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Analyst questions validity of unusual January NPD results
Analyst questions validity of unusual January NPD results
February 9, 2012 | By Tom Curtis




Thursday afternoon, The NPD Group reported unusually low U.S. retail game sales for January 2011. The results were so low, in fact, that Wedbush Securities analyst Michael Pachter said he finds them a bit dubious.

As reported by the USA Today, Pachter said that January software sales have averaged $518 million between 2004 and 2011; with this year's January software sales reaching only $355.9 million, something doesn't add up.

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

It's unsurprising Pachter was taken aback by the low figures, as on Monday he predicted that January software sales would reach as high as $505 million, with sales down 12 percent year-over-year thanks to the lack of new releases.

In early February, The NPD Group announced a major change to its sales report, revealing that it would soon include previously-unavailable Wal-Mart sales data into its monthly figures. Prior to this, the company had been estimating Wal-Mart sales in its totals. If the company had been over-estimating these sales historically, it could partially explain the discrepancy.

The group confirmed to Gamasutra, however, that Wal-Mart POS data was not included in the January report, and thus did not affect this month's software sales figures.


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Comments


Justin Leeper
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Could it be the Skyrim effect? I know that, while I was spending 240+ hours of playing time in that world, I wasn't exactly going out and buying a bunch of other games.

Jeremie Sinic
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That's exactly what I am thinking. No matter how compelling a title would be released in January, I would just hold on my purchase because there's a chance that by the time I am done with Skyrim, these games will be on sale at a bargain price.

Peter Skerritt
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Bold accusation by Mr. Pachter here. It will be interesting to see if NPD responds.

Bob Johnson
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Highly unusual but look at the weather across the US. It has been unusually warm. Highly so. No snow on the ground here still and we usually get 50" +.



That and there was also an unusual amount of AAA time sinks sold late last year which presumably would keep many more busy than usual and thus in less need of a new game so soon.



That and 15 million iPads sold last quarter of which a good chunk sold in December of which a small but healthy percentage were probably core gamers who at least are temporary distracted by their new toy.



But all speculation. Could just be an error.

Harlan Sumgui
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The data could be faulty of course, but the more likely answer is that Jan was a blip.



But, it is possible that this generation of console lasting so long is making it harder to sell games.



Gaming, especially the $60 preorder/day1/CE market is driven by hype and promise. Generating that hype is getting harder as gamers have become more cynical towards PS3/360/wii games and what they can offer. Combine that with a pool of used game discs 6 years in the making from which to buy from & retailers pushing the hell out of used games & it is easy to extrapolate that motivating buyers is going to continue to get harder until new hardware arrives.



It is going to be very interesting to see how the next few months play out.

Mike Lopez
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Wishful thinking and Cover-Your-@ss Mentality.



Does he not think that the $3 Billion iOS revenue in 2011, $2B in Social and more revenue in Android and console digital sales has to have impacted Console/PC video game retail revenues? Stop drinking the Retail Kool Aid, Man - the contraction has started and will continue.



I imagine some retail of Huge budget titles will continue but I am positive we have seen the highs in Retail.



I know NPD considers some digital sales but they have very little data and the margin for error must be huge.

c anderson
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Huge number of games were sold in the 4th quarter; huge number of big releases. There were many gamer complaints about the number of year-end big releases. Lots of unplayed games from the Christmas gift season. There have been no (I think?) big releases in January. And there is Skyrim which is a big time sink which was a big seller. Not sure why anyone is surprised by how low things are.

Mathieu MarquisBolduc
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This developper questions the validity of Michael Patcher.

Rey Samonte
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Granted, I haven't been able to afford buying new games the last year, but I wouldn't be surprised if people were still recovering from the holiday spending. I know I am.

Miles Collins
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It seems to me, that many companies have put a freeze on wage increases and cost of living has gone up considerably in the last year. People still spent a lot of many in December and are tightening budgets after the holidays. Plus those Steam sales during December were insane and I know I bought quite a few games on the cheap :)

Tom Baird
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There are a lot of reasons why January could be low:



No big releases in Jan this year

Increasing of Digital/Mobile/Social eating into retail

Some Big December titles (e.g. SWTOR) seeing heavy digital sales

Massive November launches meant plenty of time to get as gifts

Skyrim/COD/BF3 all have heavy emphasis on lots of replayability, reducing the need for new games so soon after X-mas

State of Economy factors.



With all this in mind, it doesn't seem that unusual that January Retail was so particularly low. There were so many factors this year working against it.

Tom Baird
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NPD numbers do not represent the Game Industry. They represent a majority of boxed retail(even some Retail is not included e.g. Walmart as of this report). This doesn't signify declining game sales, but declining market share of boxed vs. digital.



Digital sales have been steadily increasing whether via Amazon, portals like Gamersgate, Origin, Steam, etc...

As an example, potentially the biggest digital games retailer has reported an at least doubling of Unit sales for 7 consecutive years(http://www.gamasutra.com/view/news/39523/Steam_sales_grow_despite
_influx_of_competition.php), and is currently the company that has the highest profits relative to # of employees in the world. That is absolutely massive consistent year over year improvements, and I think many people underestimate how much traffic Steam sees, particularly during Christmas with it's legendary sales. Origin saw massive sales for BF3 and SWTOR this year, and other online retailers are seeing success with their game sales. Skyrim and Arkham City are selling well digitally. EA and Activision are going towards online in full force. As well as the newer emerging online markets of Mobile and Social. While I agree Zynga may be on the downtrend, it doesn't change that recently Facebook listed Zynga as 12% of overall revenue, not even mentioning all it's competitors. As well the App Store sold 15 billion apps as of last july(http://www.fastcompany.com/1765528/apple-just-sold-its-15-billion
th-app-and-shifted-one-billion-of-them-last-month), with a majority share of Apps being Games.



It makes sense that retail numbers are at least slowly declining, because non-retail are rapidly increasing. It's like stating that Phone sales are at an all time low, because non-smartphone sales are on a steady decline. You only have half the picture and it's the half that is being rapidly deprecated. When using NPD data there is a massive elephant in the room that is the online marketplace, and as such it is not representative of the Industry, but a small segment of it that has a declining market share of games as a whole.

Craig Page
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Clearly it is Windows Phone 7 stealing all the game sales, there may only be six people who have WP7 but apparently they buy A LOT of games.

Christian Calderon
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Digital Download & F2P FTW


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