NPD: Q2 2013 Games Sales 61 Percent Digital

[StewShearerOld]

NPD: Q2 2013 Games Sales 61 Percent Digital

The game industry sold $2.88 billion worth of videogames in America during Q2 2013.

The research firm NPD Group has released figures detailing how much Americans spent on videogames during the second quarter of 2013. Overall, the numbers are fairly decent. There was a three percent drop in game sales when compared to the same period last year, but the industry still managed sell to $2.88 billion worth of software, overall. No matter how you cut it that's a pretty decent chunk of change.

Perhaps more interesting than the totals however, are the kinds of products that consumers spent their money on. Digital game sales, <a href=http://www.gamesindustry.biz/articles/2013-03-29-digital-game-sales-growing-33-percent?utm_source=newsletter&utm_medium=email&utm_campaign=european-daily>on the rise for some time now, were behind a total 61 percent of the industry's sales in Q2 2013. Granted, that percentage does come with some caveats. For instance, according to NPD analyst Liam Callahan, there were fewer new physical SKUs released in Q2 2013 than in Q2 2012. In other words, sales were down in part because there were fewer new games for consumers to buy at retail. This was somewhat expected "as developers, publishers and consumers alike prepare for the next hardware generation."

That being the case, it's still worth noting that digital games not only captured a majority of sales, but also made up for most of the shortfall caused by the declined retail profits. "Increases in digital format spending offset nearly all the losses from the declines in physical format spending," said Callahan. In other words, in a time period where physical games took a bit of a hit (for whatever reason), digital sales saw a "27 percent increase" which, in our book, is pretty impressive.

Source: <a href=http://www.gamesindustry.biz/articles/2013-09-05-us-gaming-spend-hit-USD2-88-billion-in-q2-npd>GamesIndustry International




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[Dr.Awkward]

So NPD, if you had collected sales from digital distributors, then video game sales in general weren't down in 2012 like you concluded. This skewing of information is what happens when you ignore an outlet that quickly grew into critical status...

 

[Mr.Mattress]

So NPD, if you had collected sales from digital distributors, then video game sales in general weren't down in 2012 like you concluded. This skewing of information is what happens when you ignore an outlet that quickly grew into critical status...

This Exactly. In fact, we might finally be at the end of the Decline of Video Games. Now I'm not expecting it to bounce back like a ball; I'm more expecting it to hold Steady. However, Video Game sales should now be stabilizing.

 

[Genocidicles]

Was this counting mobile games and the like?

Because if not then I have trouble believing that over sixty percent of sales were digital.

 

[medv4380]

Digital games, and Digital content are two very different things. One includes DLC, FarmVille like monitization, and the other does not.

Revenue is still down 3% overall year over year which means that it's still down a lot more from Q2 2011 of 4.5 Billion. Which means that overall sales is down by 1/3 from two years ago. Maybe it only being down 3% from last year is good, but Q2 isn't a very active quarter so maybe it can't go much lower. The holiday quarter is much more active, and could be in for a much larger fall. We'll just have to wait and see.

 

[Strazdas]

Was this counting mobile games and the like?

Because if not then I have trouble believing that over sixty percent of sales were digital.

Dont. there are plenty of people that buy digital out of the sheer fact that it is faster and you dont need to go to the store. its easier in every aspect and digital platforms were booking like crazy, hence why origin and other stuff sprouted up. like it or not digital is taking over.

How many of those are Steam games?

I'd like to see statistics of games that released both digitally and physically.

Sadly, steam refuses to disclose its sell numbers and forces the publishers into non-disclosure agreement. i got no idea how they estimate that in the report if at all but i would guess large part.

Digital games, and Digital content are two very different things. One includes DLC, FarmVille like monitization, and the other does not.

Revenue is still down 3% overall year over year which means that it's still down a lot more from Q2 2011 of 4.5 Billion. Which means that overall sales is down by 1/3 from two years ago. Maybe it only being down 3% from last year is good, but Q2 isn't a very active quarter so maybe it can't go much lower. The holiday quarter is much more active, and could be in for a much larger fall. We'll just have to wait and see.

Q2 is a slow period as well as Q3 (games drought). But we will see a huge spike in Q4 due to new console launches and peopel buying games to play on that. and the 3% seems like curve curbing getting ready for going upwards to me anyway.

