US market sees almost 40 per cent fall in January

Update: Sony reacts, but analyst Pachter questions validity of NPD's data


Both Sony and analyst Michael Pachter have reacted to the figures, with the well known analyst questioning their validity, saying they were "hard to digest."

"It also makes no sense that sales are below the level from 2004, when games were cheaper and the installed base of consoles was much lower," he told USA Today.

"I don't know if the NPD is getting faulty data, but these numbers make no sense," he said.

Sony meanwhile was keen to look towards February and the launch of its new handheld.

"Following a strong December at retail, PlayStation continued the momentum in January through multi-retailer promotions such as 'Play Days' where we saw a 2x lift over forecast in peripheral sales and solid results for the PlayStation 3," said SCEA's Patrick Seybold.

"February will be a landmark month for PlayStation and the gaming industry with the launch of PlayStation Vita on February 22. Pre-order sales for PS Vita and the launch lineup of 25 titles continue to accelerate as more consumers seek the ultimate in handheld gameplay."

Original story

The NPD Group's figures for January are out, and show a troubling fall of 38 per cent for hardware sales and 37 per cent for physical software sales compared to 2011.

Video games hardware fell from $324 million in January 2011 to $199.5 million in 2012, while total physical software sales, including console, portable and PC, were at $379.6 million, a drop from $603.2 million last year. Accessories revenue also fell by 18 per cent, from $237.1 million to $195.2 million.

Despite the steep decline the Xbox 360 maintained its lead on the console market, and celebrated its sixth month running as the top selling machine.

Interestingly in the accessories market Skylanders toys made up 22 per cent of total accessory unit sales.

"January retail performance experienced steep declines with a lack of software launches, and poor hardware and accessory performance partly related to bad comps from Kinect-related success in January 2011," said NPD analyst, Liam Callahan.

"One factor for the double digit declines in new physical software was the lack of new launches. New launches in January 2011 represented 13 per cent of dollar sales and new launch performance dropped 99 per cent in January 2012. Games like Dead Space 2, Little Big Planet 2, and DC Universe Online ranked within the top ten last year, making for a poor comparison in January 2012 where there were no major releases."

He also suggested that without new launches to attract them to retail outlets, consumers also failed to make impulse purchases, further impacting software sales.

The figures are actually worse than those predicted earlier this week by Doug Creutz of Cowen and Company.

"We expect console/handheld software sales to decline -22 per cent y/y due to the lack of any major new releases during the January NPD reporting period," he said on Tuesday.

"We expect total packaged game video game sales to decline -22 per cent y/y, including a -14 per cent y/y decline in retail PC game sales."

He also agreed with Callahan that the reporting period lacked new releases, and pointed out that recent UK chart entries Final Fantasy XIII-2 and Soul Calibur V would fall into the February NPD reporting period.

This left Call Of Duty: Modern Warfare 3 topping the physical retail software chart for the month, followed by Just Dance 3 and Elder Scrolls V: Skyrim in third.

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Latest comments (8)

Morville O'Driscoll Blogger & Critic 6 years ago
"new launch performance dropped 99 per cent in January 2012"

Ummm... Can someone tell me why the industry continues to ignore most of the year and then releases a metric ton of (usually high quality) material in the 3 months from September to December? Please? It confuses the hell out of me why companies continue to vie with each-other for an ever-dwindling (in this economic downturn) amount of consumer bucks in such a short timeframe. There's plenty of year, and plenty of good games, to spread releases.
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William Brown Aspiring Level Designer 6 years ago
@Morville: I can only assume that the 'Festive Period' would be one of the main reasons. I'm not sure which department determines the release date and as such I'll assume that marketing departments are to blame but I don't have any experience/evidence to backup this view so I'll leave my comment as conjecture.
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Bruce Everiss Marketing Consultant 6 years ago
This isn't talking about THE American market, it is talking about part of that market and the poor figures are partly a reflection of consumers switching their spend to platforms that don't form part of the NPD data.

