Ampere Analysis Console sell-through EoY 2022: PS5 30m, XSX|S 18.5m, NSW 119.5m

[enpleinjour]

I think I've gone over this before but 2M unsold is actually fairly reasonable for a console that has proper supply/demand control, and Microsoft is notorious for over shipping in the holiday quarter.

Just a quick comparison, PS4 had 1.8M unsold after 2015 and that was properly supplied. PS5 had 2.1M unsold.

Series S sell through was bad, not shipments. It's impossible there's less than 2M unsold XBS. Next quarter's Xbox result are going to be awful because of that.

No?

Xbox already had more units unsold than PS5 to begin with. I think it's fairly agreeable that Series S had more units on shelves at any given time over PS5 before Q4 2022 to begin with. It's only with Q4 did Sony ship so much that they now had a 2M gap between sold through and shipments.

Xbox had been at that level already before holiday shipments and low holiday sell through.

This quarter, I ship 8M units of Product A
This quarter, You ship 4M units of Product B

This quarter, Product A sells through 6M to consumers
This quarter, Product B sells through 2M to consumers

Both have 2M unsold.

Last quarter, Product A shipped 3M and sold through 2.5M
Last quarter, Product B shipped 2M and sold through 1M.

Both quarters combined, Product A shipped 11M units and sold through 8.5M, leaving 2.5M unsold.

Both quarters combined, Product B shipped 6M units and sold through 3M, leaving 3M unsold.

What does this have to do with production? It's entirely down to sell through rates.

How much one ships for the quarter and part of the next quarter absolutely is a function of what one expects to sell in those quarters, which is probably what @1st_horseman is saying.

Playstation numbers are not going to representative as a whole to Xbox (it could be representative relatively as shown below) because Playstation sells almost twice as much as Xbox. It makes very little sense for Xbox to have twice as many consoles in the channel, while selling nearly half as less as Playstation and selling even less than half for the next quarter. That is catastrophic levels of market misread imo as we will see below:

PS4	Sold through	Shipments	Difference	Q3	Q4	SUM	Diff/Q3	Diff/Q4	Diff/SUM
2013	4.2	4.5	0.3	4.5	3.1	7.6	0.07	0.1	0.04
2014	18.5	20.2	1.7	6.4	2.3	8.7	0.27	0.74	0.20
2015	35.9	37.7	1.8	8.4	2.4	10.8	0.21	0.75	0.17
2016	53.4	57.1	3.7	9.7	2.9	12.6	0.38	1.28	0.29
2017	73.6	76.5	2.9	9	2.5	11.5	0.32	1.16	0.25
2018	91.6	94.2	2.6	8.1	2.6	10.7	0.32	1	0.24
2019	106	108.8	2.8	6	1.4	7.4	0.47	2	0.38

PS4 channel supply (difference) at their highest were 47% of the Q3 shipment, or 38% of Q3+4 shipments.

• PS5 2022:
  • 2/7.1 = 28%
  • 2/(7.1+6) = 15% (expected Q4 shipment)
• 8M XBS sales, we're looking at something like ~3.5 sales in the holiday quarter
  • At the top end you are estimating 4M XBS in the channel, 114% of the Q3 quarter
  • At the low end of 3M, 86% of the Q3 quarter

These are not reasonable channel stuffing situations.

 

[Xevross]

How much one ships for the quarter and part of the next quarter absolutely is a function of what one expects to sell in those quarters, which is probably what @1st_horseman is saying.

Playstation numbers are not going to representative as a whole to Xbox (it could be representative relatively as shown below) because Playstation sells almost twice as much as Xbox. It makes very little sense for Xbox to have twice as many consoles in the channel, while selling nearly half as less as Playstation and selling even less than half for the next quarter. That is catastrophic levels of market misread imo as we will see below:

PS4	Sold through	Shipments	Difference	Q3	Q4	SUM	Diff/Q3	Diff/Q4	Diff/SUM
2013	4.2	4.5	0.3	4.5	3.1	7.6	0.07	0.1	0.04
2014	18.5	20.2	1.7	6.4	2.3	8.7	0.27	0.74	0.20
2015	35.9	37.7	1.8	8.4	2.4	10.8	0.21	0.75	0.17
2016	53.4	57.1	3.7	9.7	2.9	12.6	0.38	1.28	0.29
2017	73.6	76.5	2.9	9	2.5	11.5	0.32	1.16	0.25
2018	91.6	94.2	2.6	8.1	2.6	10.7	0.32	1	0.24
2019	106	108.8	2.8	6	1.4	7.4	0.47	2	0.38

PS4 channel supply (difference) at their highest were 47% of the Q3 shipment, or 38% of Q3+4 shipments.

