The Sony Angle: Metal Gear? Metal Gear!

The PlayStation 3 exclusive, Metal Gear Solid 4, was the #1 selling game in June 2008 and Sony's first #1 title for its newest console. Combining bundled software with individual software sales, MGS4 moved nearly 1 million units in June. After less than a month in sales, here is how its stacks up with previous generations of Metal Gear Solid games, courtesy of the NPD Group:



Most people following the market want to know: Did it help push sales of Sony's PlayStation 3? Here are the facts we have:

• According to NPD Group figures, we know that as many as 220,000 of the 80GB PS3/MGS4 bundles were sold during June. That's around the same number of PS3 systems sold in May, the previous month.
• In sum, the system sold around 406,000 systems or 81,000 systems per week, a 55% increase in sales from the previous month and the highest rate ever for the PS3 outside of November/December holiday periods.
• Approximately 1 in every 4 sales of MGS4 was bundled with PS3 hardware.

Given these facts, it seems clear that the release of Metal Gear Solid 4 influenced PS3 sales.

However, we should note that this was not a perfect demonstration of the power of the Metal Gear Solid franchise. The MGS4 hardware bundle included an 80GB PS3, a model that not only has twice the hard drive space of the 40GB model but also includes some backward compatibility with PlayStation 2 software (a feature the 40GB model lacks completely). Given that this 80GB model has been difficult to find at retail for months, some pent-up demand for these features alone may have contributed to PS3 sales in June. Moreover, aggressive marketing of the PS3 – like the $100 gift-card offer from Wal-Mart – may have helped attract more consumers than Metal Gear Solid would have by itself.

With the recent announcement of a new 80GB PS3 model as the “mainstay of the company's hardware line-up”, Sony appears to be ending the multiple model strategy it has followed to date. The new configuration will also put Sony's system price firmly at $400 and end the inclusion of hardware-enabled PS2 compatibility. By announcing the system in July but not launching it until September, Sony may be making it more difficult to clear the remaining stock of 40GB PS3 systems, especially in the absence of some price cut.

As a result of all these factors – the Metal Gear Solid 4 launch, possible higher demand for 80GB systems, aggressive marketing, and an announced future price drop – Sony may see PS3 sales drop precipitously in July from the record high in June. Moreover, Sony probably still needs to get much closer to $300 and ultimately $200 before it can hope to achieve the 150 million system installed base that SCE president and CEO Kazuo Hirai has set as a goal for the PS3 lifetime. Sony continues to strongly signal that profitability, not marketshare, is its near term goal but at some point a larger installed base will be necessary to realize greater profits from the PS3 venture.

Sony's other systems, the PlayStation Portable and PlayStation 2, recorded strong increases in sales in June. The God of War: Chains of Olympus bundle no doubt contributed to the increased PSP sales. Increased PS2 sales are somewhat surprising, and difficult to explain without more information on which software titles drove consumer interest.

In its materials to the press Sony announced $298 million in PlayStation-branded software sales for June 2008, an increase of 52% from June a year ago. While those figures are certainly impressive, software sales across the board increased by over 60%, which means that Sony's share of the software market actually dropped (to 34%, down from 36%). Without the contribution of the Metal Gear Solid 4 launch, that share would have fallen even further, although Sony would still have been able to claim an increase in total dollars.

Next: Microsoft