As the numbers from Black Friday and Thanksgiving weekend continue to trickle in, many analysts are examining how the holiday sales picture is coming together this year. While The NPD Group is not ready to give its full assessment just yet, the firm did note to GamesIndustry.biz that digital promotions on PlayStation Network and Xbox Live were much more aggressive this year and may have impacted the retail channel. Digital aside, the sector that seemed to struggle the most is virtual reality, according to SuperData, which said VR has been the "biggest loser."
Thanks to "notably fewer units sold than expected due to a relatively fragmented title line-up and modest marketing effort," VR headsets are now expected to sell even fewer than previously thought. SuperData's revised forecast for 2016 calls for under 750k PlayStation VR units sold (their previous estimate was 2.6 million) with Google's Daydream selling just 261k (down from 450k). Previous estimates for HTC Vive, Oculus Rift and Gear VR remain unchanged at 450k, 355k and 2.3 million, respectively.
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As you can see, expectations for PSVR have seen the most dramatic shift. Stephanie Llamas, director of research and insights at SuperData, explained to us, "PSVR had the best opportunity to benefit from the holidays but their supply inconsistencies and lack of marketing have put them behind their potential. They did not offer any first-party deals this weekend, restock bundles or market the device, pushing instead for the PS 4 Pro. They have also pointed out that VR looks even better on a Pro than a standard or slim PS 4, so the message to most gamers is: Get the Pro now, then the PSVR later. As a result, we won't see them break 1M shipments until well into the new year."
"Had Sony pushed the PSVR the way they've been pushing their other new hardware, the demand would have certainly fulfilled a supply of over 2 million"
Stephanie Llamas, SuperData
Llamas added that Sony may be deliberately limiting PSVR supply until it can do a better job with supporting the platform. "Had Sony pushed the PSVR the way they've been pushing their other new hardware, the demand would have certainly fulfilled a supply of over 2 million. However, given its quiet release it's clear they're being cautious before fully investing in the tech. Without the 'killer app' and the slow, steady release of AAA content, they will release less than 1 million devices until they have content they feel confident will bring in the praise they want. They can afford to take it slow since they have no competition for now, so their supply and sales will rise steadily into 2017 as opposed to riding the seasonal wave," she said.
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As for Oculus, Llamas believes they've taken a risk by possibly splitting their own user base. "The Rift's Touch controllers are an opportunity for Oculus to penetrate, but not many headsets have moved, especially with their round-about deal where purchasers earned $100 Oculus credit rather than just getting $100 off. Oculus's hardware release strategy has also slowed them down and split their user base, so developers are having to make some choices around whether they should develop for both Touch and non-Touch users. This means development has slowed and is becoming another barrier to growth," she remarked.
Looking at the non-VR games market, Nintendo may actually prove to be the biggest winner, thanks to updates both to Pokémon GO and selling out of its NES mini. "On mobile we recorded a spike in earnings as players made the most of the Thanksgiving special for Pokémon GO. The game's ability to stay in the forefront of people's minds as we approach the release date for Super Mario Run may prove beneficial for Nintendo, which has yet to make a convincing claim on the $38 billion mobile games market," said Joost van Dreunen.
Overall digital game sales this holiday are down 2% from 2015 so far, but the impact of digital has grown tremendously in just a few years. "In 2012 full game downloads accounted for only 6% of total unit sales around the Thanksgiving holiday in the United States. For 2016E that number was four times higher at 24%," van Dreunen said.
The other big contributor to the slow holiday start has been big discounting, according to Wedbush Securities' Michael Pachter. "We saw greater discounting of high-profile new video games this Black Friday compared to last year. Last year's top sellers, Activision Blizzard's Call of Duty: Black Ops III , Bethesda Softworks' Fallout 4, and EA's Star Wars Battlefront, saw sticky pricing on Black Friday, with the $60 price point remaining largely intact. While discounting of sports games happens each year, many other titles that maintain pricing on Black Friday were listed at discounts of 40% or more this weekend," he observed.
"For example, Walmart had EA's Battlefield 1 and Titanfall 2 at $27, and Microsoft's Gears of War 4 and Take-Two's Mafia III at $35. Walmart also had Activision Blizzard's Call of Duty: Infinite Warfare Legacy Edition, which includes Modern Warfare Remastered , for $57, a $23 discount. Discounting of Call of Duty: Infinite Warfare began earlier in the week, with widespread discounts of roughly $20 for the different versions of the game. Hardware discounting for the PS4 and Xbox One was largely consistent with 2015, as $50 discounts were commonplace."
Pachter also agreed that the "pace of the mix shift to digital full game downloads continues to be brisk," but we probably won't know whether digital sales fully made up for retail declines until we get the complete NPD report for 2016 sometime in January.