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Talking Point: Do the December NPD Results Flag a Flaw in PS4's Strategy?

Posted by Sammy Barker

Chink in the armour

Isn’t it funny how your expectations can adapt in little to no time at all? This intrepid author has spent the past seven or so years scouring negative PlayStation 3 news, but within the span of a couple of months, the outlook of Sony’s home console market has significantly changed. Since its release late last year, the PlayStation 4 has been utterly obliterating sales records around the globe, and subsequently annihilating the competition in the process – but that wasn’t quite case in the latest December NPD report, where the Xbox One hurried away with the next-gen crown. The question is: should this temporary upset send alarm bells ringing in SCEA president Jack Tretton’s office, or is it just a minor bump in the road?

Well, it’s pivotal that we paint some context onto this page before worrying over one month’s statistics. For starters, the platform holder was eager to point out that it’s still leading the new console battle in the United States, irrespective of Microsoft’s momentary success. “[The] PS4 remains the cumulative leader for next-gen console sales in the U.S. since the launch on 15th November,” said a mathematically acute corporate communications director Dan Race in a press release published overnight. “We sold every PS4 available at retail in the U.S. and were out of stock in December due to overwhelming consumer demand.” The system also finds itself sitting on an install base of 4.2 million units globally to date, compared to its competitor’s three million.

It doesn’t take a Harvard business graduate to come to the conclusion that Sony’s worldwide approach is what harmed it over the busy shopping period in the United States, then. Assuming that you can actually find stock, the Japanese giant’s hot new hardware is currently available in a whopping 53 countries, with its competitor only reaching a meagre 13 nations. Furthermore, the firm is no doubt stockpiling inventory behind-the-scenes right now, as it readies for yet another major launch in Japan, where it’s invested significant effort into accruing an enormous software lineup tailored to the nation’s tastes. Even if the console tails off in the portable focused market, we suspect that the manufacturer is counting on a strong first week.

Of course, this strategy is pulling units off North American shelves. Unfortunately for the firm, it exists in an environment where it can only produce a finite number of formats, and despite speculation that it has actually opened a number of factories in Japan to construct the machines alongside China, it’s clearly still not getting enough devices into the channel to satisfy demand. This issue is especially evident in our native UK, where consoles sell out almost as quickly as they arrive; anecdotally we’re informed that the same problem is occurring around the globe. The real predicament for the PlayStation maker is that the device’s unavailability could push curious consumers in the wrong direction.

Microsoft may argue that it’s the strength of its software lineup and the quality of its hardware that prompted the Xbox One’s stellar sales in North America over the busy holiday shopping season – and it would probably be right. However, there’s no doubt that Sony’s inability to actually get stock on store shelves played right into the Redmond-based firm’s eager hands. With no viable alternative readily on offer, consumers looking to play third-party titles such as Battlefield 4 and Call of Duty: Ghosts on a new piece of hardware over the key Christmas period may not have had to choose which next-gen console to pick. And while it’s not exactly a catastrophe for the PS4, it’s something that the Japanese giant is going to have to address.

The real challenge that the PlayStation maker faces is that it will continue to get outshipped on its competitor’s home turf if Microsoft continues with its current strategy. And that leaves it with a real quandary: does it re-route the majority its inventory to the all-important North American market, or continue to establish itself in territories where its opponent hasn’t even arrived yet? While smaller European nations like Greece may not represent a particularly large proportion of the global audience, the Japanese giant may rightfully argue that by reaching the region it’s establishing the console in the territory – and that may make it difficult for Microsoft to compete in the country when the Xbox One eventually arrives.

Despite this, though, it’s hard to understate the North American market’s importance. Not only is it by far the biggest environment for video game sales, but it can also act as a tastemaker for other territories such as the UK. Sony’s been lucky that the price-sensitive nature of the nation has allowed the PS4 to establish a significant lead, but with the Xbox 360 still outrageously popular on these shores, it’s not hard to see how a swing in momentum – perhaps accelerated by PS4 stock shortages – could reverse the current scenario with ease. After all, nobody wants to back a losing horse, and the industry’s ongoing obsession with the United States certainly painted the PS3 as a bit of slowcoach, despite it actually selling at a faster pace than Microsoft’s machine in most parts of the world.

So, is Sony’s global approach with the PS4 a blessing or a curse? It’s honestly probably a little bit of both. We imagine that the executives at the company’s North American headquarters were cursing into their coffee this morning, as it’s almost certain stock limitations forced it to fall behind the Xbox One in December. However, its competitor has also gifted the company with an opportunity to establish a really strong lead in areas outside of the United States, and it would be incompetent of the organisation to not take advantage of that. In truth, it’s too early to assume anything – and it’s not like a single month’s NPD report is going to mean much in the long-term. One thing that it does tell us, though, is that the Japanese giant desperately needs to get new stock on store shelves.


