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Retail

Game industry sales down 24% in US during September - NPD

Game industry sales down 24% in US during September - NPD

Thu 11 Oct 2012 10:30pm GMT / 6:30pm EDT / 3:30pm PDT
Retail

Madden NFL 13 and Mists of Pandaria can't revive flagging retail business

Another month, another terrible report about the performance of video games at retail. The NPD Group has just sent us the data for the September period (technically five weeks from August 26 through September 29), and to no one's surprise, the report showed total industry sales down 24 percent to $848.3 million. Hardware sales plummeted 39 percent to $210.9 million, while software sales (including physical PC titles) fell 14 percent to $547.3 million. Accessories also dipped 11 percent to $139.9 million.

The month was dominated by the release of EA Sports' Madden NFL 13, which quickly sold through 1.65 million copies in its first week on sale. EA Sports also scored with FIFA 13 (4.5 million worldwide in five days), but that title shipped near the end of the reporting period, as did Blizzard's newest World of Warcraft expansion, Mists of Pandaria, so the full US sales for those two will probably be reflected in October's data report.

Even with a new system (Wii U) and big titles coming soon, like Halo 4, Call of Duty: Black Ops II and Assassin's Creed III, the industry is going to have a tough time breaking into positive sales territory. Wedbush analyst Michael Pachter said recently that holiday sales will likely be "relatively flat" and that new consoles are needed ultimately to reverse the ongoing retail declines.

NPD industry analyst Liam Callahan is more hopeful, however. "While year-over-year declines are present in video game software, we are seeing momentum leading up to the holidays when looking at August sales compared to September, which were up 67 percent on an average sales-per-week basis."

He also reminded us that NPD's monthly report only covers about 50 percent of the industry. Factoring in digital and other sources of revenues reveals a clearer picture.

"These sales figures represent new physical retail sales of hardware, software and accessories, which account for roughly 50 percent of the total consumer spend on games. When you consider our preliminary estimate for other physical format sales in September such as used and rentals at $191MM, and our estimate for digital format sales including full game and add-on content downloads including microtransactions, subscriptions, mobile apps and the consumer spend on social network games at $488MM, we would estimate the total consumer spend in September to be just under $1.6B," Callahan said. "Our final assessment of the consumer spend in these areas outside of new physical retail sales will be reported in November in our Q3 Games Market Dynamics: U.S. report."

The top 10 games for September are listed below:

1

28 Comments

Bruce Everiss
Marketing Consultant

1,692 594 0.4
PS3, Xbox 360 and Wii are now all in endgame. Many in the industry are still in denial but the facts are irrefutable. The sector has been downhill since 2008 and has fallen off a cliff this year.
Customers out there are actually playing games more than ever. They just aren't buying them as cardboard and plastic from bricks and mortar high street retailers very much these days. Anyone who is stuck in the old business model is in big trouble.

Posted:2 years ago

#1

Dave Herod
Senior Programmer

527 786 1.5
Popular Comment
Bruce, do you actually type your responses out every time or just copy and paste them from your "standard responses" document?

Posted:2 years ago

#2

Bruce Everiss
Marketing Consultant

1,692 594 0.4
@Dave

See my second sentence above.

Posted:2 years ago

#3

Dave Herod
Senior Programmer

527 786 1.5
Popular Comment
@Bruce - Irrelevant to the question. I was just wondering about why you sound like a stuck record.

Posted:2 years ago

#4

Daniel Hughes
Studying PhD Literary Modernism

436 496 1.1
Bruce, it's called a console transition--only two new machines are out, one of those is posting year over year gains and another has barely made any impact. All three home consoles are posting declining sales, the Wii has declined very rapidly, and no new home consoles are on the market yet.

Expecting home console sales to grow in this environment would be simply foolish. Chalking all of this down to the emergence of other sectors, and ignoring the natural sales cycle of traditional consoles (clearly at play 8 years after this generation started, 6 years after it was fully underway) is equally as foolish. New business models won't crush the older models if the older models continue to adapt.

Posted:2 years ago

#5

Bruce Everiss
Marketing Consultant

1,692 594 0.4
@Daniel

Except the decline started in 2008, when this generation of consoles should have still been on the up.