 

[Genocidicles]

Dont. there are plenty of people that buy digital out of the sheer fact that it is faster and you dont need to go to the store. its easier in every aspect and digital platforms were booking like crazy, hence why origin and other stuff sprouted up. like it or not digital is taking over.

But console gamers outnumber PC gamers, and I don't see why a console gamer would buy digital over retail. Steam might give awesome deals but the console marketplaces blow chunks.

I don't know any console gamers who'd rather buy digital than retail. Aside from speed, there's no advantage to it.

 

[Strazdas]

Dont. there are plenty of people that buy digital out of the sheer fact that it is faster and you dont need to go to the store. its easier in every aspect and digital platforms were booking like crazy, hence why origin and other stuff sprouted up. like it or not digital is taking over.

But console gamers outnumber PC gamers, and I don't see why a console gamer would buy digital over retail. Steam might give awesome deals but the console marketplaces blow chunks.

I don't know any console gamers who'd rather buy digital than retail. Aside from speed, there's no advantage to it.

And mobile gamers outnumber console gamers.
your point?
Console gamers buy digital as well, for the same reasons i already told you - its easier.

P.S. i love your name.

 

[shrekfan246]

Aside from speed, there's no advantage to it.

Oftentimes I wouldn't even say there's that. My internet takes an hour to download 1 GB. Many games these days are 8+ GB. My nearest Gamestop is a little over 4 miles away. I could walk there and back quicker than it would take to download an average new game to my PS3, and I'm not even in shape. EDIT: Unless you meant loading times, which are a pretty infinitesimal difference either way these days.

OT: I wonder if they're somehow including Steam in those figures. If they are, then a big fat helping of "You don't say!?!" is in order, since the Steam Summer Sale recently rolled through and new game releases have been fuck-all for the past few months. If it also includes things like DLC, then another big helping of "You don't say?!?" is still in order.

Unfortunately this is probably going to just be more fuel for the people who go "DIGITAL IS THE FUTURE, BURN ALL OF YOUR PHYSICAL DISKS!!!" because apparently wanting to have both digital and physical options since it's the best benefit to the customer is something of a novel opinion.

 

[medv4380]

Digital games, and Digital content are two very different things. One includes DLC, FarmVille like monitization, and the other does not.

Revenue is still down 3% overall year over year which means that it's still down a lot more from Q2 2011 of 4.5 Billion. Which means that overall sales is down by 1/3 from two years ago. Maybe it only being down 3% from last year is good, but Q2 isn't a very active quarter so maybe it can't go much lower. The holiday quarter is much more active, and could be in for a much larger fall. We'll just have to wait and see.

Q2 is a slow period as well as Q3 (games drought). But we will see a huge spike in Q4 due to new console launches and peopel buying games to play on that. and the 3% seems like curve curbing getting ready for going upwards to me anyway.

Your "spike" is relative. You see a spike because you naively compare Q4 to Q3 of the same year. If you do it the correct way, and compare Q4 to Q4 in a prior year it will probably be a drop yet again.

There are a couple of reasons for the drop on revenue since 2006, but 2012 was a huge drop so it's easier to see the causes in that year.

1) In 2012 the gamer population dropped by 5% [http://www.gamesindustry.com/gaming-population-in-us-has-declined-5-according-to-npd/]. This includes Digital and mobile. Those segments may claim to have increased in size, but the overall attrition in the industry exceeds what Digital and mobile are bringing in to the industry.

2) Digital is eroding the liquidity in the market. This is a fairly simple concept, but explaining it is NP hard because of the group think fanboys who drink the publisher kool aid about used games. It's the simplicity of the Used Car market. Lightly used cars bought by the idiots who need a new car every year permit middle class, and low income car buyers to get a car for a relatively low price. This permits the crazy man to get a new car any time he wants, and use the trade in money to subsidize his purchase. Without the used car market people hold onto cars for longer, and fewer new cars sell. Digital is essentially applying the breaks to the game industry engine.

3) Mobile is probably causing a bit of price erosion. The more people come to expect to see a game like Sonic for 3 bucks the more the come to expect to see that everywhere. Same thing happened with the Music industry iTunes crash [http://money.cnn.com/interactive/technology/itunes-music-decline/?iid=EL]. The music industry went from making 20 Billion to less than 10 Billion ten years latter all due to the massive price drop from iTunes, and the change in consumer acceptable prices.

