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NPD: Behind the Numbers, February 2010
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NPD: Behind the Numbers, February 2010

March 15, 2010 Article Start Previous Page 3 of 5 Next

Outside of these trends, there is the packed software slate for the coming months. With Final Fantasy XIII (Xbox 360, PS3), Battlefield Bad Company 2 (Xbox 360, PS3), God of War III (PS3), and Pokémon Soulsilver/Heartgold (NDS) all due out in just March, there is plenty of reason to expect software unit sales and revenue both to move upward.

One factor we don't see discussed much, but which we find interesting, is that software unit sales seem disjointed from the increasing installed hardware base.

In particular, in February 2009 there were nearly 41 million current-generation consoles (Xbox 360, Wii, and PlayStation 3). In that month revenue for those platforms totaled over $550 million.

Yet in February of this year, there are nearly 60 million current-generation consoles – a nearly 50% increase in 12 months – and the same platforms generated 9% less software revenue.

Michael Pachter, an analyst for Wedbush Securities who covers the videogame industry, has pointed to the music game genre as part of the big shift. We agree – just look at the figures below – but we feel compelled to point out that the music game genre was already suffering losses in early 2009.

The figure below shows estimated revenues for Rock Band and Guitar/DJ/Band Hero series for the first two months of each of the years 2008, 2009, and 2010, according to Wedbush's Pachter. Notice that from 2008 to 2009 the total genre would have seen a decline of around $85 million in revenue.

Yet February 2009 was a month in which total industry revenues grew, and software revenue itself grew by nearly 9%. Some of this could be attributed to sales of higher-priced bundles – remember that Guitar Hero III selling in early 2008 had only included guitars while Guitar Hero: World Tour selling in early 2009 included guitars, drums, and microphone bundles. But in fact, the average price of software in February 2009 dropped, so the prices can't explain everything.

Somehow in 2009 the industry more than made up for a loss of $85 million in music genre contraction. With a 50% larger base of current-generation console hardware, why wasn't the same possible in 2010?

Article Start Previous Page 3 of 5 Next

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