Posted:2 years ago

#6

Dave Herod
Senior Programmer

527 786 1.5
Popular Comment
Like the global economic crisis. What a coincidence.

Posted:2 years ago

#7

Bruce Everiss
Marketing Consultant

1,692 594 0.4
@Dave

Entertainment consumption goes up in an economic downturn. Hollywood had its finest years during the great depression.
You are clutching at straws in order to deny the reality.
In large numbers the public have moved on from consoles with physical content distribution. They are preferring digitally distributed content. Not only that, the advantages of digitally distributed content have attracted many millions of new people to gaming. Angry Birds has well over a thousand million downloads. These are golden times for the game industry, or at least for those sectors of it that are giving the public what the public want.

Posted:2 years ago

#8

Daniel Hughes
Studying PhD Literary Modernism

436 496 1.1
Popular Comment
The decline started after 2008, yes, but this hasn't exactly been a typical console generation, has it? Far longer than usual, with more devices competing. 2008 was the peak year for DS, which launched in 2004, and the peak year for Wii, which launched in 2006. But, both those systems peaked far higher than historical norms. The highest 12 month sales peak before that was 20 million units in one year, for PS2. Wii peaked at 24 million and the DS close to 30 million. DS stayed close to 30 million per year across 2007, 2008 and 2009. So we can already see that the highest selling systems this year peaked far higher than historical trends, that Wii peaked very early on its lifespan--a sales cycle not desirable--and we can also see, looking at 360 and PS3, that they had much longer term sales cycles, selling more consistently over a longer period, but ultimately at lower amounts than the market leading machine. To me, that doesn't suggest the console industry is doomed at all. To me, it suggests that the console industry has shifted, with different machines with different capabilities also having different sales curves.

My point is, arguing that ALL consoles declined from 2008 onwards, and using that as the basis that new models are replacing old models entirely is a flawed argument. Firstly, it's too soon to make that argument. We can argue that Vita has been severely impacted by new business models, but we can also easily argue that Vita's failures so far are a high price point and a lack of compelling content, combined with expensive proprietary media. I would say it's a combination of competition in the handheld sector and those factors. 3DS has taken off at a slightly faster rate than the DS during a more competitive time. You'll draw out the argument that's only because of the price cut, forced by mobile competition, but I would argue the system was launched too soon, at too high a price, without good enough (or even enough in terms of quantity) software or features, and with a confused marketing message. Nintendo took a brand known for accessibility and a mass-market price point (DS) and tried to pitch its successor as a premium product. A mistake they learnt from quickly, and a mistake that was only truly rectified when quality content came. Software still sells consoles.

Secondly, as Dave pointed out, the global economic crisis also exploded in 2008. Why would this impact the sales curve of the traditional industry? Because the traditional industry is strongest in the markets most severely affected by the global recession: North America, Europe, Japan. Even then, DS stayed steady into early 2010, Wii posted sales higher than 360 and PS3 in 2009, and 360 and PS3 sales continued to grow until 2011. This didn't offset the meteoric growth of Wii, but sections of the console market were clearly still robust and growing.

And now we come to the point were it has been six years without a single new home console. That is unprecedented in modern gaming. This cycle has been longer and better selling than any cycle before it. I don't know, and there isn't enough data yet, to argue whether or not the next cycle will be even bigger. But to conclude right now that this is it for consoles, before Wii U hits the market, before Vita has a price cut, before the next Microsoft and Sony machines are even revealed publicly, is short-sighted in the extreme.

I don't mean to insult you Bruce, and at times you post incredibly apt and insightful comments, but banging the same 'death of consoles' drum over and over is short-sighted and foolish. We aren't at a point were that conclusion can be drawn with any accuracy, just as I can't claim the next console cycle will exceed 2008 sales levels or bring down the mobile and social industry. I do however, believe that as new machines come, as the transitional period continues and this cycle ends and the next begins, the traditional industry will grow again, both by following its own path, and incorporating new digital models. Let's not forget NPD does not count digital sales, and a proportion of these digital sales (full game downloads, digital only downloads, DLC, subscriptions) occur across 3DS, PS3 and 360, and will form a major part of home consoles and portables in years to come.