4) Inflation doesn't work the way The Escapist, and others think it works. Inflation is a measure of what the things we need to live from day to day cost. If inflation goes up then the cost of living goes up. The Escapist, and many others, insist that Inflation means that we have more money today then we had yesterday, and that's patently false. So, in 1980 the median, or 50th percentile, of households made 46 thousand a year. Now if The Escapist were right then all we have to do is plug in the 46k into the trusty BLS [http://www.bls.gov/data/inflation_calculator.htm] inflation calculator and we should get the median income today which happens to be 50k. However, the calculator spits out 130k. This exposes a simple truth that most of us don't have more money today then out counterparts 30 years ago, and we have probably less than half the disposable income we used to. Which is why discretionary purchases like computers are always falling in price, because there is less money to fight over each, and every year. Video games are the same because they end up spending more money to make a bigger game to keep prices stable, at least up until Sony and MS did their "Great Leap Forward" plan. However, since 2007 wages have been declining much faster, and much longer, than they normally do which explains why the peak of Game Industry revenue is 2008, and has been dropping ever since.



The industry is clearly in a crash state. Is this a slow erosion crash like the Music Industry, or are we waiting for a spectacular failure to happen that rapidly sends it into oblivion like 83? Who knows, but it'll be fun to wait, and see who survives.

 

[Strazdas]

Digital games, and Digital content are two very different things. One includes DLC, FarmVille like monitization, and the other does not.

Revenue is still down 3% overall year over year which means that it's still down a lot more from Q2 2011 of 4.5 Billion. Which means that overall sales is down by 1/3 from two years ago. Maybe it only being down 3% from last year is good, but Q2 isn't a very active quarter so maybe it can't go much lower. The holiday quarter is much more active, and could be in for a much larger fall. We'll just have to wait and see.

Q2 is a slow period as well as Q3 (games drought). But we will see a huge spike in Q4 due to new console launches and peopel buying games to play on that. and the 3% seems like curve curbing getting ready for going upwards to me anyway.

Your "spike" is relative. You see a spike because you naively compare Q4 to Q3 of the same year. If you do it the correct way, and compare Q4 to Q4 in a prior year it will probably be a drop yet again.


2) Digital is eroding the liquidity in the market. This is a fairly simple concept, but explaining it is NP hard because of the group think fanboys who drink the publisher kool aid about used games. It's the simplicity of the Used Car market. Lightly used cars bought by the idiots who need a new car every year permit middle class, and low income car buyers to get a car for a relatively low price. This permits the crazy man to get a new car any time he wants, and use the trade in money to subsidize his purchase. Without the used car market people hold onto cars for longer, and fewer new cars sell. Digital is essentially applying the breaks to the game industry engine.

3) Mobile is probably causing a bit of price erosion. The more people come to expect to see a game like Sonic for 3 bucks the more the come to expect to see that everywhere. Same thing happened with the Music industry iTunes crash [http://money.cnn.com/interactive/technology/itunes-music-decline/?iid=EL]. The music industry went from making 20 Billion to less than 10 Billion ten years latter all due to the massive price drop from iTunes, and the change in consumer acceptable prices.

4) Inflation doesn't work the way The Escapist, and others think it works. Inflation is a measure of what the things we need to live from day to day cost. If inflation goes up then the cost of living goes up. The Escapist, and many others, insist that Inflation means that we have more money today then we had yesterday, and that's patently false. So, in 1980 the median, or 50th percentile, of households made 46 thousand a year. Now if The Escapist were right then all we have to do is plug in the 46k into the trusty BLS [http://www.bls.gov/data/inflation_calculator.htm] inflation calculator and we should get the median income today which happens to be 50k. However, the calculator spits out 130k. This exposes a simple truth that most of us don't have more money today then out counterparts 30 years ago, and we have probably less than half the disposable income we used to. Which is why discretionary purchases like computers are always falling in price, because there is less money to fight over each, and every year. Video games are the same because they end up spending more money to make a bigger game to keep prices stable, at least up until Sony and MS did their "Great Leap Forward" plan. However, since 2007 wages have been declining much faster, and much longer, than they normally do which explains why the peak of Game Industry revenue is 2008, and has been dropping ever since.



