September Sales Sucked

Digital game sales (left) take on physical game sales.

NPD may have tried to obscure the faces of the guilty, but the sales figures for September still showed evidence that publishers were getting killed. (Michael Pachter let loose some specific numbers, even though NPD didn't.) Sales were down once again for the most part, with a few bright spots. Overall, home console unit sales were down 20 percent over last year. Granted, last year September had the PS3 price drop boosting sales tremendously, but this year the PS3 had the Move introduction which was supposed to boost things. Still, Sony's PS3 sales were down 37 percent from last year's September, with 312,000 units sold.

The Wii suffered even more badly, with sales dropping 45% year-over-year down to 254,000 units. No wonder Nintendo is pushing for the 3DS to succeed, and and at higher prices for the software. They badly need something to replace the aging Wii's sales, and the DS line is sagging almost as much. So far we've seen nothing from Nintendo about what they might do to boost sales of the Wii this Christmas. The DS line is going to be hard to pump up, too, given that most fans are looking forward to the 3DS introduction.

Meanwhile, non-physical game sales were booming. NPD's first quarterly report on the subject estimated revenue from sources including used games, game rentals, game subscriptions, digital full game downloads, social network games, downloadable content, and mobile game apps combined to be at $2.6 to $2.9 billion, or roughly 70 to 80 percent of the $3.7 billion spent on new retail sales of hardware, software and accessories in the first six months of the year. Given the relative growth rates of the two areas, I'd expect to see the revenue cross over sometime in the next year or two.

Which leads to why NPD would make these changes (referred to in this post) to scrub away specifics, and to add reporting on other game revenues. I believe NPD was under pressure from publishers to "do something" about the constant stream of bad sales numbers. A bad sales month here and there can be explained away; two years in a row of down sales can't be explained so easily. The monthly news release from NPD saying "sales continue to suck" leads to self-fulfilling prophecy, as publishers cut back on spending, consumers get wind of things not going so well, projects get trimmed or slowed, and sales continue to slow. It's a vicious cycle.

One solution, if the news is bad, is to stop spreading the news. (Easier than fixing systemic problems or changing your business model, certainly.) So I suspect there was pressure from many sources for NPD to stop saying such nasty things... or at least, stop making it so specific by naming titles and publishers and specific hardware device sales. That way, even though the numbers still say "sales sucked last month" an individual publisher can say "Sure, maybe other publishers had a problem, but our title Call of Sequel of Honor II sold really well!"

NPD is obviously aware that game revenue from outside traditional channels is booming, so they want to cover it... but in such a way as to not embarrass those publishers who aren't moving into those areas. So the monthly pig gets a nice glossy lipstick and some eye makeup. Meanwhile, mobile, social, and free-to-play games are bringing home the bacon.