Issue #47
January 12, 2006
Wind Chill
Front Page

I hope everybody is enjoying the interesting weather that North America seems to be recieving lately. The blizzards on the praries have been mind-numbing (and fatal, incidentally), windstorms out west have created all sorts of shenanigans, and you can play soccer outdoors in Newfoundland.

Industry-wise, it's been a big week with December sales numbers from NPD and some Jack Thompson funx0rs down south. Also, the Big Three get hit with a blanket patent lawsuit and some studies both for and against games are published. It's a scientifically proven fact: scrolling down prevents brain freeze.

The votes have been talled; the democracy we know as the free market ran as smooth as ever this holiday. Consumers nationwide voted with cash and plastic alike, and NPD is here with December's sales figures. Each of the Big Three had at least one console cutting ahead of a million units, and I don't think anybody's unhappy with any of the data.

The overall console winner was the Nintendo DS (surprise) with 1.6 million new units nestled in the backpacks and purses of gamers across the US. Coming in strong second was the PS2, with 1.4 million in sales; proving conclusively that Sony's previous-generation console is far from obsolete. In third place, still exceeding one million units, was the Xbox 360. Anita Frazier, an analyst with NPD, pinned the sales of these three consoles as the foundation for overall strong sales last month, further lauding the Xbox 360 as the largest source of growth that gaming experienced this December. As per last month, here's your console data served up as CRUNCHY as I can make it. I've also included November's sales in white, for great justice.

US Console Sales (units, thousands) [GameDaily BIZ]
Nintendo DS
Nintendo DS
Xbox 360
Xbox 360

I think the PSP deserves a quick round of applause for outselling the GBA at nearly a third of the PSP's price point. It's the seventh straight month that the PSP is playing second fiddle to the DS, though.

December's hardware sales were strong; $1.6 billion, up nearly 60 percent from last year. Yearly hardware sales rose by more than 40 percent, to $4.6 billion. On software, December net $1.7 billion in sales for the industry, up slightly from last year, and added to the $6.5 billion in software sales since last December. Interestingly, yearly portable software sales increased by nearly 19 percent, while console software rose by a mere 2.6 percent; in terms of total software sales, however, portable stoftware is still less than a third of its console counterpart. To break it down:

December Game Sales (units, thousands) [GameDaily BIZ]
Gears of War (360)
Guitar Hero II (PS2)
Madden NFL 07 (PS2)
Legend of Zelda (GCN)
Legend of Zelda (Wii)
WWE Smackdown vs. Raw (PS2)
New Super Mario Bros. (NDS)
Call of Duty 3 (360)
Yoshi's Island 2 (NDS)
Call of Duty 3 (PS2)

This is the chart you've really been waiting for, though--total 2006 game sales. Two prominent Square-Enix RPG's made the final cut, Kingdom Hearts II and Final Fantasy XII.

2006 Game Sales (units, millions) [GameDaily BIZ]
Madden NFL 07 (PS2)
New Super Mario Bros. (NDS)
Gears of War (360)
Kingdom Hearts II (PS2)
Guitar Hero II (PS2)
Final Fantasy XII (PS2)
Brain Age (NDS)
Madden NFL 07 (360)
Tom Clancy's GRAW (360)
NCAA Football 07 (PS2)

Altogether told, the industry clocked in at $12.5 billion, outpacing 2005's total of $10.5 billion. A big thanks to everyone who voted. And just so we're clear, everyone voted. Whether you bought a game or two or chose to buy nothing, your action or lack thereof established December's placings. (That's more than I can say for an average Canadian national election.)

Source: GameDaily BIZ

Sales of the PS3 were the hot-button topic across the board this week, as people mixed NPD's sales figures with the official word from Sony and anecdotal evidence to create a wonderful flurry of negativity and speculation. The PS3 bears no resemblance to a duck, but everyone and their newt has deemed themselves to be SCE's judge and jury. Needless to say, Sony found their lack of faith disturbing, and was quick to issue their own interpretation of what went on.

First, some bittersweet news regarding Sony's sales targets. While they were pleased to announce that they had shipped one million units to North America, a survey from Enterbrain was released claiming that they sold 466,716 units in Japan. They had been projecting one million units in Japan by the end of the year, and upon news of the shortage, Sony's stock on the Tokyo Stock Exchange fell 2.7 percent to close 1.8 percent lower than opening.