The industry is clearly in a crash state. Is this a slow erosion crash like the Music Industry, or are we waiting for a spectacular failure to happen that rapidly sends it into oblivion like 83? Who knows, but it'll be fun to wait, and see who survives.

All spikes are relative. they wouldnt be spikes, if there was nothing to compare to. What i meant though is that it is going to spike comapred to last year q4 because of new console sales and games coming with it.

As for digital games, i fully support the justice court of europe decision that digital games must have ability to resell just like the discs have. this would solve the liquidity problem. I myself never sell off my old games however, so digital did not change my habits.

The price drops for music was a neessity. music was highly overpriced goods back when there was no competetive media, and since music industry are run by dinosaurs it took a giant like itunes to move it forward.

technically, inflation is the cost of ALL things changing. practically, its usually limited to around 1000 selected goods since its very hard to count the prices of EVERY item out there. It is not only day-to-day goods however, and ideogames does enter the 1000. It has little effect, granted, but it is considered to be a good inflation can be measured at. In fact when you breake it down, the IT business has been deflating for the past 20 years. there is abslutely no pre-text to raise prices of games.

Its not about money we have, its about puchasing power that the escapists talk. and i dont know about you, but where i live in last 10 years the purchasing power of populase has increased dramatically.

The wages have stabilized now pretty much everywhere anre are slowly rising. not as fast as they should be, and we got a situation of "2007 profits 2009 wages" quite often, but the economic crysis is definatelly over. or well, over for everyone but USA which seems to going to crash because theres no way your going to live long living like that. your whole economical system is so messed up... but lets not go there.

I would disagree that gaming industry is crashing, merely getting a nice slap on the face that may make it realize that pumping more money does not mean more sales. you know, something they used to know, 10 years ago. the chart shows peaks at pre-cryis periods as it woudl for any other industry, not much else. you head the saying "too big to fail". yeah, we are there already sadly.

 

[medv4380]

All spikes are relative. they wouldnt be spikes, if there was nothing to compare to. What i meant though is that it is going to spike comapred to last year q4 because of new console sales and games coming with it.

As for digital games, i fully support the justice court of europe decision that digital games must have ability to resell just like the discs have. this would solve the liquidity problem. I myself never sell off my old games however, so digital did not change my habits.

The price drops for music was a neessity. music was highly overpriced goods back when there was no competetive media, and since music industry are run by dinosaurs it took a giant like itunes to move it forward.

technically, inflation is the cost of ALL things changing. practically, its usually limited to around 1000 selected goods since its very hard to count the prices of EVERY item out there. It is not only day-to-day goods however, and ideogames does enter the 1000. It has little effect, granted, but it is considered to be a good inflation can be measured at. In fact when you breake it down, the IT business has been deflating for the past 20 years. there is abslutely no pre-text to raise prices of games.

Its not about money we have, its about puchasing power that the escapists talk. and i dont know about you, but where i live in last 10 years the purchasing power of populase has increased dramatically.

The wages have stabilized now pretty much everywhere anre are slowly rising. not as fast as they should be, and we got a situation of "2007 profits 2009 wages" quite often, but the economic crysis is definatelly over. or well, over for everyone but USA which seems to going to crash because theres no way your going to live long living like that. your whole economical system is so messed up... but lets not go there.

I would disagree that gaming industry is crashing, merely getting a nice slap on the face that may make it realize that pumping more money does not mean more sales. you know, something they used to know, 10 years ago. the chart shows peaks at pre-cryis periods as it woudl for any other industry, not much else. you head the saying "too big to fail". yeah, we are there already sadly.

If console launches actually caused spikes then you'd see a spike for the Wii, 360, and PS3 launch followed by a dip the next year. That's not what happens. Since the 80's revenue had a steady predictable rise year over year. You only see spikes when you look at a single company, like Nintendo. But when one dips the other pick up the slack. As a whole, console launches can't be said to drive additional revenue. A console launch can cause game sales to dip while consumers save for the new system making the console revenue neutral. Any increase is attributed to predictable trends which we're not currently in an upward trend.

