The gaming industry continued its recession in April. Consumers spent $495.2 million on new physical video games at retail last month, according to the industry-tracking firm The NPD Group.

That total sales number is down 25 percent from April 2012. Unsurprisingly, hardware took the biggest hit. Manufacturers only sold around $109.5 million in new home and portable consoles. That’s down a massive 42 percent from the same period in 2012.

Software was also down from $307.2 million in 2012 to just $254.3 million. That’s a 17 percent recession.

As always, it’s important to remember that NPD only tracks new sales at brick-and-mortar stores. These numbers don’t include digital sales.

Software

Here is a list of the best-selling games in April 2013:

1. Injustice: Gods Among Us (Xbox 360, PS3, Wii U)
2. Dead Island: Riptide (Xbox 360, PS3, PC)
3. BioShock Infinite (Xbox 360, PS3, PC)
4. Call of Duty: Black Ops II (Xbox 360, PS3, Wii U, PC)
5. Defiance (Xbox 360, PS3, PC)
6. Luigi’s Mansion: Dark Moon (3DS)
7. NBA 2K13 (Xbox 360, PS3, Wii U, Wii, PSP, PC)
8. Skylanders Giants (Wii U, 360, PS3, 3DS, Wii )
9. Lego City Undercover: The Chase Begins (3DS)
10. MLB 13: The Show (PS3, Vita)

Warner Bros. Interactive’s DC Comics fighting game topped a weak month for software sales. The brawler and Deep Silver’s zombie game Dead Island: Riptide forced BioShock Infinite out of the top spot.

“Despite overall declines, April title launches in 2013 fared better than games that launched in April 2012, up 118 percent in unit sales and 130 percent in dollar sales,” NPD analyst Liam Callahan said in the report. “This increase was driven by games like Injustice: Gods Among Us, Dead Island: Riptide, and Lego City Undercover: The Chase Begins.”

The biggest surprises for April are probably the games that are still here from March and the ones that dropped off completely.

March saw the release of Tomb Raider, Gears of War: Judgment, and God of War: Ascension. Not a single one of those maintained strong enough sales to make a repeat appearance.

That’s compared to titles like Luigi’s Mansion: Dark Moon, NBA 2K13, and MLB 13: The Show. Sony’s baseball title, The Show, hung on at 10, which is impressive for a sports game exclusive to PlayStation hardware. Luigi’s Mansion held strong at six and NBA 2K13 jumped up to seven likely thanks to the start of the NBA playoffs.

Of course, Call of Duty: Black Ops II is still selling well.

Finally, for software, it’s worth noting that 3DS titles are starting to get a stronger foothold on this chart. Luigi’s Mansion is one thing, but Lego City Undercover: The Chase Begins isn’t exactly a Nintendo staple. It might help that Nintendo published and promoted the game itself.

Hardware

The Xbox 360 once again led all consoles in terms of sales with 130,000 units sold in April. That is 28 straight months of dominance against the PlayStation 3, the Wii U, and the Wii.

“When looking at month-to-month hardware trends with weeks normalized for the five-week March period compared to the four-week April period, we have seen declines hover around 30 percent over the past few years, while March 2013 to April 2013 declines were slightly higher at 38 percent,” said Callahan.

Like I said last month, the hardware market is saturated. Few people are buying hardware because just about everyone already has a console that wants one. Gamers are also hesitant to pull the trigger on new hardware in a year that might see the release of two brand new systems.

Sony already revealed its PlayStation 4 in February. Microsoft plans to lift the veil on the next Xbox during a presentation on May 21.

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GamesBeat 2013 is our fifth annual conference on disruption in the video game market. You'll get 360-degree perspectives from top gaming executives, developers, and analysts on what’s to come in the industry. Our theme this year is “The Battle Royal.” Check out full event details here, and grab your early-bird tickets here!

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In the London Underground, the ubiquitous warning is to “mind the gap” between the train platform and the train. Peter Warman, head of game-market analysis firm Newzoo, thinks that’s a good analogy for the growing gap between investors and opportunities in the game market.

During 2012, stocks such as Zynga’s tanked after a big initial public offering. And while mergers and acquisitions hit a record $4 billion ($3.4 billion by our own calculation at GamesBeat), game investments tumbled 57 percent, according to investment bank Digi-Capital (see chart at right).

The big difference between the acquisition values and the value of investments suggests a disconnect, where investors no longer believe they can get out-sized returns. This comes amid headlines bemoaning layoffs at traditional game companies and a fall in retail sales of titles in the U.S. But in an interview with GamesBeat (in a preview of a talk at the [a]list summit in New York on Jan. 29), Warman said the gap comes from a misperception. While traditional console releases are seeing retail sales fall, the overall game industry is still growing fast on a global basis across multiple platforms, he stated.

“There is a lot of worry about the state of the game market, which is changing enormously,” Warman said. “Zynga’s stock fell, and it had such a negative effect on investors. But there is nothing wrong with social gaming and the larger market. We want to put investors back at ease and get them to understand the market that we see.”

Warman says the big trend that has benefited gaming is the increase in the number of screens people play titles on (see picture at left). In addition to the PC and the TV, consumers are playing games on tablets and smartphones, as well as portable gaming systems.

“Five years ago, only two screens mattered, but now, all of the screens form a perfect circle around the consumer,” Warman said.

Social, mobile, and online are now growing on top of the PC and console markets. And markets in emerging territories are growing at faster rates. That is a lot more to get excited about. When you add up those numbers, you get a $68 billion industry growing at a compound-annual-growth rate of 7 percent a year. All told, Warman said gamers now number about 880 million (see chart at bottom). Mobile titles are growing 32 percent a year and are now a $9 billion market. About 33 percent of all mobile-app downloads are games, and 66 percent of all mobile-app spending is gaming related.

Within this context, Warman acknowledged that some segments of the market are going through hype cycles. Social gaming had hype, followed by the mobile-gaming bubble. Investors touted “mid-core” social games even as Zynga’s casual offerings declined. Social casino games soared in the last year. Hype over the hot categories drives a herd mentality among investors and inevitably leaves them feeling burned when the category fails to live up to expectations.

“We’re confusing investors and giving them no clear outlook on the future,” Warman said. “The result is a decline in investments. But based on what we see, the game market will grow for another 20 years.”

