2011 total consumer spend on all games content in the U.S. estimated between $16.3 to $16.6 billion

U.S. video game industry new physical retail content sales reach $9.3 billion

According to leading market research company, The NPD Group, the preliminary estimate(1) for total consumer spend on gaming content via all monetization methods, including new physical video and PC games, used games, game rentals, subscriptions, digital full-game downloads, social network games, downloadable content, and mobile games, is between $16.3 to $16.6 billion. This total consumer spend on games content in 2011, which includes both physical and digital formats, represents sales that are down approximately 2 percent when compared to 2010.

Based on this estimate, spending on new physical content at retail continues to account for the majority of the total consumer spend on games content. U.S. retail sales of new physical video game content, which includes portable, console and PC game software, generated revenues of $9.3 billion, an 8 percent decline over the $10.1 billion generated in 2010.

Bright spots came from HD console software sales, which were up 9 percent in 2011, as well as increases in the consumer spend on used games sales, full-game digital downloads and downloadable content, and mobile gaming apps, which partially offset declines in the other areas of consumer spend on content.

"Overall industry results are not entirely surprising given that we are on the back end of the current console lifecycle, combined with the continued digital evolution of gaming. Core gamers continue to be engaged and spend on established franchises across both the digital and physical format using multiple devices for different gaming occasions," said Anita Frazier, industry analyst, The NPD Group.

"Our overall estimate of the market continues to point toward the increased imperative for deeper visibility into digital distribution than is available today, not only in the U.S. but globally. This is the goal of our partnership with EEDAR, and central to our discussions with publishers and others in the gaming community," said David McQuillan, president, Games at The NPD Group.

Analysis from NPD Group analyst, Anita Frazier, follows:

Overall

"December was very rough for new physical sales of video games hardware, software and accessories. Because of the great slate of content that came to market during the fourth quarter, I had expected December sales to represent a larger portion of total year sales than what occurred. This year, December accounted for just 23% of annual sales, while the average for the past ten years has been 28."

"One bright spot comes from the HD console systems. Sales across all categories for the Xbox 360 and the PS3 were up 5% for 2011. Combined, the two platforms picked up 9 share points in total sales versus 2010."

"The Xbox 360 platform accounted for nearly 40% of annual 2011 new physical retail sales across all categories."

Hardware

"Hardware was particularly hard hit in December. Normally, we see sales increase from November to December on an average sales per week basis (keeping in mind December is a 5-week retail month as compared to November which is a 4-week retail month). The 3DS and the DS were the only platforms to realize a unit sales increase versus November, which is highly unusual since typically all platforms enjoy a lift in the biggest month at retail."

"The Xbox 360 was the best-selling platform for the year, and the two HD platforms (360 and PS3) were the two platforms to realize a unit sales increase over last year. All other platforms declined in unit sales versus 2010 (save the 3DS which wasn't in market last year)."

"Despite larger percentage decreases versus last year, the Wii and the PS3 were neck and neck in second place for Annual 2011."

Software

"Our preliminary estimate for the other monetization methods in which consumers can acquire games content is $7.24B for 2011, an increase of 7% versus 2010. This includes the consumer spend on used games, digital full game and add-on content downloads, mobile games, social network games, subscriptions and rentals. The increase in these areas partially offset the decline in new physical retail sales of content in 2011. Total spend on content is down approximately 2% in 2011 while the total consumer spend against all categories is down approximately 5%. Our final estimate will be issued in March 2012, along with our Q4 estimate for these same monetization methods in Europe."

"Call of Duty: Modern Warfare 3 landed in the top spot for software title sales for both December and for Annual 2011. Looking at the top 10 titles for the year, two franchises scored with two titles each: Call of Duty and Just Dance - two franchises that couldn't be more different, demonstrating the range of appealing content on consoles in 2011."

"We get asked a lot about how Skylanders is performing. If you combine the sales of software bundles with the character packs which are tracked in the accessories category, the title would rank 4th in December, and 10th for Annual 2011 on dollar sales."

"In a bright spot for content sales, sales of games for HD platforms were up 8% in dollars in December, and 9% for the total year. Correspondingly, the PS3 and the Xbox 360 enjoyed the highest tie ratios for the year in terms of software units sold divided by the platform install base through the end of 2011."

"While unit sales are down less than dollar sales in the software category, the average retail price of software was down over 10% in December versus last year. This could indicate that aggressive promotions which lowered the average retail price did not spur an increase of unit sales the way they were intended to do."

"Star Wars: The Old Republic was the 14th best-selling title in December, and it was released only on PC. While the collector's edition sold less than the regular SKU, the SKU's both generated about the same in dollar sales, thanks to a hefty price point that fans were willing to spend on this well-loved franchise."

"The top 20 titles in December generated nearly half total software revenue for the month, which is very high."

"There is one title that would have fallen in the top 10 for December if we were ranking on an SKU basis rather than on a combined platform basis as we do now: Legend of Zelda: Skyward Sword was the 10th best selling software SKU for the month of December."

Accessories

"A lot of the decline in accessory sales can be tied to tough comps against the performance of the Kinect and Move last Q4. Most accessory types within the category are showing declines. One bright spot is the performance of headsets, which is up 18% in dollar sales versus last December."

Video Game Sales (Software - Hardware - Accessories)

NPD Group's U.S. Games Industry Sales (New Physical Sales Channel*) - December 2011 & Annual 2011

5- week month; December retail reporting period 11/27/11 through 12/31/11

December 2011 Top 10 Games (New Physical Retail only; across all platforms incl. PC)

Annual 2011 Top 10 Games (New Physical Retail only; across all platforms incl. PC)