January 2008 NPD Data

Video game hardware sales in January were below the market's expectations. Total hardware units came in at 1.227 million units, 23.86% below the market's expected 1.611 million units. The disappointing total hardware sales were largely due to surprising supply constraints with the Nintendo consoles. Nintendo Wii only sold 274,000 units, well below the market's 396,900 expectation. The Nintendo DS was even futher constrained, with only 251,000 units sold compared to the expected 483,700 units.

For the first time in the United States, the PS3 outsold the Xbox 360 with 269,000 units and 230,000 units respectively. The PS3 outperformed expectations by 28.5% while the Xbox 360 underperformed by 20.3%. This pattern illustrates the extreme mutability of video game hardware sales. Retailers will recognise the influence of consumer fads and technological improvements respectively, likewise website proprietors will also see familiar patterns. One moment a site like Poker dk could be the most popular online poker site, and a few months later it could be another site entirely.

Sony PSP sales were exactly inline with 230,000 units. The prediction market expected 233,000 units.

Growth in video game sales were well ahead of expectations for January, traditionally a slower month following the strong holiday season. Total video game software sales grew 11% from $549.5 million in January 2007 to $610.6 million.

The month's big winner was once again Activision's Call of Duty 4. The Xbox 360 SKU sold 330,900 units compared to an expectation of 359,700 units.

Sales of Super Mario Galaxy (Wii) slowed much faster than expected, dropping to 172,000 units. The prediction market expected the game to continue with 391,800 units sold.

Guitar Hero III: Legends of Rock (Wii) crushed expectations with 239,600 units sold, 36% over the forecasted 175,900 units. This beats Rock Band (Xbox 360), which sold 183,800 units, just 6.84% below the expected 197,300 units.

The following tables compare market expectations on the simExchange and actual results as reported by the NPD Group.

• US Hardware in January 2008

  Title	Actual units	Expected units	% From Expected
  Nintendo Wii	274,000	396,900	-30.96%
  Nintendo DS	251,000	483,700	-48.11%
  Xbox 360	230,000	288,600	-20.30%
  PlayStation Portable	230,000	233,000	-1.29%
  PLAYSTATION 3	269,000	209,300	+28.52%
  Total Hardware Units	1,227,000	1,611,500	-23.86%

• US Software in January 2008

  Rank	Title	Actual units	Expected units	% From Expected
  1	Call of Duty 4: Modern Warfare (Xbox 360)	330,900	359,700	-8.01%
  2	Wii Play (Wii)	298,100	--	--
  3	Guitar Hero III: Legends of Rock (Wii)	239,600	175,900	+36.21%
  4	Rock Band (Xbox 360)	183,800	197,300	-6.84%
  5	Guitar Hero III: Legends of Rock (Xbox 360)	182,700	--	--
  6	Super Mario Galaxy (Wii)	172,000	391,800	-56.1%
  7	Burnout Paradise (Xbox 360)	144,100	--	--
  8	Call of Duty 4: Modern Warfare (PS3)	140,000	--	--
  9	Mario Party DS (DS)	138,500	--	--
  10	Mario & Sonic at the Olympic Games (DS)	133,000	154,400	-13.86%
  NR	Burnout Paradise (PS3)	83,000	110,900	-25.16%
  NR	Advance Wars: Days of Ruin (DS)	81,000	102,400	-20.9%
  NR	Kingdom Under Fire: Circle of Doom (Xbox 360)	52,000	80,300	-35.24%
  NR	Sonic Riders: Zero Gravity (Wii)	39,000	97,500	-60.00%
  	Total Tracked Software Units	1,314,300	1,670,200	-21.31%
  	Total Software Sales	$610.6 million	$523.1 million	+16.73%

How exactly does this work?

Gamers and developers sign up on the simExchange for a free trading account. Using virtual currency called DKP, players buy virtual futures contracts that are under-predicting sales and short sell futures that are over-predicting sales. This concept is widely known as "the Wisdom of the Crowd" and this system is known as a "prediction market."

About the predictions

Predictions on the simExchange should become more accurate over time as (1) the diversity of the pool of traders increases and as (2) more accurate players are rewarded with more virtual currency for their accuracy (thereby enabling them to form more predictions) and less accurate players lose virtual currency (thereby discounting their ability to form more predictions).