Warman acknowledged that only a few game companies have maximized their value by succeeding in multiple parts of the market. Electronic Arts is beginning to see a payoff from its years of investments in digital efforts, but its stock price doesn’t reflect that yet. THQ, which dismantled in a bankruptcy auction last week, is an example of what happens when you make investments in the new categories too late.

“THQ ran out of time,” he said. “They didn’t have enough time to learn from experiments in gaming as a service. You have to learn your optimal investments in digital content. These days, you have to realize you are not investing in a team that will make a game and move on to something new. You are investing in a team that will run a game, like a service.”

By contrast, he pointed out that Kabam learned from years of experimentation on how to monetize games like Kingdoms of Camelot. When the studio took that property to mobile platforms in the past year, it was a smash hit, becoming the No. 1 grossing hit for the Apple iTunes App Store.

“The good news is that the tablet and smartphone platforms are poised for growth for a long time ahead,” Warman said. “And investing in international markets can pay off now. There is so much opportunity if you localize a game for a region like Russia or Turkey.”

Companies have to realize that their marketing budgets should spread across multiple platforms, not just a single platform, Warman said.

Warman highlighted five trends that matter. Consumers are using more screens. Games are becoming free. Games are becoming services. A good business model is a balanced one. And globalization matters.

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GamesBeat 2013 is our fifth annual conference on disruption in the video game market. You'll get 360-degree perspectives from top gaming executives, developers, and analysts on what’s to come in the industry. Our theme this year is “The Battle Royal.” Check out full event details here, and grab your early-bird tickets here!

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The game industry is still living in compressed time. It went through more gyrations and disruptions in a year than it usually does in a generation. The revolution in games is on our doorstep, but several of the big companies trying to start it have failed to execute. They proved that ambition alone isn’t enough to take on the status quo.

But traditional game makers can’t be too smug. We saw the bankruptcy of THQ and the weakening of many of the strongest video game franchises. Social, mobile, and online forces will continue to reshape the business in the coming year, but nobody was free of trouble.

The good news is that the number of gamers continues to soar (past a billion), and, sometime soon, somebody is going to hit a phenomenal home run. That is why that, in spite of some phenomenal crash landings, entrepreneurs and investors are still going big with new game startups. Those startups aren’t raising as much money as they once did, but the entrepreneurs running them still have fire in their bellies.

We’ve gone back through the archives of GamesBeat for the past year and dug up the stories that made the biggest impact. Here’s our list of the biggest game stories of 2012.

1. Zynga goes into a free fall

In tandem with Facebook’s disappointing initial public offering, Zynga missed its second quarter earnings targets. Demand for its games weakened, and the company’s stock price tanked 40 percent in a day. It never recovered during the year, and the toll was felt by every gaming company. In the third quarter, the results were disappointing again.

The problem for game startups is that Zynga’s value fell by 75 percent, crushing down the values of similar companies in both the public stock and private markets. Game company valuations plummeted, and it is no surprise that the pace of investments slowed in the latter part of 2012. Zynga tried to claw its way back up to recapture the glory days of its IPO. It launched a spate of new titles like FarmVille 2 and moved into mid-core games via acquisition. But the payoff isn’t clear just yet.

2. Mobile goes big

Zynga tried to move into mobile in a big way, but so did everybody else. The migration was huge, since many believed that smartphones and tablets would replace consoles. Rovio’s Angry Birds soared past a billion downloads, and the franchise took off in new directions with Angry Birds Space and Angry Birds Star Wars, not to mention a whole line of new Hasbro toys. Social game companies like Kabam successfully diversified beyond Facebook and invaded mobile — its Kingdoms of Camelot: Battle for the North turned out to be the No. 1 grossing app on the Apple App Store. About 86 percent of Flash game developers expanded into mobile. Like King.com, most of them tested their titles on the web and Facebook and then moved the successful games over to mobile.

By the third quarter, mobile-game startups accounted for 42 percent of all investments in the industry and 22 percent of the transaction value, according to Digi-Capital. That meant that mobile game investments were popular, but they were also smaller since mobile-game studios are still relatively small.

But the mobile market wasn’t easy. Indie game makers could make it big, but they often needed help. Mobile marketers tried everything the could to get their products noticed, but Apple had to crack down on the methods that weren’t good for consumers. Still, mobile promised to be huge. In the U.S., 44 percent of people were playing mobile games. And mobile became the fastest growing segment in games.

3. Kickstarter launches a crowdfunding revolution

While Zynga’s crash hurt funding, developers found a new fountain of money in their own fans. Tim Schafer’s Double Fine Productions tapped the crowdfunding site Kickstarter to fund a new adventure game. It raised more than $1 million on its first day and wound up raking in $3.3 million in 30 days by March 13. Brian Fargo’s inXile Entertainment jumped on the opportunity and raised nearly $3 million for Wasteland 2, a sequel that no traditional game publishers would touch. Jordan Weisman’s Harebrained Schemes raised $1.8 million for Shadowrun Returns. Kickstarters for a variety of other games such as Obsidian, Leisure Suit Larry, Pitfall, and others also took off, creating a revival for mid-sized game development studios.

Soon enough, crowdfunding wasn’t just a way to run around the gatekeeper publishers. It was an agent of disruption, giving more creators control over their destinies at a time when larger game companies had become risk averse. Ouya proved that as it raised $8.3 million for its Android-based video game console.

And Kickstarter wasn’t the only show in town. Gamesplanet Lab launched its own crowdfunding effort for games. Gambitious focused on raising crowdfunding and seed investment for game studios. And Chris Roberts’ Star Citizen took off in part through web-based donation system.

4. Nintendo’s kicks off the new generation

Nintendo’s run with the motion-sensing Wii was phenomenal, with more than 98 million units sold to date. But for the past couple of years, sales have lagged and Nintendo finally got a replacement console on the market with the launch of the Wii U on Nov. 18. Nintendo aimed to disrupt gaming again by incorporating tablets and asymmetrical gameplay into its new console. It initially sold out, with more than 400,000 units sold in its first week. But that doesn’t look so good in the context of some serious new competition. Apple’s new iPhones and iPad tablets routinely sell more than 2 million or 3 million units on opening weekend. Nintendo executives put on brave faces, but critics have been bearish on the Wii U throughout the past year. Those critics, such as our own GamesBeat editor-in-chief Dan “Shoe” Hsu, point out a number of weaknesses in the console, such as the lack of a killer app. Analysts expect it to sell out for the holidays, but the questions is how long it will keep selling for. So far, the Wii U hasn’t set the world on fire.

