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NPD: Behind the Numbers, May 2010
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NPD: Behind the Numbers, May 2010

July 6, 2010 Article Start Page 1 of 5 Next

May was supposed to be the bright spot in the first half of 2010 for the U.S. retail console game industry. While software sales were indeed up 3.5% from May 2009, a dramatic 20% drop in hardware dollars dragged the overall industry to a 5% decline -- with $823.5 million in revenue for the month.

That figure – the 5% fall – has dominated the headlines since the market-tracking NPD Group released its estimates for May retail video game sales, lending further weight to the idea that the retail-focused game industry is not simply in a lull but truly contracting, in a “state of persistent secular decline” as analyst Michael Pachter of Wedbush Securities has described it.

We'll examine this perception further, weighing the arguments both for and against. Along the way we'll examine the fortunes of the current hardware platforms, examine software sales in more detail, and take a closer look at titles in the top 20 chart.

Industry At a Glance

The delayed report revealed that overall video game industry retail revenue in May 2010 fell to $823.5 million, down 4.9% from $865.7 million the prior year.

All of this decline came from the hardware segment where overall unit sales dropped from 1.45 million to 1.2 million and dollar sales from $303.0 million to $241.5 million.

By contrast the software segment posted revenues of $466.3 million, a modest 3.5% increase over last May's $450.4 million. All of this growth was driven by console software, with handheld software dollar sales contracting by nearly 20% year-over-year.

As usual, the accessories segment is the only segment that has demonstrated growth both in the year-over-year monthly and year-to-date figures. For the month of May accessory dollar sales were up 3%, with the Xbox Live 1600 Point Card the top-selling item (as it was in March and April), according to NPD analyst Anita Frazier. So far this year, the accessory segment is up 2% over the same time in 2009.

These figures are strictly retail sales estimates and do not include other revenue from subscriptions, downloadable console games (e.g. from Xbox Live Marketplace), subscription-based MMOs (such as World Of Warcraft, which likely has tens of millions of dollars of revenue monthly in the U.S.), or social networking games.

The non-retail revenues may be collected directly by individual private companies with credit or debit cards or via services like PayPal, and are therefore much more difficult to measure. As a result, we no longer have an extremely comprehensive picture of overall industry revenues.

Article Start Page 1 of 5 Next

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