Do you think that Sony should have focused more on North America with the PS4, or was it right to capitalise on Microsoft’s delays around the globe? Supply the site with a comment in the interactive space below.

Should Sony have sent more PS4 stock to North America? (80 votes)

Yes, it should have made smaller nations wait while it satisfies demand in the States

24%

Hmm, I'm not really sure what to think

16%

No, it’s made the right decision to establish the device in countries around the world

60%

Please login to vote in this poll.

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User Comments (27)

BornOfEvil

#1

BornOfEvil said:

The US is always going to be Xbox country, so Sony is wise to target nations that it has a better chance of painting blue. Sony has done a pretty good job in the states thus far, so I'm not all that worried.

Sanquine

#2

Sanquine said:

Well, sony could let smaller countries wait. But i know enough friends who cancelled their Xbox one order thanks to Microsoft not communicating when it releases.

belmont

#3

belmont said:

I ordered a PS4 yesterday in the biggest retailer in Greece. I will wait for 3 to 4 weeks for it to arrive!! This is crazy.

I think that the focus should be Japan and Europe where Sony is traditionally more successful. I don't think ignoring small, but loyal countries, is good. Seems that those that supported you are ignored in favour of the US. However XB1 is not available in the majority of smaller European countries. Retailers here are not sure about the release date but they already have XB1 games on the shelves!

European nations like Greece surely don't have a major impact but they are somewhat loyal to Sony for a variety of reasons. And sometimes it is good to give priority to loyal fans.

N711

#4

N711 said:

Sony said earlier they are challenger in the US and made sense to make it sound not a big deal if MS sells a bit more.. Xbox one designed for US market so Sony main objective to dominate worldwide first. Only the future will tell if they were right

Priejv

#5

Priejv said:

"Yes, it should have made smaller nations wait while it satisfies demand in the States"

If it is selling, it is selling, no matter where it is...

ZeD

#6

ZeD said:

Sony have a done a good job with the launch. Both sides have sold a hell of a lot of consoles. Have a look at your PS4 and imagine 2 million of those boxes. Plus imagine another 2 million Xbox One's. That is a lot of units. The factories must be working 24 hours a day!
Put it this way both MS & Sony had a better day than Nintendo :/

Carl-G

#7

Carl-G said:

The people who run the PlayStation brand in the USA are useless anyway :-/ It's like they didn't even try with the PS3 & it looks like they will mess up the PS4 to now :-/ I know it's been hard for SONY to make enough PS4's but SCEA would of messed it up some other way i bet. I would SACK the lot of them & get New blood in. Sorry Jack i like you but you are just not good enough :-/

Sanqet

#8

Sanqet said:

It's all about playing the long game Microsoft could regret not releasing the xbox one sooner in smaller countries as I don't think this holiday season in USA will win or lose the console race in the states next Christmas will be much more important in deciding who dominates the market in the states while Microsoft have just handed the win to sony in the smaller countries whose sales all mount up in the global sales of each console

Matt_Berial

#9

Matt_Berial said:

I'm not a business guy, or know anything about it so i could be wrong on this. But for me it doesn't make sense to focus on territories that you're already strong in, and have a strong grip there. You should try to expand where you're not, so you can get the leg up in those areas.

Once the supply is able to be met, i have a feeling Sony will pull ahead in the US market.

Bliquid

#10

Bliquid said:

It would be ideal to have stocks ready to meet demand by speeding up production, but let's be clear: PS4 is difficult to find because it sold out.
Those who bought or want to buy either one of the two next gen consoles (sorry, WheepU) aren't so called casual gamers. They already decided which shore to land.
A minority may shift preferences, but it's just a matter of a few months for the PS4 stock production to fully meet demand.
Also, clever buyers don't buy day one consoles.
And Again, PS4 is unavailable because IT SOLD OUT.
Finally, if i press shift on my keyboard, PS4 becomes PS$.
Gotta mean something.

JayMiller1988

#11

JayMiller1988 said:

They've played it perfectly in my opinion. Now is time to focus on Japan's release.

I don't see X1 being budged no matter how many PS4's are available here in America.

Squiggle55

#12

Squiggle55 said:

First of all, I'm not concerned at all. I think the fact that they sold out is a good thing.

Second of all, who are these consumers that so badly need a console that they buy the one they don't want just because the one they want is sold out? If the PS4 sold out before I put in my preorder there's still no way I would go buy an Xbox instead.

