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.
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.
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.
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.
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.
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.
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.
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.
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 :)
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.
"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. "
It's not that January Retail is particulary low, it's more, that the industy is in decline for several years now. You can pretend otherwise, but the collapse of studios and publishers in the US and all over the world is, at least to me, a sign of the trouble the whole industry is in right now.
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_i nflux_of_comp etition.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-billionth- app-and-shif ted-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.
"They represent a majority of boxed retail(even some Retail is not included e.g. Walmart as of this report)."
Wrong, Walmart is included via estimates, NPD always estimated the Walmart sales.
"As an example, potentially the biggest digital games retailer has reported an at least doubling of Unit sales for 7 consecutive years"
True, but the fact, that the companies, that actually produce the games, Steam is selling are often in financial troubles and have lower profits, then they are used to is showing, the crisis is real.
Plus,Steam sells PC games, but if you look at the games market, there are almost no big budget PC exclusives any more, almost every game with a big budget is a console port and sells much worse, then it's console counterparts. The PC market is strong, when it comes to MMORPGs and to a lesser extend is strong, when it comes to small independent games, but the revenues created in these two areas are only a fraction of what is generated in the big budget console space.
"Origin saw massive sales for BF3 and SWTOR this year, and other online retailers are seeing success with their game sales."
Both games are published by EA, a company that failed to report a profit for half a decade now, probably not the best example for the success of digital distribution. EA just reported a net loss of 205 million dollar for the last quarter, I don't see digital sales of BF3 saving the company.
"EA and Activision are going towards online in full force."
I see, why you say EA is going online in full force, but where do you see Activision doing something online they haven't done for years now?
"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."
I don't see, why this should be a argument for the strength of social games, it is more an argument that Facebook should be worried.
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.
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.
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.
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.
It's not that January Retail is particulary low, it's more, that the industy is in decline for several years now. You can pretend otherwise, but the collapse of studios and publishers in the US and all over the world is, at least to me, a sign of the trouble the whole industry is in right now.
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_i nflux_of_comp
etition.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-billionth- app-and-shif
ted-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.
Wrong, Walmart is included via estimates, NPD always estimated the Walmart sales.
"As an example, potentially the biggest digital games retailer has reported an at least doubling of Unit sales for 7 consecutive years"
True, but the fact, that the companies, that actually produce the games, Steam is selling are often in financial troubles and have lower profits, then they are used to is showing, the crisis is real.
Plus,Steam sells PC games, but if you look at the games market, there are almost no big budget PC exclusives any more, almost every game with a big budget is a console port and sells much worse, then it's console counterparts. The PC market is strong, when it comes to MMORPGs and to a lesser extend is strong, when it comes to small independent games, but the revenues created in these two areas are only a fraction of what is generated in the big budget console space.
"Origin saw massive sales for BF3 and SWTOR this year, and other online retailers are seeing success with their game sales."
Both games are published by EA, a company that failed to report a profit for half a decade now, probably not the best example for the success of digital distribution. EA just reported a net loss of 205 million dollar for the last quarter, I don't see digital sales of BF3 saving the company.
"EA and Activision are going towards online in full force."
I see, why you say EA is going online in full force, but where do you see Activision doing something online they haven't done for years now?
"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."
I don't see, why this should be a argument for the strength of social games, it is more an argument that Facebook should be worried.