Microsoft, in comparison, was pleased to announce that they had exceeded their goal of 10 million Xbox 360 units in the supply chain, with a final tally of 10.4 million. While Nintendo's been officially mum on sales, NPD data combined with Enterbrain's study gives us a total of more than two million units, not including European markets.

Sharp-witted analysts were quick to point out the vast discrepency between Sony's claim of one million units shipped and NPD's data, which claims that only 687K PS3's have moved past point-of-sale. PJ McNealy, of American Technology Research, described the difference as "troubling," and sounded off against Sony in a research report this week. He claims that the difference, which should be attributable to units still in transit, is too large. He went on to point out everything wrong with the PS3, but we've heard that tune sung before.

The real meat of his report, though, is the continuing claim that PS3's are in stock across the nation.

The demand for PS3's has slowed, according to assorted retailers. Ars Technica took quick survey of some Cincinnati/Boston area retailers and found PS3's sitting on shelves in various quantities. They checked Wal-Marts, Best Buys, and GameStops, and found units in both SKU's at almost every location. In contrast, you can't find a Wii for your life. McNealy's report detailed his previous assumption that supply and demand for the PS3 would catch up sometime in Q2 of 2007; apparently, this could be dialed back if sales continue to cool.

Sony's response to McNealy's report was terse, courtesy of Senior Director of Corporate Communications, Dave Karraker:

While we have yet to see this research, it appears Mr. McNealy's assumptions and conclusions are flawed. This research apparently fails to account for Canada, which, as an industry standard is 8 to 10 percent of North American sales. In addition, NPD does not report all of the Sony customers in North America. Based on the shipped figures we announced on Monday, we were bringing upwards of 170,000 units per week into the territory up until December 31. If this quantity of product sold to retailers was in transit or yet to be put on store shelves, that is no smoking gun. That is the reality of doing business on a massive scale, supplying more than 20,000 retail outlets across the country.

To the point. I like that. Regardless of these initial sales, the PS3 is technically superior to the rest of its competitors by leaps and bounds. In the long run, as developers begin to take advantage of the PS3's capabilities and as Sony wittles down its supply costs, the winner of the console wars could be a no-brainer. But that's just me.


I get to use my Jack Thompson logo again this week as I present you with a trifecta of video game legislation news. Three American jurisdictions are in the news this week, and Thompson had his hand in all three of their attempts at legislating games. As an added bonus, I bring you news from Germany, where their strict censorship claimed another victim.

Rep. David Hogue's attempt in 2006 to redefine violent games as a form of pornography was hung out to dry in the State Senate, despite winning the House with a vote of 56-8. The same bill is back (with some minor adjustments; mainly, it's become noticably less specific, which is patently frightening), courtesy of Rep. Scott Wyatt. The bill attempts to define a category of "innappropriate violence" based on "contemporary community standards."

Using very much the same language as the Utah bill, Massachusetts will be taking a run at defining video games as harmful to minors. Backed by a group of senators, Representatives, and a series of community leaders, this bill has Thompson's fingerprints all over it. Both the Utah bill and this one bear a striking resemblance to a Louisiana bill which was pwned by a federal judge last year, so the futures of both attempts are questionable.

Washington, D.C.
Moving down to a municipal level, large chunks a law that would have made it illegal to sell "M" games to minors were scrapped this week. The law, formerly the Youth Protection from Obscene Video Games Act, has been renamed the Consumer Education on Video and Computer Games for Minors Act. It passed in City Council this week as an education campaign for parents to become acquainted with the ESRB regulations; the original bill would have imposed $10,000 (!) fines to retailers who provide violent games to minors, and would have imposed $1,000 fines on parents and friends who did the same. Needless to say, after testimony from experts on Constitutional Law and a letter from the D.C. attorney general, that part of the bill is no more.

Crackdown, an Xbox 360 shooter that recieved an "M" rating in North America, has been blocked from release in Germany. The national German ratings organization, the USK, effectively prevented its release by refusing to classify it. It will not be allowed to be displayed in German stores, advertised, or sold into Germany over the internet. It is illegal to sell an unclassified game to minors, but an adult can ask for it in person from a retailer. On the ban, Microsoft said:

Microsoft respects the decision of the German ratings board--the USK--not to provide the title with a rating. While Microsoft will continue to follow its policy of not publishing unrated titles, we remain committed to delivering Crackdown and other top-quality entertainment experiences to age-appropriate audiences around the world.

