NPD, Console Makers Report Promising Signs for Game Industry

There were several promising signs in the May U.S. videogame industry sales data released by NPD and the three console makers late last week, as well as in the initial sales results reported by Microsoft for the new Xbox 360 console SKU that shipped in June. Overall U.S. videogame industry sales continued to be down, but the 5 percent decline for May versus May 2009 was a significant improvement over the 26 percent drop seen in April versus April 2009.

Total U.S. videogame industry sales fell to $823.5 million in May from $865.7 million in May 2009, including hardware, software and accessories. Software sales increased 4 percent to $466.3 million thanks to strong demand for the new releases Red Dead Redemption from Take-Two Interactive for the PS3 and Xbox 360, and Super Mario Galaxy 2 from Nintendo for the Wii.

Accessory sales grew 3 percent to $115.7 million as strong demand continued for videogame point and subscription cards. The No. 1 accessory for the third straight month was the Xbox Live 1,600 point card, said NPD analyst Anita Frazier. Videogame point and subscriptions card unit sales were up 12 percent year-to-date through May versus the same period of 2009, she said.

Overall, it was the third-best May results for the industry after May 2008 and May 2009, Frazier said. Driving down overall industry sales was a 20 percent decline in the hardware category to $241.5 million. Sales of the three current-generation home consoles were up 15 percent in May from May 2009, but handheld hardware sales “were down a staggering 41 percent,” Wedbush Morgan Securities analyst Michael Pachter said.

The Nintendo DS was the best-selling system yet again, but the 383,700 or so units sold in the U.S. in May were down from about 633,500 in May 2009 and about 440,800 in April 2010. Of the 383,700 sold, about 154,000 were the new DSi XL and about 77,000 were the DSi, an industry source said. Nintendo and NPD didn’t break DS sales down by model. The overall U.S. installed base of the platform across all DS SKUs increased to about 41.4 million.

Further hurting May’s handheld hardware sales was the continued anemic performance of the PSP. Sales tumbled to about 59,400 from about 100,400 in May 2009 and about 65,500 in April 2010. Only about 10,000 of the units sold were the download-only PSPGo, the industry source said.

Wii sales increased in the U.S. to about 334,800 units from about 289,500 in May 2009 and about 277,200 in April 2010. Its U.S. installed base grew to about 29.2 million, still far ahead of the PS3 and Xbox 360 despite the growth those systems have seen so far this year.

PS3 sales increased to about 154,500 from about 131,000 in May 2009, but were down from the 180,800 or so sold in April 2010. Its U.S. installed base widened to about 12.4 million. “While tight inventory had an impact on sales numbers in recent months, we are now beginning to experience greater availability of product,” said Patrick Seybold, senior director of corporate communications and social media at Sony Computer Entertainment America.

But May Xbox 360 sales again outstripped those of the PS3. Sales of Microsoft’s console increased to about 194,600 from about 175,000 in May 2009 and about 185,400 in April 2010. Its U.S. installed base increased to 20.4 million through May, a Microsoft spokesman said Friday. About $254 million was spent on 360 products in May, Microsoft boasted. “The 360 platform, across hardware, software, and accessories, contributed the greatest share of revenue to industry sales for the month, and year-to-date,” Frazier said.

Perhaps the best sign for the 360 was the strong demand that Microsoft said it’s seen so far for its new 250-GB model. “We are hearing great feedback from retailers” who indicated they were seeing “unprecedented demand,” Microsoft said. It didn’t say how many units it shipped of the new SKU, which was unveiled at E3 (CED June 15 p1). The new model costs $299, the same price that the Elite 360 console cost before a price cut after the new model was introduced. Microsoft will sell the 120-GB Elite model and Arcade model “at their reduced prices” of $249 and $149 “as long as supplies last,” the Microsoft spokesman said.

The 360 version of Red Dead Redemption was the best-selling videogame SKU of May, with about 945,900 copies sold, NPD said. The PS3 version was No. 2, with about 567,100 sold. Super Mario Galaxy 2 was No. 3, with about 563,900 sold. The 360 and PS3 versions of THQ’s UFC Undisputed 2010 followed, with about 221,100 and about 192,200 sold respectively.