So the headline is misleading.
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Show all comments (8)
Morville O'Driscoll Blogger & Critic 6 years ago
@ William

Yeah, marketers trying to get the big Festive dollars is a good guess. It's a silly thing to do though... When it was just Sega and Nintendo fighting it out, it was one thing, but with so many formats and so many releases, it just seems counter-productive.

@ Bruce

What you mean is that Digital and Mobile isn't reflected in the data, yes? And I wouldn't say it's any more misleading than any other headline on a news site; it presumes you're going to click through, and the first two paragraphs clearly state what the data represent.
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Christopher Bowen Editor in Chief, Gaming Bus6 years ago
People still take the wholly neutered NDP reports seriously? That's the bigger news to me, and leads me to believe that Pachter is right.
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Corey Fong Director of Marketing, Flashman Studios6 years ago
I need to clarify something, Marketing departments within game publishers do not decide on launch dates. The marketing departments get assigned titles that have launch dates already attached to them.

As far as my experience has been, the launch dates are decided by the executive teams, planning out revenue generation for the fiscal year. This is a business decision, not a marketing decision.

The reality is, launch dates actually move on the marketing team, usually because of delays on the development side of things, forcing the marketing department/PR teams to react.

The Xmas season release window has always driven dollars and sales for the industry as a whole. So I think it's more of a symptom of publishers not reacting to the down economy and shifting their release schedules accordingly. It's a huge risk to shift away from what has historically been the biggest selling season of the year for game publishers.

Shifting even 25% of their titles to a different quarter means shifting man power, resources, finances and taking huge financial risks, not to mention retail buyer budgets are probably not as large compared to last quarter of the year.

While I agree with the tactic of spreading the releases out, from a business perspective, it's not as simple as "just change the release schedule".

Edited 7 times. Last edit by Corey Fong on 10th February 2012 8:11pm

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Dave Ingram Industry Writer 6 years ago

Youth with no income (ranging from 6 to 18 years) make up a large percentage of the consumer market for games. This makes the holiday season an especially juicy time to release games, as almost every gamer in this category is asking his/her parents for games and accessories for Christmas. The number of gamers who can drop $60 of their own money for a new release at any time of year likely pales in comparison to the non-working youth segment that always gets a game for Christmas.
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Private Industry 6 years ago
People probably still have their 20 games to play from christmas, plus no real new releases in Jannuary. I only managed to finish 4 in the last 4 month and that was only major releases like CoD, Uncharted 3 and so on with games like Dark Souls still needed to finish.

It`s no surprise there is that drop in sales. Jannuary 2011 was packed with big games there was not really any stop from Novemeber - February in game releases. One big title came after another. While it`s understandable the big games come out at around christmas because every year they sell more and more, I wish those slightly less know games and "smaller" games would aim for a release date outside of that time period and more for April or actually mid summer. I know mid summer people are on holidays and so on, but would they really sell less compared to releaseing in November when at the same time at least 5 huge games are coming out and those games take up all of the ad space? I was quite happy with most of last year, you got Jannuary - March a good amount of really good games you could finish and in May the by now usual Rockstar game in the form of LA Noir this year. In June and July there where Infamous 2, Shadow of the Damned (bad sales numbers) and Catherine, but once you hit September and October the madness started again and you end up with bad sales numbers. Resistance 3 was a great game and a lot better then R2 but the sales where just so bad in the crowded space. In September alone there was Driver, Fifa, NHL, PES, ICO and Shadow of the collosus HD, F1, GoW 3, Dead Island and other games and October and December wasn`t much better. If you are a CoD, Uncharted, Assassins Creed and so on sure go for the christmas market because they sell each year more than the previous year, but anything thats a bit smaller I don`t see how that makes profit during that time of the year when competing against the big titles.

Driver looks really nice and I loved the original one, but I still have to get that one because I got "only" 4 games in September out of 9 games I was interessted in because I can`t buy them all and many people might only buy 1 or 2 games per month at best.
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