June 2012 U.S. Video Games Industry Sales (NPD Group)

Following is analysis from The NPD Group's video game industry analyst, Anita Frazier

Overall

These sales figures represent new physical retail sales of hardware, software and accessories, which account for roughly 50-60% of the total consumer spend on games. When you consider our preliminary estimate for other physical format sales such as used and rentals at $170MM, and our estimate for digital format sales including full game and add-on content downloads including microtransactions, subscriptions, mobile apps and the consumer spend on social network games at $491MM, we would estimate the total consumer spend in June to be $1.36B. Our final assessment of the consumer spend on these areas outside of new physical retail sales will be reported in September in our Q2 Games Market Dynamics: U.S. report.

NPD Group's U.S. Games Industry Sales (New Physical Sales Channel*) - June 2012

5-week month; reporting period 5/27/12 through 6/30/12

Hardware

All hardware platforms, save the PS2 and PSP, saw a sales increase over May, even considering the difference in number of retail weeks. This can be attributed to the 'grads & dads' effect we normally see, but the increases were less than what we saw last year.

The 3DS is still up nearly 25% over where the NDS was in a similar point in time after release to market, and has topped portable hardware unit sales for the last 11 months. I am excited by the content that is coming to market later this year, and to watch what impact that will have on hardware sales.

New Physical Software

LEGO Batman 2 was the best-selling title for the month, selling 450K units across all platforms in June. Batman may be on consumer's minds with Batman: Arkham City also ranking sixth, and with the latest movie, Dark Knight Rises, debuting later in July.

In the first half of 2012, there were 34% less new software SKUs compared to last year. On an average SKU basis, they generated 4% less units, but 2% more dollars on average. This shows that while new launch performance is relatively stable, it is the sheer reduction in the number of launches that is contributing to the overall softness we are seeing in software so far in 2012. The decrease in new launch volume accounts for 41% of the net unit decline and 47% of the net dollar decline from first half of 2011.

Other Content Channels

Outside of new physical retail software, the second largest channel generating sales of content is in the area of mobile games. We've watched this grow consistently quarter over quarter, and new survey results indicate that 57% of smartphone owners play games on their phones on a daily basis. What's really interesting is that when asked where they were when they last played a game on their smartphones, 65% indicated that they had played the game at home.

Accessories

Point card sales are really exploding, which are up 36% through the first half of 2012, which is another indication of the trend toward digital distribution sales. With the reduced amount of new title introductions at retail, gamers are likely looking to fulfill their gaming needs in the digital space whether that might be in add-on content, mobile games or social network games.