Crackdown will join it's unclassified friends Dead Rising and Gears of War. (This comes while Germany tries to sort this stuff out.)

Sources: GamePolitics | GameSpot

Two stories today from scientists on two continents, each with a unique take on the role that video games are playing in today's society.

If you were here about a month ago, you probably read all about that study out of Indiana, where it was found that violent games tend to temporarily decrease activity to the prefrontal cortex. A similar study was released this week out of the Veterans General Hostpital in Taipei that flies in the face of scientific method everywhere. It appears to inform only as self-parody; a dire warning against drawing conclusions from incomplete data, and a good example of the ongoing debate over the validity of video games.

The study's author, Dr. Chow Yuan-hua, concluded that kids today lack language skills because of their tendency to play violent video games. She had twelve "young adults" play a "violent" video game for half an hour, and their brain activities were scanned. This was repeated once more, half an hour later.

Dr. Chow observed a decrease in blood flow to the frontal lobe; the part of the brain responsible for higher mental functions like speech and planning. Based on this, she concluded that violent games must be creating the phenomena known as "txtspeak", where people use shorthand typing to communicate methods electronically.

In other news, if you're in the market for a Ph.D., China's the place to go.

Back in the United States, an expert in education science propped up video games as the future of education in the information age, noting that the current education system was designed over a hundred years ago. David Williamson Shaffer described video games as a prime vehicle for integrating the study of technology, mathematics, and science into today's classrooms. He says:

People think that the way we teach kids in schools is the natural way we should learn. But young people in the United States today are being prepared for standardized jobs in a world that will, very soon, punish those who can't innovate. We simply can't 'skill and drill' our way to innovation.

Shaffer describes video games as a way for us to compete with China and India; countries that are producing high-quality technical workers at astounding rates. He says that using video games to educate can reach kids in a "relevant" way, allowing them to integrate learning with their other high-tech activities.

Source: China Post (via Joystiq) | Reuters

In a spiritual successor to a story from December, the Zune will soon be able to play games, according to games division VP Peter Moore. This, from a company that's distanced itself from the handheld gaming market for some time. While the games offered on the Zune are yet undefined, Microsoft's real competition in this area isn't Nintendo or Sony; the Zune is primarily a music player, and Apple's iPod is the real heavy hitter here.

Moore said that the Zune will have games by July of 2008. This is one of several facelifts the Zune is slated to recieve in the next few years; other upgrades include the potential for phone capabilities, wireless video sharing, and flash memory. If Microsoft begins to put RPGs on the Zune, I expect RPGamer will be there with bells on.

Source: Bloomberg

While there's been no news on the lawsuit against Nintendo for their Wii controller, new civil action was taken this week by Fenner Investments. This time, everybody gets a piece; Sony, Nintendo, and Microsoft have all been named as defendents in a patent lawsuit filed in Texas. Fenner is alleging that their 1998 patent on a "low-voltage joystick port interface" was violated by all three players' controller configurations. I am presuming that the lawsuit refers mainly to the PS2/GCN/Xbox systems, since the patent does not seem to apply to wireless inputs.

Of particular note is Fenner's history in the area. Fenner has settled out of court with several corporations regarding patent infringements, including Cisco, Nortel, and Juniper. While it's hard to say just how these settlements played out, if they're willing to do it again with defendents like these, I can only surmise that it must have been a positive experience for them in the past.

I tried reading the patent filing, then remembered why I'm not an electrician.

Source: Ars Technica

This month is host to the big NPD CRUNCH so I encourage you to head back up there. As an aside, here's some tasty tidbits:

Nintendo's Dough (billions, Yen) [GameDaily BIZ]
Sales (new)
Sales (old)
Operating Profit (new)
Operating Profit (old)

Nintendo's DS sales have taken Nintendo by surprise, prompting them to recalculate sales projections for the next fiscal year. Their newfound economic success has prompted the big "N" to issue a $4.02 dividend for this fiscal year; that, up from the planned $3.35. Also, they plan to sell 23 million DS units by March 2007, up from previous projections of 20 million. DS software is projected to reach 100 million units; totally eclipsing previous estimates of 82 million.

That's a wrap. Do enjoy the weather, whatever it may be.

//My windows are covered in two inches of ice;
Theo Litowski


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