One cannot simply sugarcoat the results of the past year and a half in the U.S. retail videogame industry. During that period, the market has shown year-over-year growth in only four months, according to the latest figures for July 2010 reported by the NPD Group, a retail industry tracking firm.
To put it in raw number form, the industry generated around $25.8 billion in revenue. In the 18 months prior to that, the figure was $33.7 billion. There is no spin for a 23% drop in revenue.
Regrettably, the downturn is not yet over. Even as we pore over the July figures, analysts like Wedbush's Michael Pachter and Cowen and Company's Dough Creutz are already expecting software to show a significant decline in August.
Below we'll discuss the industry figures in detail, with a special focus on hardware where there are many points to discuss. The Xbox 360 S model appears to be doing exceptionally well for Microsoft, and each of the other main platforms has its own interesting details we'd like to call out. In closing we'll discuss software for a bit and attempt to provide some perspective on sales of Blizzard's Starcraft II: Wings of Liberty and EA's NCAA Football 2011.
For the second month in a row hardware sales were up significantly while software declines dragged the industry into an overall drop in revenue. In particular hardware unit sales were up 5.4%, from 1.35 million to 1.42 million systems. At the same time hardware revenue rose an even steeper 11.6%, signaling an increase in the average price of the systems sold.
Except for average software prices, it's hard to find any measure by which software isn't in the red. Consider that revenue declined by 7.7% year-over-year while unit sales fell 8.2% from last July.
The only solace one might take from these figures is that software prices are up slightly; the average price for software stands at $38.81 so far in 2010, a 2.4% increase over the comparable figure of $37.88 from July 2009. We attribute this rise to the strength of Xbox 360 and PlayStation 3 software in 2010 relative to Wii software.
Even the reliably buoyant accessories category recorded a decline in revenue for July. Regardless, it is the only segment which still can claim year-to-date growth over 2009.
These figures refer only to retail sales estimates provided by the NPD Group and therefore do not include other sources of revenue from subscriptions, downloadable console games (e.g. through Xbox Live or the PlayStation Network), or in-game content purchased through online services.
This other content and service may be purchased directly through debit or credit card transactions or through services like PayPal. Accurate data on these services is generally available to a limited number of parties, and therefore a comprehensive measurement of overall industry revenue remains elusive.