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Customer Discussions > Video Games forum

Opinion: Game Sales Decline is Really Grim News

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Showing 1-25 of 31 posts in this discussion
Initial post: Nov 12, 2012, 2:47:28 PM PST


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.

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.

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.

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. Note: Colin Campbell writes occasional columns for Gamasutra.


Posted on Nov 12, 2012, 2:52:17 PM PST
GarionOrb says:
What a melodramatic article. The current gen in "freefall"?

Posted on Nov 12, 2012, 2:52:30 PM PST
I guess I better keep my backlog of PS2, GC, Wii,PS3,PSP games. Otherwise I won't have any games to play when the second video game crash occurs on Dec 21st.

Posted on Nov 12, 2012, 2:56:27 PM PST
Color me not surprised to have slow retail games sales. People are sick of games being overpriced for what they are buying. Come the next few weeks, there are going to be a good amount of games purchased for the Wii-U just like there are going to be a lot of customers lining up for games on the Durango/Orbis. Dev houses are trying to get their footing right now and when they look at THQ, they are cautious. Caution is good, too. I can see some F2P models hitting the next gen with an added effort for smaller titles to complement the riskier large ticket games.

Posted on Nov 12, 2012, 2:57:54 PM PST
since 2006. hmm. what was going on in 2006? oh yeah, transitional phase between console generations.

In reply to an earlier post on Nov 12, 2012, 3:07:50 PM PST
Last edited by the author on Nov 12, 2012, 8:29:05 PM PST
DVvM says:
The retail numbers really aren't good. Looking at YtD retail sales of video game software, this is easily the worst year of this generation (not even having to adjust for inflation) coming in at $1.3b below the previous low water mark. The January through October sales numbers are currently 46% below what they were in 2008.

I think we might just be looking at the new normal. The industry is undergoing what may be a long-term contraction.

In reply to an earlier post on Nov 12, 2012, 3:09:58 PM PST
So our backlogs can save us through the coming dark days? I KNEW I was buying all of those games for a reason.

In reply to an earlier post on Nov 12, 2012, 3:11:45 PM PST
Paper Tiger says:
Backlogs can only get so big before people stop running out and buying $60 games on release day. I think developers should make less AAA games and focus on smaller titles that will turn a profit even people buy them at $40 or less. Otherwise PSN and XBL need to take a good hard look at Steam's business model.

In reply to an earlier post on Nov 12, 2012, 3:12:00 PM PST
Last edited by the author on Nov 12, 2012, 3:13:12 PM PST
DVvM says:
Well, that's part of the decline. "Core" gamers have become savvy and cynical and rarely pay full price for mediocre games, as they tend to have stacks of unplayed better than mediocre games to play, else they realize that paying $60 for a video game is stupid when you can wait two weeks and get it for $20 less (or you can preorder from Newegg or something for $47.)

The industry probably needs to pull the wool over the eyes of the "core" gaming demographic again and convince them that darn near every new release is worth $60 before this turns around.

In reply to an earlier post on Nov 12, 2012, 3:30:42 PM PST
Jacob Dyer says:
Hardware sales for our six-seven year old systems are crumbling! It's over! The industry is over!

LOL. Does the media know how to write stories any other way? Either a company/industry is about to take over the universe, or it is DOOOOOOOMED!

Posted on Nov 12, 2012, 3:46:40 PM PST
Last edited by the author on Nov 12, 2012, 3:48:23 PM PST
Modern Bear says:
Of course hardware sales are in decline. By this point nearly everyone who wants a console already has one. Most of the sales now are probably to people replacing a broken one, or buying a second one. The game sales decline is a different story. People still need games to play on their consoles so something is up with 2012. My guess is that it's probably because of the way games have been released this year. There were some highly anticipated titles early in the year, like Mass Effect 3, then pretty much nothing but smaller titles until September. Publishers are bunching all their major releases into a 2 month period, which means people with limited money aren't going to be able to buy all the games they may want until early next year.

The other point that was brought up in the article I agree with, the $60 price tag. Publishers have this idea in their head that every console game must be priced at $60 on release, no matter how much they spent developing it. Some games may be worth that price to most consumers because they have tons of content that give dozens of hours or hundreds of hours of gameplay. Other games people just aren't willing to pay that price so people wait the few weeks it will take for the game to drop by 33-50%. Publishers have no one to blame but themselves because of their own pricing policies. The sad thing is they're likely going to just continue with this nonsense of "every game is worth the same price" but only boost that price up to $70 next generation. Savvy consumers like the ones on these forums will be even less inclined to preorder or buy on release day, instead waiting for the sales that will be coming soon after release.