I'd also point out that more consumers buying more games in greater numbers doesn't have to coincide with people turning away from consoles entirely, or even in any meaningful numbers. Right now the mobile growth figures coincide with the ending of one long cycle. That's correlation, not causation. As the next cycle begins, we may well see a proportion of new consumers entering the console market thanks to their experience on tablets, smartphones and social networks. Why can't the social and mobile market grow alongside the console market, Bruce? Surely if there are more gamers than ever before, buying more games than ever before, the console market will see some of the benefits of that? Overlap can very easily work both ways, after all.

Posted:2 years ago

#9

Bruce Everiss
Marketing Consultant

1,692 594 0.4
@Daniel.

I look forwards to the Xbox 720 and PS4 having app stores with FTP and IAPs because if they don't then Apple TV will bury them. If they do then I look forward to Kwalee considering publishing on them.

Posted:2 years ago

#10

Jim Webb
Executive Editor/Community Director

2,270 2,439 1.1
Daniel, you just saved me a lot lot time. Thank you.

Posted:2 years ago

#11

John Bye
Senior Game Designer

480 451 0.9
Bruce - PS3 already has some free to play games with IAPs (DC Universe Online, Dust 514 etc) and Xbox 360 is just launching its first FTP game (Happy Wars) today. If by "app store" you mean something with a relatively low barrier to entry like the iPhone app store or Google Play, Xbox 360 has had Xbox Live Indie Games for a while now, some of which have apparently been quite successful.

Posted:2 years ago

#12

Jim Webb
Executive Editor/Community Director

2,270 2,439 1.1
The Wii U will have an app like section. Supposedly the most indie developer friendly of the console bunch. Don't know how well that equates to the Apple and Android options though.

Posted:2 years ago

#13

Robin Clarke
Producer

321 748 2.3
Very insightful overview, Daniel.

I really don't know how anyone can look at what's happened in consoles in the past few years (the blue ocean strategy of the Wii and DS, Sony and MS's rush into diversified digital services, etc.) and conclude that the big players are steadfastly resistant to change.

(There have been free to play games available on consoles for some considerable time now, of course.)

Posted:2 years ago

#14

Keldon Alleyne
Handheld Developer

448 419 0.9
How about we compare this generation with the last generation. 2007 saw a massive inflation in the video game industry, so when we look at losses it makes sense to understand how inflated it is and how inevitable a decline is. And that's before you remember that every generation sees a decline after a number of years.

Then factor into the equation the value of purchasing a game years into a cycle. At first the graphics are just amazing and will play a major role in fuelling more sales.

But yes, let's ignore every other detail and focus our attention on the iPhone. Let's ignore the last 15 years of sales history, let's ignore how much more games we are selling now (in this decline) than we were ten years ago, let's ignore the fact that this is our most successful generation, let's ignore all of the wallets still voting for consoles and console games, let's ignore the 3DS sales, which if iPhone was really having an impact would have seen considerably less 3DS sales, not sales that match and in some areas exceed the DS. Yes, let's ignore everything and focus on this one whimsical idea.

Now what are the economical implications of F2P, exactly? What have we learned from the App Store so far about the market economics, and iAP, again, what are we aiming to achieve? More revenue per customer? or the same revenue per customer? at what, the expense of being able to sustain what would become premium content in that type of climate.

Now of course AppleTV may become a threat with the controller, given that it opens it up to a wider array of games. But you must remember the strength of the key franchises. Yes it is possible for them to be replaced in some capacity, but it would be naive to presume it to be inevitable.

We know how iAP and F2P are very good at tricking users into spending more, and in spending money where they might not have. What we don't know is how well the funds distribute amongst millions of developers battling for impulse plays. The only way for that to sustain is for monolithic publishers to collect and distribute against contracted teams, otherwise you end up with a very high risk high reward economy that does not favour specialized products, but instead only those who cast a wide net will survive. You have to remember that switching to a low involvement purchase market, we completely change the macro economics, which will completely change the landscape of publishers and developers.

Edited 1 times. Last edit by Keldon Alleyne on 12th October 2012 2:46pm

Posted:2 years ago

#15

David Radd
Senior Editor

359 78 0.2
To be succinct, I think any declaration of console death is premature, but what we're clearly seeing is the diversification of gaming interests outside of boxed retail, which when this current generation of consoles launched, was the overwhelming majority of sales and revenue. What we're going to see is more digital everywhere, including consoles. Sony already has their "Day 1 Digital" program, and focus like that is only going to increase, not decrease, as time goes on. So while I think there's still a runway for new consoles to land on in the next couple years, the next generation is not going to look like this generation as far as how it plays out and there's a good chance that the peak of retail sales in 2008 will never be matched.

