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.
What game in January would warrant big sales? None. Soul Caliber and FF XIII-2 were released on the 31st. They were the only ones that could possibly qualify.
I agree. There is a drought of big releases in the retail space in January. Other than a few evergreen titles and some roll over from the holiday season there wasn't much to speak of at all.
"What game in January would warrant big sales? None. Soul Caliber and FF XIII-2 were released on the 31st. They were the only ones that could possibly qualify. "
True, but if you look at past years, 2010 for example, you will see, that the only new january release Mass Effect 2 for the 360, realeased on January 26th, managed to enter the charts at number 2 with 572k, units sold. The game was outsold only by New Super Mario Bros. Wii, which sold a staggering 676k in january alone. Apart from Mass Effect 2, which was single platform then (NPD didn't included the PC numbers back then), the whole january had no big new releases.
Overall software was at 353 million dollar and software at 598 million dollar.
The numbers look even more bleak, if you compare them to January 2009, again no big games were released, but software was at 676 million dollar and hardware at 445 million dollar.
http://vgsales.wikia.com/wiki/NPD_January_2009
So, yes there were no new releases, but that's normal for a January.
@Christian: 2012 is an outlier because there was nothing new at all. January 2011 had Dead Space 2, Little Big Planet 2, and DC Universe online. Without any major new releases AT ALL in the same period, it was a given that sales would be down... but a drop such as this is notable.
January is usually a slower month for a variety of reasons, but January 2012 was a big ol' crater.
Not 2012 was the outlier, 2011 was the outlier with 2 new big releases, neither 2009 nor 2010 had big releases and both performed better, then 2012 (and 2011 by the way).
NSMB wasn't released in january, so I don't know, why you mention it, the best selling game in 2010 was released in 2009 and Mass Effect was a single platform game, on the shelfs for 5 days and still sold over 500k. Besides, I mentioned it earlier, 2009 outsold 2010, 2011 and 2012 without any new releases.
You guys can try to spin the numbers like you want, software sales are almost 50% down compared to 2009, while I guess the installed user base is about 30% up in the same time. I would say, these numbers are alarming.
I mention it (and if you see my post, I even mention that it was released in November of the previous year) b/c YOU did LOL:
"Mass Effect 2 for the 360, realeased on January 26th, managed to enter the charts at number 2 with 572k, units sold. The game was outsold only by New Super Mario Bros. Wii, which sold a staggering 676k in january alone"
You were the one who brought it up, highlighting how it sold so much in January, which is another reason our points about THIS year having nothing worth buying are valid.
No one is spinning anything. We are simply giving reasons for why it might be lower.
2009 didn't have the same amount of Digital Sales, didn't see so many massive November releases, of which the biggest sellers have tons of replayability (either through multiplayer, or Skyrim being what it is).
SWTOR (a late december launch) sold most of it's copies via Origin rather than through regular retail. (At one point I recall hearing 600k retail copies sold, with 2m users, which just goes to show how without digital sales, NPD is really only showing a fraction of the picture)
Also mid-late December releases can affect January sales, and the majority of big releases this year were November with few being mid-late December(exception being SWTOR, but it's sales are skewed towards digital).
As Christmas releases get bigger and Digital get stronger, it makes sense that January sees less and less retail boxed sales.
Edit: As it stands NPD is going to continually paint a rather rapid downward decline, which just isn't true of the Industry as a whole, because of it missing Digital Content, and that includes both mobile and social, which are both growing quickly. Customers aren't just disappearing, they are shopping elsewhere. While I don't have proof, with Apple's App Store, reporting massive game profits, Zynga showing such rapid growth (and others following), and Steam reporting at least a doubling of sales through 8 consecutive years (!), there are tons of healthy areas for games that are not represented here.
It seems you missunderstood my initial post, I mentioned NSMB Wii, because the game sold 676k in january, despite being released several months before. Your argument was, that the sales were down, because no big games were released in january and I gave you an example of a year with better sales, were the best selling game in january was a game, that was already on the market for several months. This proofs your argument false, that january 2012 had slow sales, because of the fact, that no big games were released.
@ Tony
"2009 didn't have the same amount of Digital Sales, didn't see so many massive November releases"
If we are talking about January 2009 sales and compare them with January 2012, we have to look at november/december 2008 releases:
November 2008:
Gears of War 2
Call of Duty: World at War
Guitar Hero World Tour
Left4Dead
December 2008
Fallout 3
I wouldn't call this a weak holiday lineup either, combined software sales of November and December 2008 are above combined sales of November and December 2011.
The same goes for the holiday lineup 2009.
November 2009:
CoD MW
NSMB Wii
Assassin's Creed 2
Dragon Age Origins
Decmber 2009:
Mario & Luigi: Bowser's Inside Story
Again a strong November/December Lineup, that outsold the November/December 2011 lineup,so blaming it to the strong 2011 holiday lineup doesn't work.
Leaves digital sales as the last hope, but honestly, January 2012 is almost 50% down compared to January 2009, do you really believe that digital sales make up this much?
And about Zynga, just take a look at the development of their profits, the bubble did already burst.
And last but not least, SWTOR isn't interesting for this comparsion, because NPD numbers in 2009 didn't include PC sales, besides, WoW is much bigger then SWTOR and it was already on the market in 2009 and already was successfully distributed digital.
Except that SWTOR is relevant because it released late December, meaning new purchases will easily leak into January. It is also seeing record breaking early growth. WoW wasn't released December 2008, and is less likely to cause a spike in January 2009 sales.