In reply to an earlier post on Nov 12, 2012, 3:53:05 PM PST
Last edited by the author on Nov 12, 2012, 3:53:31 PM PST
That's a really good point. I posted the article because I thought it would generate some interesting discussions (my project was correct, or at least I think the discussions are interesting so far). There's little to no need for consoles, because so many of us have them already (although I had to purchase another console because my first PS3 broke down). It's getting close to the next generation, any way.

I'm particularly guilty of purchasing games when they are cheaper and/or much less expensive, as well. Aside from my reluctance to purchase games at full price due to the fact there's little to no replay value, I just feel that there has not been as many games worth buying on day one. I also ended up selling some of the games I bought as well, such as AC3 and Resident Evil 6. I got so bored of AC3 and I didn't even finish it, and RE6 felt liked a waste of time after I finished most of it.

In reply to an earlier post on Nov 12, 2012, 4:06:04 PM PST
Modern Bear says:
I almost always wait until games go down in price to $40 or less. Occasionally I will buy them at full price if I really want it badly and if I have some trade-in credit or coupons, but that is only once or twice a year. It really sucks when you buy a game at full release price and then don't like it, and can only get $20-25 from trading it in. When people get burned a few times like that, they are going to be overly cautious with their gaming dollars in the future. Publishers make a lot of excuses for declining sales, especially blaming the used game market, but they need to look in the mirror first. If they know they have a less than stellar title they should consider selling it at $40 instead of $60. Way more people may take the plunge, so they can sell way more copies, and surprise, make more money.

Thank you for bringing up this topic too. It is an interesting topic. Sure the article sounds like gloom and doom, but sometimes these predictions do turn out to be true. To tell the truth I think that perhaps the gaming industry does need to go through a down cycle in order to separate the wheat from the chaff. Hopefully then the surviving companies can learn from their mistakes and come back even stronger.

Posted on Nov 12, 2012, 4:10:56 PM PST
Aku says:
What do you do when you're wrong about Nintendo dying?

Write about the video game industry dying, of course!

Posted on Nov 12, 2012, 5:25:34 PM PST
Last edited by the author on Nov 12, 2012, 5:26:06 PM PST
got mayo?™ says:
I just think the platform makers are on the greedy crack rocks. There is no reason 7yr old hardware sku's are not in the $150 range already.

Posted on Nov 12, 2012, 6:21:05 PM PST
MrnDpty161 says:
I would probably be open to buying retail if it were at 40.00 --- some of these titles comming out are one playthrough games or just not sparking enough interest for Day 1 buys. ME3 was my last day 1 expense, I'll have to read reviews and watch how these all play out before I buy becuse money is pucker-tight. You buy something for 60.00 plus what ever sales tax there is, when a week or sometimes 4 days later, it's already selling at 40 something.

Posted on Nov 12, 2012, 6:24:13 PM PST
MrnDpty161 says:
Which is why I think the current war they want to start on used games may damage the market, just like I believe downloads are also too expensive even when the game has long since been forgotten. You'll have people just get maybe one game at best and that said game better have 9/10 ratio on the mainstream review sources as well as peer related.

In reply to an earlier post on Nov 12, 2012, 6:25:07 PM PST
Facelord says:
This was also the first generation that the main consoles were at PREMIUM pricing instead of great prices from the very start. Also, inflation totally has something to do with that. The PS3 for $200, I could see that happening within a year. For $150, though? That's insane.

In reply to an earlier post on Nov 12, 2012, 6:26:10 PM PST
Facelord says:
THIS is why I'm a handheld gamer. $40 for Playstation All-Stars, Gravity Rush and Sly Cooper on the go? Yes please!

In reply to an earlier post on Nov 12, 2012, 6:55:30 PM PST
Dukeshire says:
Well sales would go up if Flores, McClane and M grew up and purchased the other "evil" system! They alone hold the fate of gaming in their hands. God help us all.

In reply to an earlier post on Nov 12, 2012, 6:58:45 PM PST
Agree 100%.

In reply to an earlier post on Nov 12, 2012, 8:24:35 PM PST
Yup. More sensationalist articles from gaming sites.

I wonder how this stacks up to the final years of last gen. That seems like it would be relevant data here.

In reply to an earlier post on Nov 12, 2012, 8:27:37 PM PST
Why pay $60 when I can pay $40 a month later? I understand that many people are willing to pay a premium to be the early players of a game they like, but I think these last few years have shown that for most non-exclusive games, waiting is a prudent option.

In reply to an earlier post on Nov 12, 2012, 8:29:36 PM PST
DVvM says:

There you go. Those 2012 numbers aren't complete.

In reply to an earlier post on Nov 12, 2012, 8:29:40 PM PST
Yeah, but it also completely ignores the recent explosion in digital sales.

If you want to argue that the business models are changing, that's fine. Arguing that this is some horrible scenario is just silly.
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Discussion in:  Video Games forum
Participants:  18
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Initial post:  Nov 12, 2012
Latest post:  Nov 12, 2012

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