Posted:2 years ago

#16
Popular Comment
Oh look, Bruce is back. He must only go on holiday during the Zynga stories.

Posted:2 years ago

#17

Daniel Hughes
Studying PhD Literary Modernism

436 496 1.1
Couldn't agree more David. It's also important to note how exceptional 2008 was for boxed product. Wii was still selling at its launch price of $250, Grand Theft Auto 4 came out, the price of the DS had actually increased slightly on its launch price because of the demand for the Lite model, and three Nintendo published games that would sell more than 10 million globally came out within a matter of months of each other: Mario Kart Wii, Smash Brothers Brawl and Wii Fit. Let's not forget that Wii Fit, with its balance board included, was an expensive boxed product, too, and Guitar Hero was still a huge selling, and large grossing, product. 2008 was an absolutely exceptional year for boxed product, thanks to a series of mega-sellers and peripheral bundled games, and not one we're likely to see repeated, unless the raw unit sales of consoles in this cycle all peak in the same year: unlikely given the disparity in release windows.

That being said, there is absolutely no reason why the sales of digital and retail product across consoles can't outdo the 2008 totals in years to come, and no strong indication that with the right evolution, the right services and software, the console industry can't go from strength to strength.

Posted:2 years ago

#18

Sam Maxted
Journalist / Community / Support

155 65 0.4
I don't think there's any doom and gloom to be read into this at all. If you look at the release list above, September was unusually quiet as far as AAA games go. People simply can't buy what isn't on sale.

Granted, there are a few major releases in there, but perhaps not as many as we're used to seeing at that time of year.

Also, the lack of any recent price drop on consoles won't be doing hardware sales any favours.

Posted:2 years ago

#19

Nuttachai Tipprasert
Programmer

79 60 0.8
@Bruce as John said PS3 and Xbox 360 already had both IAP and F2P games on the system. And for the app store, they both have PSN and Xbox Live Market Place for more than 3 years already. And I think lots of people told this to you for multiples of time. Seem like you have a habit of ignoring some facts for your own convenient, huh?

Edited 1 times. Last edit by Nuttachai Tipprasert on 15th October 2012 2:38am

Posted:2 years ago

#20

Bruce Everiss
Marketing Consultant

1,692 594 0.4


Some people do not realise that 1.3 million new Android devices are activated every day. That is a level of potential customers that totally dwarfs the whole console industry. And many of those people can be reached, if you know what you are doing. One game alone, Angry Birds, has had over 1,000 million downloads. Consoles are puny in comparison, there are only around 68 million Xbox 360s and about the same number of PS3s in the whole world. And from what I have seen when visiting people most of these are sitting gathering dust under the television.

One of the problems we have is that so called game industry journalists are mostly console journalists and they have seriously lost the plot, they don't know what is actually happing in gaming. So real world gaming is being massively under reported. Edge magazine should be mostly phone and tablet games with a little section for consoles. That would then reflect the reality of gaming in the world today.

And then we have the industry people who have a vested interest in the old platforms that are burning under their feet. Some want to get off but mostly don't know how. Some are on here calling me names because they are either in denial or they simply don't understand what is happening in the gaming industry. It doesn't matter because I get plenty of support from those in the industry who do understand and who are making lots of great games that are fantastically successful.

And finally take a look here to see the rich creative diversity of iPhone games, then go and compare it with the stale console chart: http://thumblounge.com/topapps/top-iphone-games/ Then realise what video games the real people in the real world are actually playing.

Edited 1 times. Last edit by Bruce Everiss on 15th October 2012 9:13am

Posted:2 years ago

#21

Keldon Alleyne
Handheld Developer

448 419 0.9
You must also remember that the previous population of gamers also do not want their gaming experience to be diluted for the larger new population. It's nothing to do with being old fashioned, it's purely about their gaming enjoyment.



According to what we know about mass human behaviour, with great change comes great fundamentalism.