• PS5 2022:
  • 2/7.1 = 28%
  • 2/(7.1+6) = 15% (expected Q4 shipment)
• 8M XBS sales, we're looking at something like ~3.5 sales in the holiday quarter
  • At the top end you are estimating 4M XBS in the channel, 114% of the Q3 quarter
  • At the low end of 3M, 86% of the Q3 quarter

These are not reasonable channel stuffing situations.

I would say the Series S situation in the holidays last year was close to a catastrophic misread of the market. They piled in loads of supply of it and had cheap deals but November NPD results were awful and as we can see WW sellthrough is low. I would wager Xbox were expecting at least 1M more Series S to be sold through worldwide than there were.

2.5-3M in the channel for ~21-21.5M shipped sounds about right to me.

 

[Welfare]

How much one ships for the quarter and part of the next quarter absolutely is a function of what one expects to sell in those quarters, which is probably what @1st_horseman is saying.

Playstation numbers are not going to representative as a whole to Xbox (it could be representative relatively as shown below) because Playstation sells almost twice as much as Xbox. It makes very little sense for Xbox to have twice as many consoles in the channel, while selling nearly half as less as Playstation and selling even less than half for the next quarter. That is catastrophic levels of market misread imo as we will see below:

PS4	Sold through	Shipments	Difference	Q3	Q4	SUM	Diff/Q3	Diff/Q4	Diff/SUM
2013	4.2	4.5	0.3	4.5	3.1	7.6	0.07	0.1	0.04
2014	18.5	20.2	1.7	6.4	2.3	8.7	0.27	0.74	0.20
2015	35.9	37.7	1.8	8.4	2.4	10.8	0.21	0.75	0.17
2016	53.4	57.1	3.7	9.7	2.9	12.6	0.38	1.28	0.29
2017	73.6	76.5	2.9	9	2.5	11.5	0.32	1.16	0.25
2018	91.6	94.2	2.6	8.1	2.6	10.7	0.32	1	0.24
2019	106	108.8	2.8	6	1.4	7.4	0.47	2	0.38

PS4 channel supply (difference) at their highest were 47% of the Q3 shipment, or 38% of Q3+4 shipments.

• PS5 2022:
  • 2/7.1 = 28%
  • 2/(7.1+6) = 15% (expected Q4 shipment)
• 8M XBS sales, we're looking at something like ~3.5 sales in the holiday quarter
  • At the top end you are estimating 4M XBS in the channel, 114% of the Q3 quarter
  • At the low end of 3M, 86% of the Q3 quarter

These are not reasonable channel stuffing situations.

Or another way to look at it, XBS sell through was 1M to 2M less than Microsoft expected for Q4 2022.

As I've been saying, Xbox sell through was not what Microsoft expected. Don't know why we are trying to talk like the holiday performance for XBS was actually what Microsoft intended.

 

[salesguy]

I've never trusted Ampere TBH. Seems I recall some very bad estimates by them before. I generally dont trust anything not sourced in NPD, GFK/GSD and Media Create/Famitsu. Which there seems zero indication I see that these estimates are.

These particular estimates of course seem reasonable, but no more so than many of the more sophisticated posters here and possibly no more official.

 

[Fatal Nutritionist]

I doubt Xbox was intending to sell 1M more S by itself knowing they didn't have the Xbox Series X units to send out.

We can easily estimate that most Xbox sales during the holidays were Xbox Series S everywhere for that exact reason, so we are looking at a a few million sales during the holiday everywhere for the Xbox Series S alone? I doubt Microsoft was expecting 4 or 5 million of Xbox Series S, which is the only unit they could have over shipped.

Also did we ever get UK sales numbers for XBS for the 4thQ?

 

[enpleinjour]

I would say the Series S situation in the holidays last year was close to a catastrophic misread of the market. They piled in loads of supply of it and had cheap deals but November NPD results were awful and as we can see WW sellthrough is low. I would wager Xbox were expecting at least 1M more Series S to be sold through worldwide than there were.

2.5-3M in the channel for ~21-21.5M shipped sounds about right to me.

While the holidays numbers were very bad, the months before were showing a similar trend, so I would have expected MSFT to have a better prediction.

Or another way to look at it, XBS sell through was 1M to 2M less than Microsoft expected for Q4 2022.

As I've been saying, Xbox sell through was not what Microsoft expected. Don't know why we are trying to talk like the holiday performance for XBS was actually what Microsoft intended.

Like I said, using absolute numbers is not right as the shipment numbers for PS and XB are near 100% different.
2M for Playstation is ~30% more than their actual shipment. For Xbox that would be a near 60% more of their shipment. It's an enormous miss of expectations if so, which is why I do not find it reasonable.

Either way, its a minor difference in the long run and I doubt we will ever find the real answer.