5. OnLive’s collapse

No company held more promise than OnLive, which came on the scene in 2009 with a plan that astonished everyone. OnLive’s “cloud gaming” solution would allow people with low-end computers to play high-end games that were processed in a remote data center and then streamed as videos to the players’ screens. The cloud would allow players to log into their games from anywhere and play as long as they had a good Internet connection. OnLive beat its milestones and surprised the skeptics, launching its service in 2010. It came up with a lot of improvements, but it lost a number of big game publishers such as Electronic Arts as rivals such as Gaikai came on the scene. OnLive’s membership base grew slowly, and it had a tough time competing against free-to-play online games.

So the company kept raising money at a high valuation to keep the lights on. By 2012, the company had burned through more than $200 million in funding. It had more than 200 employees but failed to break even. It hit the wall in August, running out of money. An investor bought the company and ousted founder Steve Perlman. The company went through a bankruptcy alternative and lost many of its employees. It is trying for a comeback but in a much reduced state.

Perlman has moved on to his wireless broadband startup, but his failure to warn people about the collapse was unpopular with employees. This fall sent a shock wave through the cloud-gaming industry, and it was a case of a solid company racing too far ahead of its own revenues until it shattered its own dream.

6. Curt Schilling’s 38 Studios falls apart, forcing him to auction off his bloody sock

Curt Schilling was a baseball hero who pitched his team to a 2004 World Series victory with a wounded foot. After he retired, he started 38 Studios, a game startup with the audacious goal of creating a massively multiplayer online fantasy role-playing world that could challenge Blizzard Entertainment’s World of Warcraft. He poured more than $50 million of his own money into Project Copernicus, and he hired comic artist star Todd McFarlane and fantasy novelist R.A. Salvatore. It was the ultimate bet on the MMO business. But it wasn’t meant to be.

Schilling took $75 million in loans from Rhode Island in exchange for moving his company there from Massachusetts. But the company’s first game, Kingdoms of Amalur, was a mediocre success, and it ran out of money in June. It laid off more than 300 people abruptly and then filed for bankruptcy. Schilling had to auction off most of his property, including his bloody sock. Instead of killing off WoW, 38 Studios became a cautionary tale for states that provided rich incentives to risky startups.

7. Social casino games take off

Everybody loves a bubble. Speculation that online gambling might be legalized led to a feeding frenzy in the adjacent market of non-real-money social casino games, where people spent money on virtual goods but couldn’t cash their winnings out. Games such as Zynga Poker had taken off over the past five years. But when the Justice Department ruled in December that online gambling could be legal, the floodgates opened. IGT paid $500 million in January for Double Down Interactive, a social gaming company with only 70 employees. After that jackpot, the speculators moved in. Dozens of new startups received funding for their social casino and sports betting games. Analysts report that social casino games will generate $1.6 billion in revenue this year, and that will steadily grow over the next several years. Betable has cut deals with five social casino game companies to convert their titles into real-money gambling games. Zynga’s crash took some of the air out of this bubble, but many are still betting that online gambling will give a big boost to the social casino game companies and visa versa. Zynga itself is betting big on online gambling, and so is Facebook. Will the bubble pop in 2013, or will the marriage of social casino games and online gambling pay off?

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Call of Duty: Black Ops II beat out Halo 4 for the top spot for U.S. retail game unit sales during the critical month of November, according to market researcher NPD.

But both blockbuster games were not able to lift overall game sales high enough to beat sales for November 2011. Sales for total video game hardware, software, and accessories sold at retail were $2.55 billion in November, down 11 percent from $2.87 billion a year ago.

The list does not include some of the fastest-growing parts of the game business, which includes used-game sales, mobile games, social games, and online titles such as free-to-play games. But the U.S. retail sales list is still useful in pointing out trends in gamer tastes, and it also keeps score on which companies are performing the best.

Game hardware sales were $838.9 million, down 13 percent from $962.2 million a year ago. Game software sales were $1.43 billion, down 11 percent from $1.60 billion a year ago. Game accessory sales were $280.9 million, down 8 percent from $305.3 million a year ago. If you count PC games, total software sales were $1.46 billion, down 11 percent from $1.65 billion a year ago.

It’s no surprise that Black Ops II beat out Halo 4, as Black Ops II is on more platforms.

The top 10 games of the month were:

• Call of Duty: Black Ops II (360, PS3, Wii U, PC)** 1 Activision Blizzard
• Halo 4 (360)** 2 Microsoft
• Assassin’s Creed III (360, PS3, Wii U, PC)** 3 Ubisoft
• Just Dance 4 (Wii, 360, Wii U, PS3) 4 Ubisoft
• Madden NFL 13 (360, PS3, Wii, PSV, Wii U) 5 Electronic Arts
• Skylander Giants (Wii, 360, PS3, 3DS, Wii U)** 6 Activision Blizzard
• Need for Speed: Most Wanted 2012 (PS3, 360, PSV, PC) 7 Electronic Arts
• NBA 2K13 (360, PS3, Wii, PSP, Wii U, PC)** 8 Take 2 Interactive
• WWE 13 (360, PS3, Wii) 9 THQ
• FIFA Soccer 13 (360, PS3, Wii, PSV, 3DS, Wii U, PSP) 10 Electronic Arts

**(includes CE, GOTY editions, bundles, etc., but not those bundled with hardware)

Here’s the analysis from Liam Callahan, analyst at NPD:

Overall

“These sales figures represent new physical retail sales of hardware, software and accessories, which account for roughly 50 percent of the total consumer spend on games.  When you consider our preliminary estimate for other physical format sales in November such as used and rentals at $207 million, 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 $410 million, we would estimate the total consumer spend in November to be over $3.1 billion.  Our final assessment of the consumer spend in these areas outside of new physical retail sales will be reported in February in our Q4 Games Market Dynamics:  U.S. report.”

