Why May Had Lowest Industry Sales Since 2006
By Ajané Celestin-Greer | June 14, 2011 | News | No comments | Share
The NPD Group released the May report yesterday, and it did not look good for the gaming industry.
May 2011 was the lowest month of sales for the industry since October 2006. NPD Group attributes this to a lack of releases, but NPD Analyst Anita Baker says the declines in the month are mostly attributable to the Wii, which has been declining and is expected to continue to decline over the next year.
The Wii only sold 236,000 units in May, according to a report released by analyst firm Wedbush Securities, which translate to a 20% decline year on year. Also in the report, the Nintendo 3DS had a 50% decline from its second month total, well below its estimated sales in hardware and software. The report suggests this is due to a lack of software titles and says the outlook is “unclear” for the 3DS.
The Xbox 360 leads the month for May, and although Sony’s PlayStation 3 has made a 14% gain since this time last year, the 360 accounts for 34% of all video game revenues since January. The Wedbush Securities report suggests this is due to demand for the Kinect, and suggests that both systems will trend downwards without a price cut, though Microsoft “may have the luxury of waiting until next year.”
The Wedbush report also suggests that the announcement of new systems such as the PS Vita and Wii U may have a negative effect on hardware as we move closer to their release dates, as customers will likely hold off on buying a new console in order to buy the newer systems.
As for software, the Wedbush report suggests a combination of the PS3, PSP and DS’ “disappointing” software sales created the largest “shortfall”, as overall software sales have been disappointing.
According to NPD Group, the top five-bestselling games across all platforms are:
- L.A. Noire (360, PS3),
- Brink (360, PS3, PC)
- Lego Pirates of the Caribbean, (Wii, 360, NDS, PS3, 3DS, PSP, PC),
- Portal 2 (360, PS3, PC)
- Mortal Kombat 2011 (PS3, 360)
The list is for the most part not surprising, as very few large software titles were released, and this year has been the lowest of overall games released for this month in years. In the NPD Group report, this is credited to the fact that large publishers have decided to cut down on number of games released in order to make higher quality titles. In addition, time is being taken to increase the life of existing games by releasing extra content in the form of downloadable content (DLC), which are not included in NPD’s figures.
I believe it bodes well for gamers because they can look forward to higher quality games that will be released around the same time. This should increase competition, therefore pushing the quality of games even further, and as DLC is becoming quite popular, we can play our favorite games even longer. As we move towards the holiday season, we will likely see some interesting increases in software sales as heavy hitters like Modern Warfare 3, Battlefield 3, and Assassin’s Creed: Revelations release in November.
Overall, the report from Wedbush Securities suggests that — even with these sales being lower than expected (and they were largely expected to be flat)—the gaming industry is just fine, concluding:
We think that the industry is quite healthy, and think that excitement from last week’s E3 Expo will carry over and somewhat mitigate the miserable May sales results. Investors discovered last week that the hard core gamer is still alive and well, and over the balance of the year, we expect lessened concerns about migration to mobile or social games cannibalizing console game sales.
