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[In Gamasutra's latest analysis of U.S. console game retail trends, Matt Matthews examines why industry growth may finally kick in during March, while also examining music game sales and intriguing hardware trends for February 2010.]
Analysts had expected the February 2010 U.S. retail video game sales figures to show yet another year-on-year decline, and indeed revenue was down a dramatic 15% according to the official figures published by the NPD Group last week. Only one month in the last twelve has shown measurable growth. Ten months showed contraction, and in the remaining month growth was less than 1% or essentially flat.
Obviously, it's believed that the online game market is seeing significant growth, thanks to the rise of web-based and social network online games, as well as digital distribution in general.
But the conventional wisdom holds that the retail industry will return to growth in March 2010. Below we'll examine this claim and some evidence justifying this optimism, with important factors like the music game genre and installed hardware bases.
We'll also examine the shifting hardware landscape, revealing updated figures for Nintendo DSi sales and our first reasonably hard estimate of how well the PSP Go hardware is selling relative to the standard PlayStation Portable hardware model.
As hardware prices are cut, the retail game industry will increasingly rely on increased software sales to drive revenue growth. To that end, we'll examine software unit sales and pricing and examine one analyst's claim that the Wii market has become more selective – i.e. casual – in the past few months.
Retail video game revenues dropped to $1.26 billion in February 2010, a loss of $222 million (or 15%) compared to the same month in 2009. The majority of the loss was roughly shared between the hardware segment (down $108 million) and the software segment (down $112 million).
Hardware unit sales were down over 300,000 units across the six key platforms. The Wii alone saw a drop from 753,000 units in February 2009 to 398,000 units in 2010, a difference of 355,000 units. Nintendo has claimed some of the decline is due to “continued product shortages”. The only other platforms to show declines were Sony's PlayStation 2 and PlayStation Portable (PSP).
Furthermore, hardware revenues were further hit by lower average prices for each platform in 2010. Recall that every system, with the exception of the Nintendo DS, has seen a price cut of some sort in the past year.
Software unit sales dropped precipitously, from over 19 million units in February 2009 to just over 16 million units in 2010. This drop was offset somewhat by a rise in average software prices, one of the few bright spots in the month's figures.
As has been the case consistently for months, the accessories segment of the industry was least affected by the downturn. Revenue in that segment was essentially flat for the month and year-to-date.
Please note that all the NPD Group data presented here covers only retail sales. Subscription fees and revenue generated through console and handheld storefronts, like Xbox Live Arcade or the PlayStation Store, are not covered.