“It’s important to compare this month’s results to November 2005, which was the last time the industry began to transition between console generations with the launch of a new platform. Comparing this month’s results to November 2005, retail video games sales are nearly twice as big as they were then (+97%). This really demonstrates the long-term health of retail sales even as many platforms are quite late in their lifecycles.”

“Despite an overall retail video game decline of 11 percent, November had the smallest year-over-year decrease we have seen for dollar and unit sales so far this year.  This is a sign of momentum going into the December holiday period.”

Software

“At 14 percent, video game software unit declines are tied with August 2012 for the smallest year-over-year declines so far this year.”

“Overall entertainment software units decreased by 15 percent, however, when comparing the performance of the top 5 titles from this year to last, we see a rise in unit sales of 5 percent (games outside of the top 5 sold less, leading to overall declines).”

“While there was a 21 percent decline in the number of titles that launched this November versus November 2011, these new titles are holding their own and generating the same number of dollars per title on average.  Unfortunately, declines this month stemmed from softer sales from catalog titles, which launched outside of this month, with dollar sales down 11 percent, collectively.”

“Half of the software dollars sold in November 2012 were for the Xbox 360, which gained 8 share points in overall software sales from last November.”

Hardware

“November 2012 was the lowest hardware decline for dollar sales we have seen in year-over-year trends so far this year.”

“The much anticipated launch of the new Wii U console brought in more dollars than the Wii launch in November 2006, up 21 percent from that launch month.  With an average price 35 percent higher for the Wii U at launch compared to the Wii, this is an example of how consumers are willing to come out and spend when they see the value of the product.”

“Comparing Wii sales from November 2011 to Wii sales combined with Wii U sales in November 2012, dollar sales increased by 76 percent.”

“Xbox 360 led overall hardware platform sales for the sixteenth consecutive month.”

“Through bundling compelling third party content with the PS Vita hardware, November 2012 was the second highest month of sales on a unit basis for the PS Vita since launch.”

“The Nintendo DS was the only platform to increase in hardware unit sales versus November 2011.”

Accessories

“Skylanders accessories continue to perform well, building off the original game with the Skylanders Giants.  Skylanders unit sales of both original and the new Giants were up over 250 percent compared to last November.”

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The poor performance in May was a little better percentage-wise compared to April, when sales fell 42 percent year-over-year. The strong sales of Diablo III did create a bright spot: PC game sales were up 230 percent for the month.

But the weak brick-and-mortar store sales aren’t necessarily something to fret about as retail is becoming a smaller piece of the pie, accounting for 50 to 60 percent of sales. The total spending on games, when adding digital and other sales such as used games, adds up to more than $1.17 billion in the month.

In May, hardware sales were $138.9 million, down 39 percent from $228.8 million a year ago. Software was $255.4 million, down 32 percent from $375.9 million a year ago. Accessory sales were $122.3 million, up 7 percent from $114.2 million a year ago. Accessory sales were up because of strong game-card sales as well as the success of Activision’s Skylanders products, which are hybrid toy-game devices.

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, sales were $335.2 million, down 16 percent from $400.1 million a year ago.

NPD is working with video game research company EEDAR to try to come up with more accurate numbers for global digital and physical game sales worldwide. The top-selling game of the month was Blizzard’s Diablo III (pictured above).

Microsoft said that total spending on the Xbox 360 was $209 million in May. The company sold more than 160,000 hardware units in the month in the U.S., and that meant that it capture 45 percent of the U.S. market share for hardware.

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 to 60 percent of the total consumer spend on games. When you consider our preliminary estimate for other physical format sales such as used and rentals at $155 MM 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 $420 MM, we would estimate the total consumer spend in May to be $1.17 B. Our final assessment of the consumer spend on these areas outside of new physical retail sales will be reported in September in our Q2 [editor's note: second fiscal quarter] Games Market Dynamics: U.S. report.

Hardware

All hardware platforms, save the 3DS, saw a decline in unit sales versus last year. The Nintendo DS, however, did realize a 35 percent lift over April 2012 catalyzed by the May 20th price reduction on the DSi and DSi XL. Even with the price drop on the DS platform, 3DS sales realized an increase of 17 percent over last May.

New physical software

PC Games sales realized a year-over-year increase of 230 percent realizing $80 MM in sales, which softened the decline in software sales overall.

Diablo III is the top-selling title for May, the first time since July 2010 that a PC-only game accomplished this feat. Since the game launched day and date through digital distribution as well, full sales of the title are some multiple of what is reflected in the retail sales. Starcraft II was the title that topped the best-seller list in July 2010, a testament to the power of the Blizzard brand in PC gaming.

To dig deeper into the new physical retail software performance this month, new launches generated 31 percent more dollars this May than they did last May largely due to the success of Diablo III. This May, new SKU [editor's note: stock-keeping unit] launches across console, portable, and PC game software generated 188 percent more unit sales per SKU than they did last May. So while there were fewer new item introductions this May, they collectively generated more unit and dollar sales.

YTD [editor's note: year-to-date] 2012, there have been 27 percent fewer new software title introductions into retail, which we believe is a big part of the softness we’re seeing in May sales. A title obviously continues to see sales beyond its launch month, so there is a longer term impact from a narrower array of available new content. That said, we saw some exciting content at E3 [editor's note: Electronic Entertainment Expo] that will come to market in the latter part of the year, and when great content comes to market, gamers are still showing up at the stores to buy it.

Accessories

The Accessory category continues to perform well due to increased video-game-card sales, up 74 percent from last May, as well as the continued success of Skylanders.

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It was another bad month for game companies. Video game sales fell 42 percent percent in April, with total industry sales falling to $630.4 million from $930.9 million a year ago, according to market researcher NPD Group. The early Easter holiday this year may have contributed to the lower than expected sales numbers, along with a relatively light game release schedule for the month.

The poor performance in April was worse percentage-wise compared to March, when sales fell 35 percent, and February, which was down 20 percent year-over-year. April, like February, had a relatively light release schedule for core console games.

In April, hardware sales were $189.7 million, down 32 percent from last April’s $279.9 million. Software was $292.1 million, down 42 percent from $503.2 million a year ago. Accessory sales held steady with $148.6 million, a one percent increase from last year’s $147.8 million.