Thirdly, I voted that they should have put more focus on inventory in the states. Like someone else already said, it makes the most sense to focus on the major market where you have traditionally NOT been the undisputed leader. They were wise to make Japan wait the longest for this very reason. And many smaller countries are very likely to follow the lead of the major market winners.

charlesnarles

#13

charlesnarles said:

Everybody in the US who wanted one before 2015 had the opportunity to preorder. Sony should sell every single unit it can, in the most profitable manner. 1st come, 1st serve.

iSolipsistJudas

#15

iSolipsistJudas said:

@belmont those might be loyal countries but you have to remember the US is a big target for Somy. If something is successful here then it is sure to thrive throughout other nations, mostly. That's the same reason why PS NOW is launching here first because Sony wants to see the US's response to it

iSolipsistJudas

#17

iSolipsistJudas said:

@BornOfEvil Not always going to be Xbox territory. The Xbox got a head start last gen which made it more popular. But I believe with new-gen it's shifting to PS4 or even equally

Gamer83

#18

Gamer83 said:

Given the popularity of FPS here and the fact MS has the most popular exclusive franchise in the genre in Halo, along with a deal with EA on what could be the next big FPS in Titanfall, I'm not really sure there's much Sony can do to win this market. As I posted in the story about NPD for Dec. Sony just has to get enough units here to stay close. And hopefully the stock situation will start improving here pretty soon. People are acting like seeing X1's in stores is a bad thing, but it's actually not. The system is selling, the only reason you continue to see them on shelves is because MS is supplying stores very well. Sony, because of its world wide focused strategy as opposed to territorial, has had a harder time getting NA outlets enough systems to meet demand. Sony just needs to make sure it can start getting more supply here soon so those who want a PS4 don't get too frustrated waiting. If you really want to analyze it, there's advantages and disadvantages to the strategies both Sony and MS are employing. We won't really know which is better until at least 2 or 3 years down the line.

hamispink

#19

hamispink said:

Speaking just from my experience, here in Kansas I've yet to go into a store that wasn't well stocked with Xbox Ones, and I've yet to see a PS4 in the wild. Based on that, either Microsoft is sending out an incredible amount of consoles, or more likely, it has already sold to all the early adopters that want one and will trail off in sales much like the Wii U. I think the PS4 is still sitting pretty, I'm just not sure if that will still be true in the following months when they are able to meet demand.

edit: I think everyone who is assuming this means that Sony is going to lose North America to Microsoft is being very short-sighted. I don't think anyone should be surprised when a sold-out console can't outperform the Xbox, which is seemingly available to anyone who might want one.

uchinakagema

#20

uchinakagema said:

The problem is just stock availability. i just walked into a random Walmart yesterday and the had one Xbox One for sale but no PS4. PS4 is selling in 48 territories while the Xbox One is in only 13. If Sony and Microsoft are making their new consoles at the same pace Microsoft console should be seen more in different places than Sony's console

KAPADO

#21

KAPADO said:

If a gamer who has neither next gen console and has no loyalty/affiliation with neither . He or she will buy the console readily available that plays that NBA2k14 ,COD,Or Battlefield 4 they saw on tv. Evenif they saw the ps4 tv advert. Let's hope the extra $100 is a deterrent...which it won't be in most cases.

divinelite

#22

divinelite said:

I think seeing US got the lowest price of ps4 in the world, they should just dump ps4 there first rather than supplying here in my country unbought

We Asian can wait until Sony or whoever set the price conscious of our buying capability

I dunno... Can I be proud to say wherever I go to store I can see many ps4 just lying there waiting for people who can buy them at 600$ and above? So, there is no shortage here...

Sutorcen

#23

Sutorcen said:

The major flaw is that the console hasn't received another firmware update (it desperately needs one) and no new retail games in over two months. It's as if Sony had a plan up until its release and then nothing. Disappointing.

Fenriswolf-

#24

Fenriswolf- said:

I'm curious if these numbers are based on sales reports from retailers, or based on the manufacturers figures of what they shipped to retailers.. Regardless, the lack of availability has to be the only reason it sold less. I know 6 people who are waiting until they can actually find one, so I'm sure there are countless others here in the states who are in the same boat!

-CraZed-

#25

-CraZed- said:

The only thing the December NPD numbers reveal is that Microsoft had the inventory to sell here while Sony did not. Sony has a MAJOR launch to get ready for in February on a little archipelago named Japan.

I would say, that despite NOT having the available stock that Microsoft had, Sony had a great month and it signals nothing but positives for the PS brand here in the States

Slapshot

#26

Slapshot said:

I don't think it really matters too much, really. How many people sit around looking at worldwide data sales to make a purchase? Also, as we've seen time and again in the US, when a console is sold out here, the demand shoots sky high, which sales up substantially thereafter.

I think the real telling point will be a year from now, when the demand drops and the consoles are freely available for purchase - what is the dropping point of demand for these consoles? It's at this point when we will see just how viable this new market is in its early stages and how much developer support will be sticking with them, or shifting back to the high install base of the last generation consoles.

artemisthemp

#27

artemisthemp said:

I have read at less 3 post on a Xbox fansite, where people get a PS4, because they are tired of Microsoft not announcing a release date of Xbox One, so Sony did the right thing.

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