Video game sales failed to live up to high hopes in December, with total industry sales falling 21 percent to $3.99 billion from $5.07 billion a year ago. For the year, game sales were $17.02 billion, down 8 percent from $18.59 billion a year ago, according to market researcher NPD Group.
The poor performance of video game sales in physical retail stores masks what’s really happening. Gamers are shifting their purchases to online, social and mobile forms of gaming — dubbed digital gaming — while the retail side is shrinking fast. And the growth in digital isn’t quite big enough to offset the shrinking retail numbers.
In December, hardware sales were down 28 percent while software was down 14 percent.
Full told, the estimated total consumer spending on games includes physical video and retail games, used games, game rentals, subscriptions, full-game digital downloads, social network games, downloadable content, and mobile games. Not counting hardware, this had estimated sales of $16.3 to $16.6 billion in 2011, down about 2 percent or so from a year ago.
Hardware sales were down 11 percent for the year, as were accessories. Software was down 6 percent. New physical retail sales of portable, console and PC games were $9.3 billion in 2011, down 8 percent from $10.1 billion in 2010. Sales grew for used games, full-game digital downloads, downloadable content, and mobile gaming apps.
“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,” said Anita Frazier, analyst at the NPD Group. “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.”
Shed added, “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.”
NPD is working with research company EEDAR to try to come up with more accurate numbers for global digital and physical game sales worldwide.
For the full year, Call of Duty Modern Warfare 3 was the best-selling game, and it took the top honors in December. Just Dance 3 from Ubisoft was No. 2, followed by Elder Scrolls V: Skyrim from Bethesda Softworks, Battlefield 3 from Electronic Arts, and Madden NFL2012.
During the year, Microsoft said it sold 1.7 million Xbox 360 consoles in December and it was the top console seller in 2011. Microsoft also said it outside the second-place player by more than 2.7 million units. It captured about 49 percent of consumer retail spending at $6.7 billion in sales for 2011. Of that, $2.1 billion was spent on accessories such as Microsoft’s Kinect motion-sensing system. Microsoft said it has sold 66 million Xbox 360s, has 40 million Xbox Live members, and has sold more than 18 million Kinect sensors. Microsoft said it ended the year with 40 percent share of the console hardware market.
Sony said it sold 6.5 million PlayStation 3 consoles in the holiday season.
Don't let cyber attacks kill your game! Join GamesBeat's Dean Takahashi for a free webinar on April 18 that will explore the DDoS risks facing the game industry. Sign up here.