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, sales were $307.2 million, down 42 percent from $533.7 million a year ago. The poor software sales were even lower than what a number of analyst firms predicted. Of course, these sales do not reflect the digital side of games, including social, mobile, and online.

The top-selling game of the month was Activision Blizzard’s Prototype 2 (pictured). Lucasarts’s Kinect Star Wars and Activision Blizzard’s Call of Duty: Modern Warfare 3 were the next top selling games for April, at number two and three, respectively.

Here’s some more analysis from NPD Group’s Anita Frazier:

Overall new physical sales

“This year, Easter fell very early in April, which means most Easter-related purchases may have fallen into March this year, whereas last year, Easter fell late in April causing most sales to fall in that month. We usually find that Easter-related purchases generate an extra 10 percent in revenue in the month they occur, so some of the softness compared to last April could be attributed to the shift in Easter timing.”

Hardware

“One thing to keep in mind is that the 3DS has outsold the DS by about one million units in their respective first 14 months in the market, and the DS went on to become the best-selling gaming hardware system ever.”

“The average selling price for hardware increased over last April, with one of the drivers of that increase being the Star Wars Kinect 360 bundle, which included the Xbox 360 console and controller, a Kinect sensor, and Kinect Star Wars game.”

Content

“I think what the new physical retail content sales reflect a very light release schedule in terms of the amount of compelling new games. Last April, the top seven titles outsold the top-selling title this year, and, simply stated, there were notably fewer new market introductions. I think it’s a simple as that because when we see compelling content come into the market, the games are still selling as well as ever – we just saw a lot less this April as compared to last.”

“Kid Icarus: Uprising on the 3DS ranked among the top 10 SKU’s for the month, and would have made the list if we were reporting on SKU rather than total title level.”

“For some insight into digital purchasing of content, we can look at the performance of points and subscription cards which was up 75 percent in units over last April. These could very well have been last minute additions to Easter baskets early in the month.”

Accessories

“Skylanders characters remain a strong driver of accessory sales. The three character pack SKU’s have sold just under 10 million units in the U.S. since their launch into the market last October.”

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GamesBeat 2013 is our fifth annual conference on disruption in the video game market. You'll get 360-degree perspectives from top gaming executives, developers, and analysts on what’s to come in the industry. Our theme this year is “The Battle Royal.” Check out full event details here, and grab your early-bird tickets here!

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The poor performance in March was a little better percentage-wise compared to February, when sales fell 20 percent, and January, which was down 34 percent year-over-year. Both January and Feburary had light release schedules for core console games, but March had some big releases this year.

In March, hardware sales were $323.5 million, down 35 percent from $494.5 million a year ago. Software was $553.1 million, down 25 percent from $735.4 million a year ago. Accessory sales were $222.5 million, down 8 percent from $241.4 million a year ago.

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, sales were $585.1 million, down 26 percent from $790.9 million a year ago. The poor software sales were in line with what a number of analyst firms predicted. Of course, these sales do not reflect the digital side of games, including social, mobile, and online.

NPD is working with research company EEDAR to try to come up with more accurate numbers for global digital and physical game sales worldwide. The top-selling game of the month was Mass Effect 3 (pictured).

Here’s the commentary from Anita Frazier, analyst at NPD:

“While it was a disappointing month, and first quarter, for new physical retail sales of video games hardware, software and accessories, it wasn’t entirely unexpected given guidance we’ve seen from several sources.”

“Outside of new physical retail sales, we find that the consumer spend on content on used games, rentals, subscriptions, mobile games, social network games, digital full game downloads, and add-on content accounted for an additional $2.5 billion to $2.7 billion across the U.S., U.K., France, and Germany in Q1 2012.”

Hardware

“Hardware really slowed down this month, and all systems saw a unit sales decline versus last March, and on an average sales per week basis, versus February 2012. That said, the high-definition console systems fared better than many other hardware platforms.”

“The Xbox 360 is the best-selling console system for the last 15 [months] and the best-selling hardware platform overall for the past eight.”

Software

“High-definition platform unit sales of software were flat [compared] to last year, which is a bright spot in this month’s reporting. “

“Mass Effect 3 sold more than twice as much as did Mass Effect 2 during its introductory month in January 2010.”

“In a list of the top 10 SKUs for the month (as opposed to top titles as listed here), 3DS Kids Icarus: Uprising would have been among the top selling individual SKUs for the month of March.”

“Skylanders: Spyro’s Adventure was the 15th best-selling title for the month. The accessory items are selling phenomenally well. The three character pack SKUs were all among the top 10 accessory items for the month of March.”

Accessories

“Accessories were up slightly in unit sales for the month, but down in dollars due to a decline in average retail selling price. Interestingly, among the top ten accessory SKUs for the month, only three were “traditional” accessories, while the remainder were either point or subscription cards or Skylanders character packs.”

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Video game sales crashed 34 percent in January, with total industry sales falling 34 percent to $750.6 million from $1.14 billion a year ago, according to market researcher NPD Group.

The lousy performance of video game sales in physical retail stores masks what’s really happening as the industry transforms to digital sales, which aren’t captured in the retail numbers. 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 January, hardware sales were $199.5 million, down 38 percent from $324.0 million a year ago. Software was $355.9 million, down 38 percent from $576.0 million a year ago. Accessory sales were $195.2 million, down 18 percent from $237.1 million a year ago. 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, sales were $379.6 million, down 37 percent from $603.2 million a year ago.

Liam Callahan, analyst at the NPD Group, said, “January retail performance experienced steep declines with a lack of software launches, and poor hardware and accessory performance partly related to bad comps from Kinect-related success in January 2011.” A year ago, there were a lot more releases of new video games in January.

He added, “Outside of new physical retail sales, we estimate that the consumer spend on other ways to acquire content including used games, full game and add-on content downloads, social network games, mobile games, rentals and subscriptions accounted for an additional $350 – $400 million in sales.  Our final quarterly estimate of the Q1 2012 consumer spend in these areas will be released in our Q1 Games Market Dynamics: U.S.”

David Dennis, spokesman for Microsoft, said that the Xbox 360 had another month as the leader in console sales. The Xbox 360 led U.S. hardware sales for the 13th month in a row, selling 270,000 units in January. Microsoft said it holds 49 percent share of console sales, with the total retail spend on Xbox hitting $301 million.

