NPD July 2014: Software Heads South For The Summer

We’re back to the new normal for video game hardware and software at retail in the U.S. for July. That is, a huge increase in hardware revenue, up 100 percent from $99.4 million to $198.8 million, (due, of course, to new console sales) and a drop in software revenue, (down 15 percent from $210.1 million to $178.2 million) with a minor increase in accessory sales (up 3 percent to $137.3 million). It’s a situation that’s not exactly what publishers might like, but it’s still promising in many ways. As usual, though, you need to look deeper into the numbers to see what’s really going on.

NPD’s Liam Callahan does the usual cheery framing: “Similar to the pattern seen in seven out of the last nine months, strong growth in hardware sales offset declines in software sales in July 2014 while accessory sales had modest growth, leading to an increase of 16 percent in overall new physical video game sales compared to July 2013,” Callahan said. Of course, the first thing you want to know is some details on those hardware sales, as Sony, Microsoft and Nintendo continue to try and put the best spin on things.

Sony had no new announcement since the NPD numbers came out, but the company did announce it’s sold 10 million PlayStation 4 consoles so far earlier this week at Gamescom. “We just announced that the PlayStation 4 has sold through more than 10 million units worldwide — and more than 30 million PS4 games have been sold — since its launch less than nine months ago. It’s a remarkable milestone that reinforces PS4’s record-breaking pace and the movement it has created among players globally in defining next generation gaming,” Shawn Layden posted on the PlayStation blog.

Microsoft and Nintendo promptly responded, with… crickets. Really, it’s all about the games, right Actually, Microsoft has been active this week talking about its new system update and plenty of new games coming up, while Nintendo has been pretty quiet throughout Gamescom, the company has a booth. Nintendo did post a sizzle reel of upcoming games for the Wii U and 3DS:

As far as specifics about hardware sales go, new consoles are doing far better than the last generation at a similar point after launch. “Hardware sales doubled in July 2014 (vs. July 2013), stemming from growth in eighth generation console sales which offset declines in seventh generation console and portable hardware,” Callahan said. The key thing to note there is that both the PS Vita and the 3DS continue to do poorly. That’s not new for Sony, but Nintendo’s star performer last year was the 3DS – so when sales are worse than last year, that’s not good news for Nintendo.Still, Callahan was positive when it came to the Xbox One and PS4. “When combining life-to-date sales of Xbox One and PS4 after nine months, and comparing them to the combined totals of nine months of sales for Xbox 360 and PS3, sales of the newest consoles are larger than the prior generation by close to 80 percent,” Callahan noted. Again, the real interesting part is what he didn’t say: The Wii U wasn’t mentioned in that analysis. Probably because the burst of enthusiasm for the console generated by Mario Kart 8 has largely worn off.Strong sales of the PS4 and Xbox One are good for the long term health of the console business, even if software sales were dismal at retail stores in July. It’s interesting to note that last year software sales were more than twice the amount of hardware sales, while this year hardware revenue is beating out software revenue. Of course, part of that is due to the higher price of new consoles, but it still shows an impressive swing.Callahan had some ideas as to why software sales showed such a precipitous drop from last year. “Two factors caused declines seen in July 2014 software sales: reduced sales for new launches, and the decline in seventh generation software not entirely being offset by eighth generation sales,” he said. “July is typically a quiet month for software sales, representing about 5 percent of annual sales. Typically, NCAA Football launches in July and often ranks as the top game. As that title is no longer being produced, new launch sales declined steeply by close to 70 percent in July 2014.” See, EA., it’s all your fault. Well, it does seem like a missed opportunity for the publishers in general. If a given month is known to be lacking in new game competition, why not schedule a release then Probably because most games and DLC are released when ready, and not held back unnecessarily. Still, it might be nice to schedule something for a month when “New!” would get more attention from the media and gamers.The software picture at retail was not brightened by new consoles, either. “When comparing the increase in eighth generation sales over the decline in seventh generation sales, the net decrease was $20.1 million,” Callahan said. It’s also probably true that more sales are being acquired by digital means, and thus not being tracked by NPD’s numbers. When SuperData’s digital information arrives, that should give us more insight into how July stood for software publishers. Callahan did note that Nintendo did very well for the month if you looked at individual SKUs (stock-keeping units) in terms of sales, rather than lumping together all the different versions of a title. “Four SKUs for the 3DS would make the top ten software list when ranked on an SKU basis: 3DS Tomodachi Life, 3DS Pokemon Y, 3DS Pokemon X, and 3DS Mario Kart 7. With the addition of NWU Mario Kart 8, five of the top ten SKUs this month were published by Nintendo and helped drive Nintendo into the top video game publisher spot for July 2014,” Callahan declared. This makes you wonder just how well Nintendo might be doing if its software was appearing on multiple hardware platforms, rather than just its own. Looking at the Top Ten list, the strength of Minecraft is impressive as it vaults into the #2 position, probably because the kids that make up its core audience are home for the summer. When the PS4 and Xbox One versions of Minecraft hit later this year, the title will be even stronger – though new software from other publishers will probably claim the top spots.<div class="ad-wrapper row show-for-small-only"> <div class="ad-container ad-container-dfp">  <div id='div-gpt-ad-661efdd7623e6' style='height:250px; width:300px;' class="midmobile"> <script> googletag.cmd.push(function() { googletag.display('div-gpt-ad-661efdd7623e6'); }); </script> </div>  </div> </div> July 2014 Top 10 Games (new physical retail; across all platforms incl. PC) 1. The Last of Us (PS4, PS3) Sony 2. Minecraft (360, PS3) Microsoft / Sony 3. FIFA 14 (360, PS4, XBO, PS3, PSV) Electronic Arts 4. Watch Dogs (PS4, 360, PS3, XBO, PC)** Ubisoft 5. Mario Kart 8 (NWU) Nintendo 6. Call of Duty: Ghosts (XBO, 360, PS4, PS3, NWU, PC)** Activision Blizzard 7. Grand Theft Auto V (360, PS3)** Take 2 Interactive 8. Sniper Elite III (PS4, XBO, 360, PS3)** 505 Games 9. NBA 2K14 (360, PS3, PS4, XBO, PC)** Take 2 Interactive 10. Lego Marvel Super Heroes (360, PS3, 3DS, NDS, PS4, NWU, XBO, PSV, PC) Warner Bros. Interactive **(includes CE, GOTY editions, bundles, etc. but not those bundled with hardware)

NPD July 2014: Software Heads South For The Summer

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