Customers are buying Microsoft's Xbox One and Sony's PlayStation 4, but they appear to be buying them for different reasons than the one that powered previous console launches.

Though each company has sold more than 3 million consoles since their November launches, those sales have not created a surge in game sales or even a hit title for either console.

Go back to the Atari 2600 (the great-grandfather of the modern videogame system) and it was a game -- in that case, the first home version of Pac-Man -- that brought customers flocking. The same was true when Super Mario Bros. led the original Nintendo to the top of the gaming heap. Games have more or less been the driving force behind console sales ever since. Even with the latest generation of consoles, both Sony and Microsoft devoted much of their launch press events to showing off the lineup of games made exclusively for their machines.


But while customers are buying the new consoles in large numbers, videogame sales have actually fallen. Wedbush analyst Michael Pachter noted that December U.S. console/handheld software sales were down 17% compared with last year, coming in at $1.28 billion, well below his estimate of $1.53 billion.

Why are sales so soft?

While some of the drop might be because consumers blew all their discretionary money on the $499 Xbox One or the $399 PlayStation 4, that argument carries little weight. Videogame consumers have historically wanted to put their new consoles through their paces with the hottest titles. Since neither console in its basic configuration comes bundled with one, you would think the 6 million people who bought new consoles would have picked up a game or two.

Liam Callahan, an analyst at NPD, told the Wall Street Journal that this year's new releases have not sold well. Further, NPD reports,  games specifically created for the new devices, such as Microsoft's Roman soldier game "Ryse: Son of Rome" and Sony's "Killzone: Shadow Fall," did not even sell in large enough numbers to make NPD's top-10 sales charts.

This lack of a jump in game sales, despite the launch of the new consoles, is bad news for game makers and companies dependent upon game sales. Electronic Arts , GameStop , and Activision Blizzard  all saw stock prices that were flat or down in December.

The news, however, is not as bad for Microsoft and Sony. Both companies have traditionally made money from the sale of games while the consoles were breakeven propositions. Research firm IHS recently took apart the Xbox One and estimated that Microsoft's console cost $471 for materials and manufacturing. The numbers are similar for Sony -- IHS says the PS4 costs $381 to manufacture.

The article Games Aren't Driving Xbox One or PS4 Sales originally appeared on Fool.com.

Fool contributor Daniel Kline is long Microsoft. The Motley Fool owns shares of GameStop and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2014 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.


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January 23 2014 at 5:16 AM Report abuse rate up rate down Reply
Jason

My reasoning: Video gaming is hitting a critical mass.

You're right Jonny Doe, graphics aren't everything. That's why I actually purchased a NEW XBOX 360 two weeks ago. If you think I'm crazy, consider the following:

XBOX1: $500, $50-60 a game, ridiculously limited library, no backwards compatibility.

XBOX 360: $260 (Total paid for a new 250G 360(e) and a used Kinect from GameStop). A library of thousands of games, including many great ones which can be obtained used for $20 or less.

I have yet to pay more than $15 a game, which has allowed me to start a pretty good collection of a dozen games within the past two weeks alone. This includes many Kinect games, which I know aren't popular, but I like to do exercise at home so it's all the world to me. I also get some free games through the "Games with Gold" program.

I've seen the two systems. Yeah, the XB1 is better... it's just not that much better to warrant double the investment.

January 23 2014 at 12:23 AM Report abuse rate up rate down Reply
unitedtruthtexas

I bought a xbox one on the release date. To be honest I was really disappointed in both systems are far as preparation of release. I mean they go to the E3 and pretty much lied about what would be available as if they didn't arrange the releases. Great system, but it would be great to actually have more games.

January 22 2014 at 8:31 PM Report abuse rate up rate down Reply
Jonny Doe

I bought an Xbox One right around Christmas for the sole purpose of video gaming and I have found myself logged on more to my Xbox 360 since then because the games are still much more fun to play. (Graphics aren't everything) Also, I can't speak for everyone, but I am definitely waiting to spend my money on games that are ONLY being released on the next gen consoles because the 'combo games' being released on both systems are not impressive at all. Call of Duty, Battlefield, Madden are only very slightly better on the new systems and some (Madden) even have less features than the 360/Ps3 versions. I think the real reason that game sales are down is that the gaming community is getting older and are becoming smarter shoppers. We don't buy games that claim to be the greatest game ever before we review or play them, which is why nobody is buying the over-hyped Ryse game which is basically a dressed-up 'Guitar Hero Gladiators' with no guitar controller.

January 22 2014 at 6:36 PM Report abuse rate up rate down Reply
steve.wass

That guess is completely wrong. The actuall reason people aren't buying games with their consoles is simply that the games are terrible. Every single new game exclusivley for the new consoles suck and people are buying these new consoles instead because one theyre new and available and also because they are waiting in anticipation for the actual good new games that will slowly start to be released for these consoles starting in late February.

January 22 2014 at 2:51 PM Report abuse rate up rate down Reply