Feel free to correct me if I have it wrong but after 2 days of research here is what I understand is going with the November NPD report.
A) More Hardware Sales actually occured but at reduced prices. Therefore, net net..a 9% drop in total revenue.
B) 34% drop due to Microsoft Kinect comparisons. There wasn't any great accessory that released with any great fanfare.
XBOX 360 and Playstation 3 UDRAW tablet may count as an accessory. Unfortunately, it has received few customers accepting it.
And given the widespread acceptance of the Kinect, there aren't as many customers that want to buy it...that haven't already done so. Plus, I am not convinced that the XBOX 360 Kinect Bundles are factored into NPD's report as *both* a Hardware and Accessory sale. In my opinion, I think they just tally it up as a Hardware sale only.
Like the 3DS Zelda 3DS Mario bundles are tallied up as HARDWARE purchases rather than a Hardware + Software purchase.
Correct me if I am wrong. The NPD Report isn't very clear.
And of course Software including PC games was up 16%.
Net overall retail sales gain of .4% year over year.
It's easy to dismiss the entire report as meaningless simply by the fact that overall retail sales only up .4%.
Except for 1 thing... Profit Margins.
Software carries bigger profit margins than Hardware and Accessories. In 2010 we saw the exact opposite November as in 2011's November. We saw Hardware + Accessories way up while Software (other than Call of Duty Blackops) was a disappointment.
In January 2011 Rick Aristotle Munarriz wrote some comments on both Gamestop and the 3DS.
For the 3DS, back then Rick stated paraphrased, "Without a price cut to the 3DS this system isn't going to sell."
Well..He was right... Without one it wouldn't sell... But, the price cut did happen and now sales skyrocketed.
This opens up a large user base...can't sell software without first selling the hardware. Can't get 3rd Party Development Houses on board unless you have a large enough user base to attract them with.
Remember...The 3DS's competition IS NOT the PS VITA. It is the Smartphone + Tablets...At least in the eyes of Gamestop Shorts/Puts buyers.
Wow..I've said a lot.....
But bottom line to wrap this up... An increase in Software is far more important in my view in terms of revenue/earnings than an increase in Hardware/Accessories.
An increase in Hardware/Accessories is what I call a "Leading Indicator" to an increase in Software.
We saw an increase last November in HARDWARE and SOFTWARE...on a Per Unit of Sale basis.
A DROP in Revenue on the Hardware Side (thus) is no big deal for long investors. It's unit of sale that matters the most.
It's like this....Ask yourself why Amazon is selling the Kindle Fire for a loss....and you'll understand why the PRICE CUTTING on the HARDWARE is a net positive for RETAIL.