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NPD: New Stat-Reporting Policy 'Important Step For Industry'
NPD: New Stat-Reporting Policy 'Important Step For Industry'
October 20, 2010 | By Kris Graft

October 20, 2010 | By Kris Graft
More: Console/PC

NPD Group said this week that its recent decision to limit the publication of monthly U.S. video game retail unit sales data is representative of the industry's shift to emerging online business models.

NPD analyst Anita Frazier said in a blog post that the policy change might have been "a hard pill for some to swallow" for some, but she argued that the new reporting format "is an important step for the industry."

She explained, "We’ve long acknowledged that our reporting of monthly point-of-sale purchases (covering new physical sales of hardware, software and accessories only, not used game sales) did not represent 100 percent of the consumer spend on the industry."

NPD said earlier this month it would stop reporting specific U.S. monthly hardware sales figures and video game software sales figures, although the group said it may release some unit sales data on a case-by-case basis. The firm still reports dollar-sales figures from retail.

The majority of the industry's consumer spend still happens at physical video game retailers, said Frazier. But business models based on digital downloads, virtual item buys, mobile apps and subscription models are generating more and more revenue for game companies.

NPD this month will release a new report, "Games Industry: Total Consumer Spend," which will attempt to give a bigger picture of how much the games industry makes by including such non-retail business models, along with physical retail data.

"Since new physical sales at retail have been down for some months now, the news that the industry is beleaguered has been widely covered, and it has caused unnecessary angst for many," Frazier said.

NPD reported last week that combined digital, used and rental game sales were between $2.6 and $2.9 billion for the first half of the year, in addition to the $3.7 billion spent at physical retail on new games, hardware and accessories for the period.

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Sounds like the Console / Game sales old war is finally over...

Bart Stewart
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It does seem puzzling as a business move. Your customers are asking for more data, and so you give them... less data. Huh?

But while the "we console manufacturers don't like your numbers saying games sales for our boxes are down -- stop publishing them" scenario seems sort of plausible, it's not the only possibility.

Imagine that you own a company whose product is the observation and analysis of market trends. The quality of your product (and thus the likelihood of sales) depends in large part on the degree to which people can trust the numbers on which your analyses are based.

But now suppose you're having severe trouble collecting accurate and complete numbers from a new segment of the market. Everyone knows your numbers are increasingly flawed, and you haven't found a good way yet to make them more accurate. The increasingly bogus numbers are starting to taint the trustability of your other analysis products.

What do you do?

One option is to do what NPD has done: stop publishing the inaccurate numbers until you can figure out how to make them more accurate. You still don't have a good product to offer, but at least you're no longer trying to sell a bad product.

I have no idea if that was the reason behind NPD's decision. But as a theory it's at least as plausible as suggesting that NPD are secretly doing the bidding of the console makers.

DanielThomas MacInnes
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Yes, hiding sales numbers and manipulating data to make companies appear profitable is always a sign of a healthy industry. Yay.

Mike Lopez
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I tend to agree with Bart: Retail numbers alone are increasingly becoming a smaller portion (though still a majority) of the market, where once they were the whole market. I would rather NPD try to forecast the overall market and use the retail numbers as a reference but I guess they still don't know how to do that because none of the publishers readily report their digital and on-line numbers in the same way that most of the big retailers report very specific unit sales. It also occurs to me it would help the entire industry if the publishers and first parties reported their digital unit sales quite specifically and admitted that retail distribution is trending down, but they are still wary of upsetting their retail partners and not wanting to send a message to consumers that it is time to jump on the digital distribution bandwagon (that model which is way better for industry margins than retail).

Leon T
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Yet NPD never published the entire market. They always stopped publishing the older consoles that continued to sell hardware and software. The never published used games sells. They don't publish pc games.

You never got an entire view of the video game market from NPD or even just the console market alone. As in investor this move is only more proof that the industry is in trouble. Despite hardware numbers being higher than they were last generation and consoles selling for higher prices. This is what happens when you have an industry that continues to make 20 games a year that cost 200 million dollars and only 3 return a profit and about two break even.

All but maybe 4 big game companies have been bleeding money since the move to HD. HD alone is not to blame though as many companies were in trouble before this generation started.

gus one
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EA report their digital sales. On track $750m this year and expect $1bn the year after. People need to get past consoles as just being the only digital sales. It's everything on all possible media platforms that isn't in a box and in bought a shop.