Yup, Traditional Game Sales Are Bad

NPD reports that overall sales (combining videogames, and hardware) for August were down 10% over last year; hardware was down 5% and software was down 14%. These are the worst August sales since 2006. Looking at the year so far, total sales are down 8%, with the handheld software and hardware sector down an amazing 25%. No wonder Nintendo just dropped the price of the DSi and DSi XL by $20, though that seems like an insufficient response to the news.

Of course, these sales figures leave out PC sales (like the 300,000 copies of Starcraft Blizzard sold in August) and DLC, and social games, and mobile games. Two possible reasons come to mind: Either sales are down because people aren't playing games, or they're playing games NPD isn't tracking. I don't think gameplaying is going away.

I see no reason for optimism that traditional videogame sales will turn around. Even if you assume Move and Kinect are hits, and the 3DS kills in March, and all the console makers dropped their prices for Christmas... you're still left with games that cost $60 new. You can still play Halo or Call of Duty online instead of buying a new game. You can buy used games, and the quantity and availability is just getting better. There's plenty of DLC to choose from at prices way less than retail stores, generally. You can play games like League of Legends for free, and many other MMO's. Facebook games are free to play too. Thousands of mobile games are available for nothing or just a few dollars.

The universe has changed and it ain't going back. Sure, there will still be AAA titles with multiyear development cycles and development and marketing costs pushing $100 million (or exceeding it). But that won't be where the majority of the revenue lies, and this will happen in a few years. Time to start charting a new course, or build a new boat, or hop off and go overland for a while. The seas ahead look pretty stormy.