NPD is working with research company EEDAR to try to come up with more accurate numbers for global digital and physical game sales worldwide. The top-selling game of the month was Call of Duty: Modern Warfare 3 (pictured), which was launched in November and is the top-selling video game of all time.

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Video game sales are expected to grow from $66 billion worldwide in 2010 to $81 billion by 2016, but that growth masks some profound changes that are happening in the industry. Namely, the world will shift from sales of games in physical stores to a wide variety of digital distribution methods, according to market researcher DFC Intelligence.

Online sales of games are the largest area of growth and could surpass retail sales as early as 2013, said David Cole, a long-time analyst at San Diego-based DFC, in an interview. Disruptions in the market will make it more complex for game publishers to run a business, but if they do it right, they could find untold riches.

The forecast includes revenue from all types of games, including console hardware and software (both physical and online), portable hardware and software, PC games, and games for mobile devices such as mobile phones, tablets, music players and other devices that can play games as a secondary feature.

Cole said that global sales of physical game software peaked in 2008. That makes sense in part because the global financial crisis that hit in the latter part of that year caused a big shift from $60 console games to free-to-play games played online via PCs. Recession-shocked consumers felt the free-to-play titles were a better bargain.

But the decline of physical game sales will likely be slow and steady, not drastic, as users have to become accustomed to new ways of paying such as subscriptions or virtual item sales.

The report also predicts that the glory days of consoles are behind us. The Nintendo Wii U is expected to see strong sales starting in late 2012 (Nintendo hasn’t set a precise date yet), but Cole doesn’t think it will surpass the Wii’s sales. New consoles are also expected from Sony and Microsoft, but not until 2014 at the earliest, Cole said. The uncertainty around the timing of these new launches is one of the biggest unknowns in the industry. Cole said he believes Microsoft and Sony are enjoying rising profits from game sales now and aren’t motivated to incur a lot of new costs by introducing brand new consoles.

At some point, however, competition will force them to introduce new machines. Nintendo had a glorious year for the Wii and handheld DS system in 2008, but it has seen sales decline since that peak. So Nintendo is more motivated to launch a new machine. Nintendo introduced the 3DS earlier this year, but it has been so poorly received that Nintendo slashed the price. the Xbox 360 and the PS 3 may very well live up to their goals of lasting 10 years in the market. But if Microsoft and Sony don’t introduce new consoles in the new few years, they run the risk of turning consumers off.

“The issue is Sony and Microsoft don’t feel like they’re in a hurry to introduce new consoles,” Cole said.

That’s where there is more opportunity for online games, digital distribution, smartphones, tablets and other mobile devices. As those systems become more capable, they could become viable threats to the consoles and will grab more market share. The good thing about these new systems is they offer the best chance for the industry to win over new consumers who would never play a console game.

“We feel the consoles have hit their peak,” Cole said.

For publishers, the tough task becomes knowing where to place bets. They have to support the right game platforms and find all the niches to exploit.

In 2011, industry growth is expected to be just 3 percent. Overall retail hit a peak at $58 billion in 2008. By 2016, the retail market will shrink to $43 billion. Online sales are expected to increase from $19.3 billion in 2010 to $37.9 billion by 2016. This includes revenue from PC online games, console online games and mobile online games including mobile phones and tablets.

Cole noted that the game industry has surpassed sales of the music industry, but it remains behind movies, which generate more revenue if you count all of the different ways movies are monetized on different platforms.

In July, video game sales cratered 26 percent compared to a year ago, following a 10 percent overall drop in June and the worst month since 2006, NPD reported.

While it may seem like the game industry is in a funk, these sales numbers reflect only retail sales. Other digital sales – including used games, rentals, online games, mobile games and social games — show constant growth.

“There is no getting around the fact that video game sales in the new physical retail channel suffered its lowest month since October 2006,” said Anita Frazier, an analyst for NPD.

She said that, despite the very rough month, new physical retail sales are down just 4 percent year-to-date and, based on seasonality trends observed over the last 10 years, the trend for the year is expected to be flat to down 2 percent in overall sales.

Total video game hardware, software, and accessory sales at retail stores were $707.7 million in July, down 26 percent from $961.3 million a year ago. Overall console video game sales (excluding PC games) were $687 million, down 20 percent from $855.3 million a year ago.

Game hardware sales were $223 million, down 29 percent from $313.8 million a year ago. And game software sales were $336.2 million, down 17 percent from $403.3 million a year ago. Accessory sales, which in earlier months this year were up thanks to strong sales of Microsoft’s Kinect motion-sensing system, were $127.8 million, down 8 percent from $183.1 million a year ago.

If you throw in the sales of PC, console and portable games, the total is $356.9 million, down 30 percent from $509.3 million a year ago. That means that PC games are also suffering pretty bad right now.

Last year saw the release of RockStar Games’ Red Dead Redemption, while this year RockStar (which is owned by Take-Two Interactive) released the highly acclaimed LA Noire detective game in May. LA Noire dropped off the top ten list already. Meanwhile, Take-Two’s big release for June, Duke Nukem Forever, completely cratered and fell off the list in July. The game was panned by critics.

The top sellers this month included Electronic Arts’ NCAA Football; Disney’s Cars 2; Activision Blizzard’s Call of Duty Black Ops; Disney’s Lego Pirates of the Caribbean; Ubisoft’s Just Dance 2; Take-Two Interactive’s Major League Baseball 2K11; Majesco’s Zumba Fitness: Join the Party; Bethesda Softworks’ Fallout New Vegas; Nintendo’s New Super Mario Bros. DS; and Mortal Kombat 2011.

The NCAA game’s results are a big victory for EA, since sales of this year’s title are up 15 percent compared to a year ago.

Microsoft said it held 45 percent share of the overall current-generation game console market. It said it sold 277,000 Xbox 360s in July, maintaining the No. 1 spot. It said it was the fifth month where the Xbox 360 held more than 40 percent of the current-generation market share. Total retail spend on Xbox 360 products was $250 million, the most for any U.S. console, but down from $350 million in June. Microsoft was down from a year ago, but last year’s sales were pumped up by the launch of a slimmer model, Frazier said.