 

[Welfare]

While the holidays numbers were very bad, the months before were showing a similar trend, so I would have expected MSFT to have a better prediction.



Like I said, using absolute numbers is not right as the shipment numbers for PS and XB are near 100% different.
2M for Playstation is ~30% more than their actual shipment. For Xbox that would be a near 60% more of their shipment. It's an enormous miss of expectations if so, which is why I do not find it reasonable.

Either way, its a minor difference in the long run and I doubt we will ever find the real answer.

I think you're forgetting that 2M unsold is about where normal supply is at for regular sell through, regardless of how high the Q4 shipments was. Xbox One had similar if not more units unsold than PS4 despite shipping less overall.

Xbox shipping what they did in Q4 with the expectation they'd have ~2M in the channel, and then having way more than that due to lower than expected sell through, isn't even new. Same exact thing happened at the XB1 launch. They had 900K unsold compared to PS4's 300K and XB1 sell through was much worse than PS4 after 2013.

This is my post to you back in January showing that Microsoft is much more Q4 focused than Sony and Nintendo, so the over shipping isn't questionable.

Xbox FY23 Q2 Results: Gaming Revenue declined 13% ($4.758B), Content & Services -12%, Hardware -13% | Game Pass Growth YOY | MAU = 120M (Record)

I see that as a new game. Bowser's Fury added a lot Bowser's Fury is indeed a brand new game but the actual Super Mario 3D World on Switch is a straightforward (enhanced) port of the Wii U version.

www.installbaseforum.com

Like, I'm 1000% sure Microsoft didn't expect to only be up slightly YOY in the November 2022 NPD when they price cut to $249. There's no world where Microsoft actually projected Xbox does as bad as it did last holiday. They did miss targets, they have a ton of units unsold after the holidays, this is not new behavior for Microsoft.

 

[AstroB]

Nintendo: only includes royalties on physical AND digital 3rd party software/hardware revenues

I can't find this information in the financial statements.
Is it specifically pointed somewhere in the reports?

 

[D.Lo]

Company revenues given in IR don't show the entire marketplace. And they're also inconsistent between the 3 console makers. In a nutshell:

PS/Xbox: only includes royalties on physical 3rd party software/hardware revenues

Nintendo: only includes royalties on physical AND digital 3rd party software/hardware revenues

Huh?

I thought Sony included the entire digital purchase cost as 'revenue' despite them just being a storefront for third party titles?
But Nintendo only includes their cut of digital third party software, not the whole sticker price.

Sony Revenue: Hardware+first party software+digital third party software (despite 70% of this being passed straight on)+30% of physical third party software

Nintendo Revenue: Hardware+first party software+30% of physical third party software+30% of digital third party software

 

[MegaXZero]

I can't find this information in the financial statements.
Is it specifically pointed somewhere in the reports?

Page 14, the note. They been noting this for I think a year or two now.

 

[fiendcode]

I can't find this information in the financial statements.
Is it specifically pointed somewhere in the reports?

https://www.nintendo.co.jp/ir/pdf/2022/annual2203e.pdf

Page 57, (8)(i)

"However, in cases such as downloadable software from software publishers, the Company recognizes revenue equal to the amount of sales commission that the Company group will receive."

There's also usually a notation in their IR results when giving revenue breakdowns.

Huh?

I thought Sony included the entire digital purchase cost as 'revenue' despite them just being a storefront for third party titles?
But Nintendo only includes their cut of digital third party software, not the whole sticker price.

Sony Revenue: Hardware+first party software+digital third party software (despite 70% of this being passed straight on)+30% of physical third party software

Nintendo Revenue: Hardware+first party software+30% of physical third party software+30% of digital third party software

Sorry, I should've worded it better but yes, Sony/MS claim 100% of digital while Nintendo only includes their 30% cut.

Also on physical software it's not usually 30% but around 15% for PS/Xbox and 10-25% for Nintendo. Nintendo's range is different because their platform fees on packaged games is determined by rom size rather than MSRP. I've no idea on licensed hardware and peripherals though.

 

[D.Lo]

Sorry, I should've worded it better but yes, Sony/MS claim 100% of digital while Nintendo only includes their 30% cut.

Also on physical software it's not usually 30% but around 15% for PS/Xbox and 10-25% for Nintendo. Nintendo's range is different because their platform fees on packaged games is determined by rom size rather than MSRP. I've no idea on licensed hardware and peripherals though.

Yeah you made it sound like Nintendo claims more, when in reality it's Sony (and evidently MS) who inflate revenue by reporting the retail price of other people's products they sell for them.

I was just using shorthand for retail percentage, of course it makes sense given there's an actual retailer there who needs a cut too.