Finally it's also terribly incorrect to mistake a difference in the behaviour the mass (which is dominated by an influx of a completely new population) with any hint of the previous population being converted. Figures show that this is not the case, there is a change in video game revenue, that if you wanted to just guess the reasons for the changes you could presume it to be down to social and mobile gaming, but those figures can easily be explained by what we already know happens in the industry.

Now I've always seen GI as a site where knowledgeable professionals share information and make intelligent conversation, but what I'm seeing in some places is the fanboy mentality you see in the typical internet forums. There are plenty of resources at hand to us all to have constructive discussions that add to the debate. But it seems to be more a case of people just airing their opinions, which doesn't add to the discussion, seems more like trolling to me.

Edited 1 times. Last edit by Keldon Alleyne on 15th October 2012 10:02am

Posted:2 years ago

#22

Justin Biddle
Software Developer

159 484 3.0
"Then realise what video games the real people in the real world are actually playing."

I feel oddly privileged to fall into the 'unreal people in the unreal world' category then :)

Posted:2 years ago

#23

Nuttachai Tipprasert
Programmer

79 60 0.8
First thing I need to point out is, half of the games in the list you just shown was released on console/PC before (Crazy Taxi, Monopoly, Wipeout, Mine Craft, Slender Man) and the other half have their own equivalents already been launched years before they came to mobile.

Second, do you know the games name Journey and Gravity Rush? Because these two are one of the most creative games ever created in this generation, and, yet, I haven't found any games like those on mobile.

So, I found your point about mobile games are more creative than console/PC is very moot.

I really don't understand why you need to hear the news about console demise that much. Sorry, but I think that news benefit no one even mobile developers. What I sees in this generation is, we have broader market than we used to have. This is a very good news for the industry, and I appreciate that. You can target your games on any platform you see fit; casual games on mobile, hardcore games on console/PC. That's the way we should go. If we can grow both market together, that's will be awesome. That means we have more people playing our games. So, I don't see any reason why people in the industry want to see one platform kills another. Seriously, I just don't understand that kind of attitude.

Posted:2 years ago

#24

Jim Webb
Executive Editor/Community Director

2,270 2,439 1.1
Bruce, how does an industry expanding at a rapid rate correlate to a segment of the industry in demise? You have this very narrow focus that just because mobile is taking off that consoles must therefore be dead.

Stop looking at market percentages as though they were absolute values. If the market triples in size but the console percentage of that market shrunk to 1/3rd that size, it doesn't mean the console market itself is dying. Those number of console gamers are still gaming on consoles.

And those people you see in the pub and on the bus playing games, I agree, that's fantastic, but do you see what they do when they get home? How many of them jump on their home console? How many sit on their couch with their mobile phone playing a game? Once out of your eyesight, your fantasy world becomes a mystery.

Coexistence, Bruce. It's a good thing.

Posted:2 years ago

#25

Bruce Everiss
Marketing Consultant

1,692 594 0.4
@Jim Webb

Consoles are dying, the figures do not lie. Whilst overall far more people are playing games. The Popcap 2012 survey found:

"Phones and computers are the most common game devices (33 percent and 32 percent respectively), with dedicated consoles trailing behind at 18 percent."

and



These are the facts. Add in the headline at the top of this article and it is obvious that there is a complete transition from physical distribution go gaming IP to digital distribution. Very soon there will be no physically distributed games.

Posted:2 years ago

#26

Jim Webb
Executive Editor/Community Director

2,270 2,439 1.1
Didn't I just say you need to stop looking at percentages? My figures in the proceeding example are fictitious and are for demonstration purposes only. If the gaming market was say 100 million 10 years ago of which 80% of it was home consoles, that means there were 80 million home console gamers. Move forward to today and we may have 500 million gamers of which 20% of it are on home consoles. That's still 100 million home console gamers.

The market expanded greatly and while the home console market lost considerable market share, it actually grew under this example. This is why I'm trying to tell you to stop using percentages as validation for your home consoles are dead mantra.

And don't start with digital distribution killing off home consoles. Not only have all home consoles been capable of digital distribution since 2005/6 but most full retail titles are also available on them now. And that's to say nothing at all of movies and music still having a brick and mortar presence despite an even greater impact from digital distribution.

Posted:2 years ago

#27

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