The CPI hasn't measured the increase in prices in a long time in the US. Congress adopted a "cost of maintaining" CPI a long time ago. Which is why there is debate on whether, or not Chicken should be included in the voodoo formula. What is, and isn't included in the formula is based on class-ism, and doesn't measure the actual increase in prices. If it were any where near accurate it would reflect the median wage closer instead of being off by some absurd margin. Wages have clearly been flat, and every increase for the median and lower has been well below the CPI since the 70. Which means there is less money to spend on luxuries like video games if CPI is anywhere near accurate. The Escapists application of Inflation to video games is as Idiotic as NPR applying inflation to a the price of a 10 pound bag of potatoes from 10 years ago to show how inflation has eaten away at our buying power. But the price was so absurd Idahoans had to point out that the price hadn't moved at all in that entire time, and they had to make an apology for it.

Your overly optimistic on wages. Unless wages go from 50k to 54k the game industry will still be looking at a significant decline in purchase power.

But then again, we won't really know until November Sales start.

 

[Strazdas]

If console launches actually caused spikes then you'd see a spike for the Wii, 360, and PS3 launch followed by a dip the next year. That's not what happens. Since the 80's revenue had a steady predictable rise year over year. You only see spikes when you look at a single company, like Nintendo. But when one dips the other pick up the slack. As a whole, console launches can't be said to drive additional revenue. A console launch can cause game sales to dip while consumers save for the new system making the console revenue neutral. Any increase is attributed to predictable trends which we're not currently in an upward trend.

The CPI hasn't measured the increase in prices in a long time in the US. Congress adopted a "cost of maintaining" CPI a long time ago. Which is why there is debate on whether, or not Chicken should be included in the voodoo formula. What is, and isn't included in the formula is based on class-ism, and doesn't measure the actual increase in prices. If it were any where near accurate it would reflect the median wage closer instead of being off by some absurd margin. Wages have clearly been flat, and every increase for the median and lower has been well below the CPI since the 70. Which means there is less money to spend on luxuries like video games if CPI is anywhere near accurate. The Escapists application of Inflation to video games is as Idiotic as NPR applying inflation to a the price of a 10 pound bag of potatoes from 10 years ago to show how inflation has eaten away at our buying power. But the price was so absurd Idahoans had to point out that the price hadn't moved at all in that entire time, and they had to make an apology for it.

Your overly optimistic on wages. Unless wages go from 50k to 54k the game industry will still be looking at a significant decline in purchase power.

But then again, we won't really know until November Sales start.

As you say, a spike is visible if we look at a single company, and in this case two companies launch the new console at the same time. two major players, who are now (after WiiU failed to sell well) the bigger players in the field. So if you got >2/3 of your market spiking, its reasonable to see whole market spiking.

As a long term trend, yes, fair enough, however it is noticable that it highly corelates with the state of world economy. And that one is picking back up now so the curve may change its destination. Either way there wont be the 80s style crash.

I was basin my knowlege of European CPI as that is the one im familiar, being in europe and all. And Maintaining stable CPI is yet another thing US does backwards. A small inflation is helpful to ecnomy and stagnation is not. (btw they are really debating whether to include chicken? the state of your government seems to be worse than anticipated).
CPI and median wage does not have to correlate. inflation does not bring higher wages. This is because capitalism is not fair and never have been. Like i said before, currently we have a situation of "crysis level wages" with "pre-crysis profits", skewing the buying power a lot and the actual purchase power decreases with CPI increase due to wages staying relatively stagnant.
I do agree that escapist measure of inflation towards videogames is wrong, i did nto dispute that. but they arent dealing with people who know economy most of the time and msot of what we discuss here is beyond the average person. ive met people who do not know what inflation is at all even.
Wages can go from 50k to 54k (im assuming you use american weird system of counting yearly wages instead of montly), now whether they will or not depends entirely on politicians and corporates.

And yes, indeed we wont know till november.

 

[MCerberus]

So NPD, you're tracking gross software sales yes?
So your numbers are completely irrelevant for today's marketplace. It took you how long to include digital and... how are you tracking microtransactions?

 

[Something Amyss]

Oftentimes I wouldn't even say there's that. My internet takes an hour to download 1 GB.

Beyond that, there's the service. In my experience, PSN is SLOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOW. XBL is faster, though I'm still out on "fast." I get Steam games faster than either. I mean, honestly, the "speed" isn't really there on consoles in my experience.

I suppose there's still a benefit if you are agoraphobic or something, but otherwise? No.