 

[gtj1982]

When will the PS5 channel stuffing scenario for this quarter end? It’s now March and I still haven’t noticed PS5s flooding retail shelves at least here in the US. All I’ve actually noticed in the reports we have received is that increased supply has lead to increased sales.

 

[SSN]

When will the PS5 channel stuffing scenario for this quarter end? It’s now March and I still haven’t noticed PS5s flooding retail shelves at least here in the US. All I’ve actually noticed in the reports we have received is that increased supply has lead to increased sales.

Yeah that narrative is so annoying! People need to realise that PS5 needs to have a good retail presence in more countries than Nintendo & Xbox. 3-4M difference b/w shipped vs sold through would be considered good supply for PS5 especially in what will presumably be its peak year.

Like seriously, I am seeing relatively more bullish projections for NSW in its 7th year than for PS5 in its 3rd. Lol

 

[allan-bh]

When will the PS5 channel stuffing scenario for this quarter end? It’s now March and I still haven’t noticed PS5s flooding retail shelves at least here in the US. All I’ve actually noticed in the reports we have received is that increased supply has lead to increased sales.

Well, we don't know how many units Sony is actually shipping, only a forecast.

 

[Baki]

When will the PS5 channel stuffing scenario for this quarter end? It’s now March and I still haven’t noticed PS5s flooding retail shelves at least here in the US. All I’ve actually noticed in the reports we have received is that increased supply has lead to increased sales.

Yeah that narrative is so annoying! People need to realise that PS5 needs to have a good retail presence in more countries than Nintendo & Xbox. 3-4M difference b/w shipped vs sold through would be considered good supply for PS5 especially in what will presumably be its peak year.

Like seriously, I am seeing relatively more bullish projections for NSW in its 7th year than for PS5 in its 3rd. Lol

It’s called concern trolling. Classic interweb discourse.

 

[gtj1982]

Well, we don't know how many units Sony is actually shipping, only a forecast.

So it will go on until we get the actual Q4 results? I’m thinking February and March NPD will kill any doubt that Sony will meet their forecast.

 

[D.Lo]

People need to realise that PS5 needs to have a good retail presence in more countries than Nintendo & Xbox.

Why does PS5 need good retail presence in more countries than Nintendo?

 

[The Hunter]

So it will go on until we get the actual Q4 results? I’m thinking February and March NPD will kill any doubt that Sony will meet their forecast.

sony has 2 million consoles shipped and available since 31 December. Let's say they sell 4-5 million consoles to consumers in this quarter, that means they have sold the 2 million consoles already available since December + another 2-3 million consoles shipped in the current quarter. To get to the forecast they are missing another 3-4 million consoles that will have to be shipped but will remain unsold, 1-2 million more than the consoles shipped but remained unsold in December. I think in sony's plans there is a slowdown in shipments/production for the next quarter considering that they will already have the consoles available to sell in the next quarter, to concentrate the shipments for the last quarters of the year. In fact they shipped 2.4 million consoles in April -June period last year, so even a 2.6 or 2,8 million consoles shipped in the next quarter would still be an increase and a positive result for investors. Maybe I'm too optimistic, but I think sony knows what its doing and will be able to meet the forecasts

 

[fiendcode]

When will the PS5 channel stuffing scenario for this quarter end? It’s now March and I still haven’t noticed PS5s flooding retail shelves at least here in the US. All I’ve actually noticed in the reports we have received is that increased supply has lead to increased sales.

When we get results from Q4 FY23 (if they miss target) or even Q1 FY24 (if they make target) and see if they did or not.

Channel stuffing doesn't mean anecdotal shelf stuffing. Retail doesn't really work that way.

 

[gtj1982]

When we get results from Q4 FY23 (if they miss target) or even Q1 FY24 (if they make target) and see if they did or not.

Channel stuffing doesn't mean anecdotal shelf stuffing. Retail doesn't really work that way.

So what’s the basis for channel stuffing now besides anecdotes and gut feelings? So far actual data has shown that supply has gone up and sales have gone up. Now we wait to see what the supply actually was. Even with 2 million in the channel at the end of Q3 Sony would want to ship enough to have at least 3 million in the channel at the end of Q4 to have a healthy supply at retail WW. Q1 should be a return to a more normal shipping pattern.

 

[allan-bh]

So what’s the basis for channel stuffing now besides anecdotes and gut feelings? So far actual data has shown that supply has gone up and sales have gone up. Now we wait to see what the supply actually was. Even with 2 million in the channel at the end of Q3 Sony would want to ship enough to have at least 3 million in the channel at the end of Q4 to have a healthy supply at retail WW. Q1 should be a return to a more normal shipping pattern.

Maybe the fact that Sony's forecast, if confirmed, would be the best Q1 ever for a console and we aren't seeing signals of sales being that high