So basically you are saying SWTOR, a game that sold worldwide 2 million times, is causing the bad january sales? If this is the case, the industry is in much deeper trouble then I ever imagined.
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.
True, but if you look at past years, 2010 for example, you will see, that the only new january release Mass Effect 2 for the 360, realeased on January 26th, managed to enter the charts at number 2 with 572k, units sold. The game was outsold only by New Super Mario Bros. Wii, which sold a staggering 676k in january alone. Apart from Mass Effect 2, which was single platform then (NPD didn't included the PC numbers back then), the whole january had no big new releases.
Overall software was at 353 million dollar and software at 598 million dollar.
http://www.gamasutra.com/view/feature/4273/npd_behind_the_numbers_jan uary_.php
The numbers look even more bleak, if you compare them to January 2009, again no big games were released, but software was at 676 million dollar and hardware at 445 million dollar.
http://vgsales.wikia.com/wiki/NPD_January_2009
So, yes there were no new releases, but that's normal for a January.
January is usually a slower month for a variety of reasons, but January 2012 was a big ol' crater.
Not 2012 was the outlier, 2011 was the outlier with 2 new big releases, neither 2009 nor 2010 had big releases and both performed better, then 2012 (and 2011 by the way).
Mass Effect 2 and New SMB (November of the previous year, I know) by your own admission were big sellers that year.
NSMB wasn't released in january, so I don't know, why you mention it, the best selling game in 2010 was released in 2009 and Mass Effect was a single platform game, on the shelfs for 5 days and still sold over 500k. Besides, I mentioned it earlier, 2009 outsold 2010, 2011 and 2012 without any new releases.
You guys can try to spin the numbers like you want, software sales are almost 50% down compared to 2009, while I guess the installed user base is about 30% up in the same time. I would say, these numbers are alarming.
I mention it (and if you see my post, I even mention that it was released in November of the previous year) b/c YOU did LOL:
"Mass Effect 2 for the 360, realeased on January 26th, managed to enter the charts at number 2 with 572k, units sold. The game was outsold only by New Super Mario Bros. Wii, which sold a staggering 676k in january alone"
You were the one who brought it up, highlighting how it sold so much in January, which is another reason our points about THIS year having nothing worth buying are valid.
No one is spinning anything. We are simply giving reasons for why it might be lower.
2009 didn't have the same amount of Digital Sales, didn't see so many massive November releases, of which the biggest sellers have tons of replayability (either through multiplayer, or Skyrim being what it is).
SWTOR (a late december launch) sold most of it's copies via Origin rather than through regular retail. (At one point I recall hearing 600k retail copies sold, with 2m users, which just goes to show how without digital sales, NPD is really only showing a fraction of the picture)
Also mid-late December releases can affect January sales, and the majority of big releases this year were November with few being mid-late December(exception being SWTOR, but it's sales are skewed towards digital).
As Christmas releases get bigger and Digital get stronger, it makes sense that January sees less and less retail boxed sales.
Edit: As it stands NPD is going to continually paint a rather rapid downward decline, which just isn't true of the Industry as a whole, because of it missing Digital Content, and that includes both mobile and social, which are both growing quickly. Customers aren't just disappearing, they are shopping elsewhere. While I don't have proof, with Apple's App Store, reporting massive game profits, Zynga showing such rapid growth (and others following), and Steam reporting at least a doubling of sales through 8 consecutive years (!), there are tons of healthy areas for games that are not represented here.
It seems you missunderstood my initial post, I mentioned NSMB Wii, because the game sold 676k in january, despite being released several months before. Your argument was, that the sales were down, because no big games were released in january and I gave you an example of a year with better sales, were the best selling game in january was a game, that was already on the market for several months. This proofs your argument false, that january 2012 had slow sales, because of the fact, that no big games were released.
@ Tony
"2009 didn't have the same amount of Digital Sales, didn't see so many massive November releases"
If we are talking about January 2009 sales and compare them with January 2012, we have to look at november/december 2008 releases:
November 2008:
Gears of War 2
Call of Duty: World at War
Guitar Hero World Tour
Left4Dead
December 2008
Fallout 3
I wouldn't call this a weak holiday lineup either, combined software sales of November and December 2008 are above combined sales of November and December 2011.
The same goes for the holiday lineup 2009.
November 2009:
CoD MW
NSMB Wii
Assassin's Creed 2
Dragon Age Origins
Decmber 2009:
Mario & Luigi: Bowser's Inside Story
Again a strong November/December Lineup, that outsold the November/December 2011 lineup,so blaming it to the strong 2011 holiday lineup doesn't work.
Leaves digital sales as the last hope, but honestly, January 2012 is almost 50% down compared to January 2009, do you really believe that digital sales make up this much?
And about Zynga, just take a look at the development of their profits, the bubble did already burst.
And last but not least, SWTOR isn't interesting for this comparsion, because NPD numbers in 2009 didn't include PC sales, besides, WoW is much bigger then SWTOR and it was already on the market in 2009 and already was successfully distributed digital.
Except that SWTOR is relevant because it released late December, meaning new purchases will easily leak into January. It is also seeing record breaking early growth. WoW wasn't released December 2008, and is less likely to cause a spike in January 2009 sales.
So basically you are saying SWTOR, a game that sold worldwide 2 million times, is causing the bad january sales? If this is the case, the industry is in much deeper trouble then I ever imagined.
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.