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NPD: Behind the Numbers, November 2010

Last Thursday, the gloom that has surrounded retail video game sales in the U.S. lifted – perhaps only temporarily – with the release of the November 2010 hardware, software, and accessory sales estimates from the retail-tracking NPD Group.

Not only was it the biggest November on record, but it also hosted the biggest single software launch in American history. Activision Blizzard's Call of Duty: Black Ops, developed by Treyarch, leapt to 7th on the all-time best-selling sales chart with 8.4 million units of sales in a mere 19 days on the market.

Furthermore, Microsoft also released its new Kinect camera – which permits controller-less interactions – for the Xbox 360, driving accessory sales to an astonishing $413 million dollars, the largest single-month total for that segment of the market outside of December, and a 69% year-over-year increase from 2009.

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Christopher2863d ago (Edited 2863d ago )

Honestly. November-December belong to Activision with both CoD:BO and WoW:Cataclysm. Two massive video game releases in the two busiest months of the year for video game purchases. I'm sure subs for WoW went up a few million as old accounts were reactivated to try the new expansion.

JokesOnYou2863d ago (Edited 2863d ago )

wrong reply, see below

2863d ago
The Maxx2863d ago

Looks like MS did a good job with that $500 million marketing expense and it's paying off.

"Furthermore, Microsoft also released its new Kinect camera – which permits controller-less interactions – for the Xbox 360, driving accessory sales to an astonishing $413 million dollars, the largest single-month total for that segment of the market outside of December, and a 69% year-over-year increase from 2009."

$413 million in sales done in 1 month. The $500 million spent will be all regained and more by end of December.

Christopher2863d ago (Edited 2863d ago )

You do know that the $413m sales isn't profit, that's total sales based on off-the-shelf cost. Only a fraction of that is profit for Microsoft.

$413,000,000 / 150 = 2,753,333 Kinect sales. Of course, those totals for accessories doesn't take into account other accessory sales, so this figure could be lower. Not likely but too much, though. I'm not sure Microsoft is going to meet their 5m goal, but they will definitely make their previous 3m goal.

Microsoft will have to sell a minimum of 10m Kinect units (assuming an extremely generous $50 profit for each $150 sale) to make up for their marketing costs. And that doesn't include any previous marketing expenses (conventions, displays at malls prior to release, etc.) or its research and development costs.

gamingdroid2863d ago (Edited 2863d ago )

Then again, MS doesn't just make money of each Kinect sold as it makes money from additional Xbox 360's sold, additional accessories for those Xbox 360 solds, games, downloadable content, Xbox Live membership and ownership in a new business venture that hopefully generates a profit over the life of the brand.

More often than not, people only look at the short term profit, but do you ask a small business owner if he is looking to recoup the cost of starting his business the first two months?

Advertisement is an investment for the long term in the brand name and product trust. You rarely if ever expect it to pay off during the campaign.

The research cost is amortized over many other different departments as well as being used for other avenues of business. As far as I can tell, Kinect is a very healthy development unlike the questionable Windows Phone 7 investment so far.

"I'm not sure Microsoft is going to meet their 5m goal, but they will definitely make their previous 3m goal."

MS already reportedly sold 2.5 million Kinect in 25-days in November. That is about 100k units per day. You still got more than 25-days in the biggest shopping month of the year so surpassing the 5-million wouldn't suprise me. The 3 million units sold goal is probably already surpassed by the time they reported the 2.5 million units sold....

Christopher2863d ago (Edited 2863d ago )

Nowhere did I not say it wasn't a longterm plan or say that they don't make money elsewhere. I equated the cost of marketing Kinect to Kinect sales, that's all.

As far as longterm, they seem to be doing well towards that. High initial base compared to their primary competitor will lead to increased third-party support. I'm not sure they'll see much profit in their first year overall, but if they continue to grow the Kinect base the way they have, they're setting up for a very good future with the product as long as the attach rate is reasonable.

gamingdroid2863d ago

I'm just pointing out that very often, people tend only to talk about the short term investment ignore the long term and proclaim that it is a bad investment.

If you are going to compare a long term investment to a short term benefit, then I think it is appropriate to mention the long term benefit as well.

Otherwise it might seem misleading intentional or not. I was just trying to point that out.

JokesOnYou2863d ago (Edited 2863d ago )

As surprising as it seems everybody spends money to make money, I remember hearing sony spent $135m just to advertise they were launching the ps3 slim in Euro, who knows what the total is for the US & Japan was????, I'm sure sony spends a considerable amount on ps3, move etc but its only micro that people hate on for advertising: http://www.pushsquare.com/6...

Does micro spend more on advertising, YES but thats just a reality that micro has more cash flow to spend than sony. The 500mil will be spent over time, its not like its just for a few days, a few ads, a few celebrity endorsements and a giveway event, no its a set amount put aside for a continous ad campaign which started prior to kinect launch and through out the holidays well into the new year. Although its alot of money what people dont realize is that its an investment, folks hate when micro advertises multiplats but when you see the gap in software sales for those titles in 360 favors, its micro laughing all the way to the bank. I'm sure micro are well on their way to recouping their expenses for kinect given the success its had so far.

-In the end advertising is pointless if the product itself is NOT compelling, see micro's efforts with Mobile PC's, Windows ME & Kin, all flopped hard despite huge ad campaigns.

+ Show (1) more replyLast reply 2863d ago
insomnium22863d ago (Edited 2863d ago )

No it won't. Kinects don't grow on trees you know. They need to be manufactured.

I'm not surprized YOU say that though T9.

2863d ago
disturbing_flame2863d ago

Gamers got passion for numbers.

Serious business.

Hopefully some of us only play games.

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