, the strength of their marketing message and the question of whether they provided anything truly compelling for consumers to spend their money on in a year when consumer spending overall was down at Christmas.
That's not to say that Microsoft isn't a legitimate target for some of the blame. The problem is only partially that consumers could not get their hands on Xbox 360 consoles, which meant they couldn't buy software for the system either. Causing much more grief was the question of what consumers were actually doing with the money that was destined to be spent on their next-generation console purchase.
According to retailers we spoke to in the closing weeks of last year, few consumers were walking into stores with money destined to be spent on an Xbox 360, discovering that the system is unavailable and instead investing on games or hardware for other systems. With each Xbox 360 that was unavailable, hundreds of pounds were flowing out of the videogames sector; what remains to be seen is whether it was staying in the pockets of customers awaiting better availability of the Xbox 360, or whether it was being spent on other goods and lost forever.
Nobody is denying that rolling out a console in all three major global territories in the space of a fortnight is an amazing achievement, and few would argue that in an ideal world, consumers wouldn't prefer to be able to get their hands on the latest hardware as soon as possible, rather than waiting for months after the Japanese or American launch. A global simultaneous launch is a laudable goal; but not, many are now starting to feel, at the expense of having enough units to remotely meet demand in Europe or North America.
This Christmas was always going to be a tough one for the industry, but many had hoped that the strong performance of the DS and PSP would lift the market and allow it to continue to grow. It's hard to say if that would have been the case even without the Xbox 360 shortages - slow sales of the PS2, for one thing, can be attributed more to Sony's failure to cut the price of the aging hardware than to any action on Microsoft's part - but certainly, November and December have been tougher than most had predicted.
The industry can only fervently hope that Microsoft makes good on its promise to keep stock flowing into the channel in the New Year - already, some rumblings suggest that only 200,000 units will ship in North America in January, which may not even fill all of the pre-Christmas disappointed pre-orders - and that when it does, some of the money it missed out on before Christmas is still burning holes in consumers' pockets.
http://www.gamesindustry.biz/content_page.php?aid=13856
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