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NPD: Behind the Numbers, August 2010


September 13, 2010 Article Start Page 1 of 4 Next
 

For the fifth month in a row, the U.S. retail video game industry experienced another decline, according to estimates by the NPD Group. Software contributed most to the 10% decline, despite robust sales of Madden NFL 11, the latest American football simulation from Electronic Arts.

Below we examine a variety of aspects of these latest sales results, from the details of Madden sales to the continuing erosion of Nintendo Wii and DS software sales. We also compare the Xbox 360 S model launch to the launch of Sony's PS3 Slim in 2009.

Before we begin, however, let us look at the top-line sales figures and where the industry stands as it heads into the final four months of the year.

Industry at a Glance

We were most alarmed by the software figures for August, where dollar sales dropped from $471 million in 2009 to only $403.5 million this year.

At least one heavily promoted title, Kane & Lynch 2: Dog Days from Eidos, didn't even make the top 20 for the month. Moreover, handheld software sales were particularly hard hit, falling to levels we haven't seen since 2005.

In terms of unit sales, software has been tracking under 3 million units per week for several months, and in August that measure hit its lowest reading in over three years. The only consolation is that software prices have done better in 2010, with each unit selling for 2% more on average, year-to-date.

(See the table below for the key sales figures for this month.)

For the first time in its data release to the press, the NPD Group added a footnote to the software sales segment noting that it “includes sales of new physical games sold at retail” but “does not include revenue from used, digital downloads, DLC, rental, subscription, mobile or social network games”.

They go on to explain that, in addition to their monthly releases, they “will report on the total market, including these other forms of revenue, on a quarterly basis in the near future.”

We applaud the effort (by the NPD Group now, and hopefully others in the future) to provide a more complete picture of the state of the video game business. While we don't yet know the details that will be provided in the Group's quarterly report, we hope that it will provide at least the level of transparency currently available from retail.

It would indeed be unfortunate if the contraction at retail gave the impression that the video game business overall was contracting. It seems plausible to us that the whole market, in all its forms, is actually growing. How ironic that the overprotective secrecy regarding online sales and extra-retail revenue streams could lead investors and analysts to precisely the wrong conclusion.


Article Start Page 1 of 4 Next

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