[Gamasutra analyst Matt Matthews examines December 2010's U.S. video game retail sales data from NPD Group, and looks to 2010 events like the launch of Kinect, contraction of retail software sales and the rise of digital models to see what 2011 may have in store.]
On Thursday the NPD Group released its estimates for retail video game sales in December 2010. It also released estimates for consumer spending on all video game content, including social games, digital distribution, and used games.
Not only were retail sales of hardware and software down for the year, but even with the additional revenue from the extra-retail sources, the full market size remained constant from 2009 to 2010.
Below we will look back at 2010 and pick out the big trends and then look forward to 2011. In the new year the industry faces several big questions:
The launch of Xbox Kinect has changed the balance in the console market. What will we consider the new status quo a year hence? Where will Nintendo take the Wii as its sales pace slows?
Retail software sales have slowed significantly. Where is the contraction and where is the growth? What are the factors driving the decline?
The NPD Group estimates that total consumer spending on games in 2010 was essentially flat from 2009 – even when extra-retail sources like digital distribution and social games are considered. What do these new figures tell us?
Read on for complete details.
After a good run in October and November, during which the industry posted gains in software and in accessories, the final totals for the industry were below expectations in December.
Few new games were launched in December, but some notable titles like Disney's Epic Mickey for the Wii and Activision Blizzard's World of Warcraft: Cataclysm for the PC, did well.
Moreover, Activision Blizzard's Call of Duty: Black Ops and Ubisoft's Assassin's Creed: Brotherhood and Just Dance 2 all continued to have strong sales in their second month. Despite this, software sales were down for the month both in units and in revenue.
Only the accessory segment – where both Microsoft's Kinect and Sony's Move peripherals are counted – showed growth in December and for the full year. As expected, there was also significant growth in points and money cards for services like Xbox Live and the PlayStation Network.
According to NPD Group analyst Anita Frazier, these cards “grew the most in unit volume” of any accessory, relative to sales in 2009. She went on to call this a “retail reflection” of the growth of extra-retail distribution channels.
Below we have collected the December 2010 and full year figures for retail sales in 2009 and 2010.
The NPD Group also released its 2010 estimates for total consumer spending on video game content, through retail and other sources. They put the value of the market for video game content at $15.6-15.4 billion; this represents $5.5-5.3 billion of additional revenue on top of the $9.35 billion in software sales shown in the table above.
Last month we described how the industry might have reached $19 billion by moving $1 billion in accessories and showing growth in the software segment. Neither of those events came to pass, so the industry ended the year at $18.5 billion. The figure below puts the December and full-year results in context with the past few years.
To put the last couple of years into context, we have gathered the retail sales data from 1997 to the present in the figure below. While the scale is different, we do note that total sales contracted from 2002 to 2004 in a gross manner not unlike the contraction of 2008 to 2010.
Should the retail video game market contract any further in 2011, then it will probably be the longest such contraction in the last 20 years of the video game market. Moreover, the industry will have reset to a level lower than the beginning of the huge growth experienced between 2006 and 2007.