Frazier said that a year ago, 19 games sold more than 100,000 units. This year, only eight games sold more than 100,000 units. That was because there were so few new releases. Last year, 29 games were released in July, while this year there were only 17 releases. August could also be a slow month because EA’s Madden NFL 12 won’t release until Aug. 30 this year.

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The number shows that the overall video game industry is growing, despite the fact that retail sales of games have been falling. Those numbers — showing growth instead of a decline — are important to give a boost to investor confidence in the video game sector.

Consumers spent $2.03 billion on new video game console and PC software in the first quarter, compared to $2.26 billion a year ago.

But the total amount spent on new digital methods was $1.85 billion, up from $1.68 billion a year earlier. Digital methods include sales of used games, game rentals, subscriptions, digital full-game downloads, social network games, downloadable content and mobile phone games. If you add hardware, content, and accessory numbers ($2.11 billion), you get a total of $5.9 billion.

When asked if NPD expected to see a trend of these “alternative” video game revenues increasing compared to “traditional” avenues of purchasing game content, NPD analyst Anita Frazier told VentureBeat, “The space is evolving too rapidly to anticipate any future trends except for the fact that the rate of change is more on the sudden end of the scale than gradual.”

We’ll be exploring the most disruptive game technologies and business models at our third annual GamesBeat 2011 conference, on July 12-13 at the Palace Hotel in San Francisco. It will focus on the disruptive trends in the mobile games market. GamesBeat is co-located with our MobileBeat 2011conference this year. To register, click on this link. Sponsors can message us at sponsors@venturebeat.com. Our sponsors include Qualcomm, Flurry, Greystripe, Nexage, Tapjoy, FunMobility, TriNet, Zong, Sibblingz, OpenFeint, Spil Games and
WildTangent.

Total sales of game hardware, PC games, console games, and portables rose 3 percent to $1.36 billion from $1.33 billion a year ago, according to market researcher NPD. The report is encouraging since many months have been negative compared to year ago numbers. The core video game industry has been struggling with a slow recovery, aging hardware, and increased competition from gamer time from smartphone and tablet games, Facebook, and web games.  But this report shows that the industry is not necessarily doomed to ever-declining sales.

Software sales (console and portable games sold in stores) were still weak in the month, with sales down 5 percent to $601.4 million from $633.6 million a year ago. Dollar sales were down in part because of lower average selling prices for console games, said Anita Frazier, analyst at NPD.

Hardware sales, on the other hand, were healthy. And accessory sales were up thanks to sales of Microsoft’s Kinect motion-sensing system and sales of Xbox Live point cards. The latter means that users are starting to buy lots of cards so they can purchase digital content, such as movies or Xbox Live Arcade games, online.

Retail sales of console software were up 2 percent, while portable game sales declined. The portable game business was probably impacted by gamers waiting for Nintendo to launch its 3DS handheld game system in March and by sales of competing Apple iPhone, iPod Touch and iPad devices.

Overall, video games as a whole were down 6 percent in 2010. But the game industry has many growing niches, including social network games, mobile games, browser-based online games, used games, game rentals, and free-to-play games on a variety of platforms.

NPD said U.S. retail game hardware sales were up 10 percent to $466.9 million from $426.4 million a year ago. Game software sales also fell 5 percent in January. Accessories were up 22 percent to $256.9 million from $210.0 million a year earlier, largely because of sales of Microsoft’s Kinect motion-sensing accessory for the Xbox 360, as well as Sony’s PlayStation Move wand-like controller.

The No. 1 title on all platforms was once again Call of Duty Black Ops, the hot-selling combat game from Activision Blizzard which debuted in November. Black Ops was also No. 1 in January, continuing a long streak. Call of Duty Black Ops is now the biggest-selling game in history, surpassing Nintendo’s Wii Play game.

No. 2 was Capcom’s Marvel vs. Capcom 3: Fate of Two Worlds, for the Xbox 360 and PS 3. Ubisoft’s Just Dance 2 for the Wii was No. 3, showing that music games aren’t dead but the trend is moving from faux guitar games to dance games. Take-Two Interactive’s NBA 2K11 was No. 4, and Electronic Arts’ Dead Space 2 was No. 5.

For new releases, there were fewer big titles released in February 2011 compared to February 2010. One of the new games that sold well, but not spectacularly, was Sony’s Killzone 3, pictured above. It came in at No. 8. Bulletstorm, also from EA, debuted this month at No. 7.

Frazier said that the best-selling hardware of the month was the Xbox 360, which had its best non-holiday month ever. The 250-gigabyte version bundled with the Kinect sensor was the driver of higher average selling prices for console hardware. Microsoft said it has now sold more than 10 million Kinect sensors. All hardware systems sold more in February than they did in January. That might be a reflection of an improving economy.

Nintendo said that its Wii console sales have now sold more than 35 million units in the U.S. since the console launched in 2006. The console sold more than 454,000 units in February. Nintendo said that Donkey Kong Country Returns for the Wii has now sold more than 2 million units and New Super Mario Bros. Wii has now sold more than 9 million units.

Microsoft said it sold more than 535,000 Xbox 360 consoles in February, up 27 percent from a year ago. Total spending on the Xbox 360 during the month was $475 million, the highest among the consoles.

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Video game sales were down 6 percent to $18.58 billion in 2010, compared to $19.7 billion in 2009, according to preliminary estimates for games of all kinds, according to market researcher NPD.

Game hardware sales were $6.29 billion, down 13 percent. Game software — consoles and portable games sold in stores — was down 6 percent to $9.36 billion, and game accessories were up 13 percent to $2.93 billion. The latter rose because of sales of Microsoft’s Kinect and Sony’s PlayStation Move motion control systems.

But if you consider software only (excluding hardware and accessories), sales were flat or down 1 percent to $15.4 billion to $15.6 billion. That software number includes sales of games sold in stores such as console video games, PC titles, and handheld games. But, for the first time, NPD also included sales of digital downloads of games, social network games, game rentals, online game subscriptions, and sales of used games.

Overall, games are becoming one of the biggest forms of entertainment, competing favorably with music and movies as they vie for the attention of old and young, male and female audiences alike. With the vast growth of games such as CityVille on Facebook, the notion of being a gamer is becoming as meaningless as a “moviegoer,” since everyone’s playing.

