Video Game Sales Fall in 2010, but Bright Spots Emerge: Report

Strong sales of Microsoft's Kinect platform couldn't keep video game industry sales from slumping in 2010, NPD reports.

Video game sales were flat for 2010, according to The NPD Group, whose research showed that total consumer spending on gaming content in 2010 was down by as much as 1 percent compared with 2009.

The preliminary estimate for total consumer spending on gaming content-including new physical video and PC games, used games, game rentals, subscriptions, digital full-game downloads, social network games, downloadable content, and mobile game apps-was between $15.4 billion and $15.6 billion in 2010, according to the market research company.

NPD said spending on new physical content at retail continues to account for the majority of total consumer spending on games content. NPD research found U.S. retail sales of new physical video game content, which includes portable, console and PC game software, generated revenues of $10.1 billion, representing a 5 percent decline over the $10.6 billion generated in 2009.

Sales of new physical video game hardware, software and accessories ended 2010 at $18.6 billion, a 6 percent decrease from 2009. If PC game sales are included, which enjoyed an increase of 3 percent versus 2009, sales hit $19.3 billion, down 5 percent from 2009. Aside from PC games, accessory sales were up over 13 percent due to a 20 percent increase in the average retail price of accessory items, NPD's report noted.

Bright spots came from PC games new physical retail software, which was up 3 percent in 2010, according to data released by NPD Group, as well as increases in the consumer spending on used game sales, full-game digital downloads and downloadable content, mobile gaming apps, and social network gaming, which offset declines in console and new portable physical game sales, rentals and subscriptions.

In 2010, the Xbox 360 platform was the only system to enjoy a year-over-year increase in unit sales. December 2010 was the best month ever for Xbox 360 hardware sales. For the month of December, the Nintendo DS was the best-selling hardware system, achieving an install base of over 47 million units sold in the United States, which now surpasses that of the Sony PlayStation 2. Microsoft's Kinect platform was the best-selling accessory item for the second month in a row, following its release in early November.

"December 2010 represented one of the strongest monthly performances the industry has ever had at retail. It was a robust finish to a year marked by innovation and engaging millions of consumers through a multitude of delivery models," said Michael D. Gallagher, president and CEO of the Entertainment Software Association, the trade group that represents U.S. computer and video game publishers.

"Computer and video games led all other entertainment options as we responded to consumers' demands for creative content on every platform, from consoles to smartphones to handheld game devices," he said. "I look forward to a strong 2011 with a great pipeline of titles, many of which will be unveiled at the global center of video games-the E3 Expo."

NPD Group industry analyst Anita Frazier noted that the dynamics of games content purchasing changed dramatically in 2010, with options ranging from the physical product to digital downloads on connected devices as well as in-store digital kiosks.

"The increasing number of ways to acquire the content has allowed the industry to maintain total consumer spend on content as compared to 2009, and we should expect 2011 to be a growth year in the games industry as the consumer demand for gaming continues to evolve," she said.