Game Sales Decline is Really Grim News

Every month a research company called NPD tots up the U.S games
industry’s retail sales, and releases the data to its clients, who are
mostly games publishers, investors and retailers. Some of the
information is published and reported.
“This will be the worst year for games retail since 2006.

And each month, a clever mathematician in Chattanooga, Tennessee called
Matt Matthews digs into those numbers and publishes his analysis on
industry website Gamasutra. (It’s a must-read column.)

Matt’s analysis for October’s results? “By practically every measure
this will be the worst year for [games] retail since 2006.” Oh dear.

Game sales for October were down 25% compared to the same month in
2011, with consumers spending $755.5 million on hardware, software and
accessories compared with $1 billion last year.

Of course, packaged games sales are not nearly the whole picture of
the gaming business. Digital distribution, free-to-play, mobile don’t
get counted in NPD’s monthly numbers, and these are all areas that are
booming. This is why we questioned that organization’s claim, back in September, that 12 million gamers have mysteriously vanished.

But still, the vast majority of games companies' revenues comes from
games retail. As we await any scrap of news about Sony and Microsoft’s
plans for next generation consoles, the current generation is in
freefall.

Matt says that, based on his calculations, even the traditional boom
months of November and December will disappoint those who believe that
2012 can be saved. And yes, he’s factored in the launch of a new console from Nintendo.


Unable to stop the rot.


There are more than 50 million Xbox 360s and PS3s in U.S consumers' hands, and yet a major franchise game like Resident Evil 6 limps toward launch-window sales of less than a million.

People are simply not buying $60 games from retail stores in the way
they did in the past. At the end of October, Matthews reckons
year-to-date packaged sales have not yet reached the 100 million units
milestone, a point that was passed in early July in previous years of
this generation. This time in 2011 and in 2012, we were through 130
million units, and in 2008 the end-of-October number was at 166 million.



“
For every dollar made during the heyday of the market...the industry is only generating fifty four cents today.

He says games dollar sales so far this year are at $3.3 billion. In 2011
- a decline-year that everyone was describing as pretty dire - we were
at $5 billion.

Matthews makes the following point: “The total value of the January
through October video game software market has shrunk by nearly 46
percent since 2008. For every dollar made during the heyday of the
market...the industry is only generating fifty four cents today.”














Analyst Doug Creutz has named seven AAA, non-sports fall releases in
2011 that sold more than four million units in North America and Europe.
This year he is predicting only four (Borderlands 2, Assassin's Creed 3, Halo 4, and Call of Duty: Black Ops 2).

Hardware sales are crumbling. Xbox 360 is down by a third this year,
while PS3 is down by a quarter. Only 3DS has managed to sell more units
than last year, although, of course, this year it’s had ten months on
the market, while in 2011, it had only been available for seven months
when the October stats came through.

So what’s the problem? Leaving the dodgy economy aside, it’s clear
that the hardware companies have been way too timid in ushering in the
excitement of a new generation, or in kickstarting this fading generation with some meaningful price cuts.



“
Some of the blame for 2012's decline should be laid at the door of Microsoft and Sony's timidity.

Retail and games publishers are screaming blue murder about the lack of
launch hardware, and yet the soonest we can expect to see a new
generation is still a whole year away. Mid-generation initiatives like
Move and Kinect - actually, me-too reactions to Wii’s success - have
failed to provide significant horsepower.

Wii U is just about to drop, but its bounty, as always with Nintendo, is likely to disproportionately favor first-party games.

Consumers are playing more games than ever, and spending more time playing games, but the market has shifted away from full-priced ‘AAA’ games towards social, mobile, digital.

Given that the new consoles will definitely be reactions to this
trend, offering more free-to-play games and cross-platform mobile /
social gaming, it’s an unavoidable conclusion that games retail’s finest
days are behind us. But also that some of the blame for 2012's decline
should be laid at the door of Microsoft and Sony's timidity.

You can see more analysis an charts here