It basically means that games had a better year than last year, when sales were down almost 9 percent. That’s because of strong holiday sales in the month of December.

Spending on games at retail stores still accounted for the majority of games sold. Sales of game software on the PC, portable and consoles was $10.1 billion, down 5 percent from $10.6 billion in 2010. The bright spots included sales of PC games in stores, up 3 percent thanks to blockbusters such as StarCraft II and World of WarCraft Cataclysm.

Other strong categories were used game sales, full-game digital downloads, downloadable content, mobile gaming apps, and social network games. Those helped offset declines in console and portable and new physical retail game sales, rentals and subscriptions.

“December 2010 represented one of the strongest monthly performances the industry has ever had at retail,” said Michael Gallagher, president of the Entertainment Software Association, the game industry trade group. “It was a robust finish to a year marked by innovation and engaging millions of consumers through a multitude of delivery models.”

Anita Frazier, an analyst at NPD, said the dynamics of game purchasing changed dramatically in 2010 with options ranging from retail to digital downloads on connected devices as well as in-store kiosks. While physical store sales will likely continue to decline, overall game playing and revenues will likely grow.

The year was marked by a series of blockbuster game releases. Activision Blizzard launched titles such as StarCraft II on the PC, Call of Duty Black Ops on all platforms, and World of WarCraft Cataclysm on the PC. Black Ops was the best-selling game of the year. Microsoft also shipped 8 million units of its Kinect motion-control system in the last two months of the year, while Sony sold more than 4.1 million units of its new Sony PlayStation Move motion-control system.

A year ago, the video game industry was in worse shape. The recession took its toll on gamers in 2009, with overall sales falling 8.6 percent to $20.2 billion in 2009 compared with $22.11 billion in 2008, according to NPD’s report a year ago. NPD has since revised the 2009 number to $19.7 billion. In December, 2009, sales rose only 4 percent overall. Those numbers included only traditional console and portable game sales. NPD changed its methods to include broader game sales during 2010.

During 2010, Microsoft said it was the only console to show year-over-year console unit sales growth, up 42 percent. Overall, $6.2 billion was spent at retail on Xbox 360 hardware, peripherals and games. In December, Microsoft said it sold more than 1.9 million units.

During December, three of the top 10 console games were Xbox 360 titles: Call of Duty Black Ops, Assassin’s Creed Brotherhood and Kinect Sports. In order to keep up with holiday demand, Microsoft pulled both console and Kinect hardware units from its January and February production. Consequently, Microsoft expects to have shortages in January and February. For 2011, Microsoft believes that Gears of War 3 will be a big seller; it is also launching more Kinect titles such as Avatar Kinect.

Nintendo likely saw a fall off in sales as users may be waiting until March before they buy its new 3DS handheld, which allows users to see 3D images without glasses. Nintendo said it sold more than 8.5 million DS units in 2010 and 7 million Wii consoles in the U.S. In December, Nintendo sold 2.5 million DS units and 2.3 million Wii consoles.

Since 2005, Microsoft has sold an estimated 51 million Xbox 360 consoles, Sony has sold 46 million PS 3 consoles, and Nintendo has sold 84 million Wiis, on a worldwide basis. Nintendo said that of the 250 million game devices sold in the past decade, Nintendo sold more than half.

Sony said it was happy that it was the only console to have a 32-percent increase in sales year-over-year. The company said that the introduction of the Move (while perhaps overshadowed by Kinect) has been a success. Big titles such as LittleBigPlanet 2 and Killzone 3 are also coming soon. Move launched with 50 titles and 20 more are still coming.

For December, game sales were $5.06 billion, down 9 percent from $5.55 billion a year ago. Console and portable game hardware was $1.84 billion, down 16 percent in December. Console and portable game software sold in stores was $2.37 billion, down 8 percent. Video game accessories sold in December were $853.2 million, up 10 percent.

The biggest selling game of the year was Black Ops. The next most popular games in order were Electronic Arts’ Madden NFL 11, Microsoft’s Halo Reach, Nintendo’s New Super Mario Bros., Take-Two Interactive’s Red Dead Redemption, Nintendo’s Wii Fit Plus, Ubisoft’s Just Dance 2, Activision Blizzard’s Call of Duty Modern Warfare 2, Ubisoft’s Assassin’s Creed Brotherhood, and Take-Two’s NBA 2K 11.

For December, the top-selling physical store games were Black Ops, Just Dance 2, World of WarCraft Cataclysm, Assassin’s Creed Brotherhood, Nintendo’s Donkey Kong Country Returns, Disney Epic Mickey from Disney Interactive, Madden NFL 11, Ubisoft’s Michael Jackson The Experience, NBA 2K 11, and EA’s Need for Speed Hot Pursuit.

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GamesBeat 2013 is our fifth annual conference on disruption in the video game market. You'll get 360-degree perspectives from top gaming executives, developers, and analysts on what’s to come in the industry. Our theme this year is “The Battle Royal.” Check out full event details here, and grab your early-bird tickets here!

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40.1 million of the 77 million Americans playing games on mobile devices play them on the iPhone, iPod Touch or iPad — nearly catching Nintendo’s 41 million gamers playing the DS and DSi and blowing well past Sony’s 18 million gamers on its Playstation Portable device — according to the Newzoo International Gamers Survey 2010.

Jobs’ announcement came at an Apple event unveiling its new line of iPods, an updated operating system and a new model of the Apple TV. The new lineup included a revamped iPod Touch sporting Apple’s A4 processor that Apple is seemingly embracing as a gaming platform with the unveil of an Unreal 3 engine-powered game from Epic Games, the creators of the Gears of War series.

Sales of Apple’s iPods have been slipping as of late — in its most recent quarterly report, sales of iPods were down 8 percent from a year earlier despite posting blowout numbers in its other sales categories. The outlook for mobile games, though, looks good, as NPD group indicated that it would soon count sales of mobile games as a growing part of the market.

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GamesBeat 2013 is our fifth annual conference on disruption in the video game market. You'll get 360-degree perspectives from top gaming executives, developers, and analysts on what’s to come in the industry. Our theme this year is “The Battle Royal.” Check out full event details here, and grab your early-bird tickets here!

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