Smartphones/Tablets Blamed For Falling Game Sales

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Smartphones and tablets could be to blame for another sales decline in the video game industry

The video game industry has suffered another sales decline, and it seems that smartphones and tablets could be to blame.

According to NPD Group, the video game industry suffered another decline in sales in June, dropping 10 percent from the same period last year. Total US game sales fell to $995 million (£618m) this June from $1.11 billion (£689m) in June 2010, with software, hardware and accessories sales all posting declines.

Software sales dropped 12 percent to $469.5 million (£219m) from $531.3 million (£330m) in the same period last year, while hardware sales fell 9 percent to $366.6 million (£228m) from $401.7 million (£249m) in June 2010. Accessories sales also slid, falling 11 percent to $158.9 million (£98.6m), compared with $177.7 million (£110m) in June of 2010.

Smartphone Impact

Michael Pachter, an analyst with Wedbush Morgan Securities, told the Los Angeles Times that sales of Nintendo’s Wii and portable DS console were falling due to the emergence of mobile devices like smartphones and tablets, which are increasingly able to offer a fully featured mobile gaming experience.

“The DS is losing share because of smartphones,” Pachter told the paper. “Seventy percent of DS users are pre-teens. Within that population, 50 percent are perfectly happy with an iPhone or iPod Touch. So Nintendo has lost access to about half of that market.”

Take 2 Interactive’s “L.A. Noire,” available on Sony’s PlayStation 3 (PS3) and Microsoft’s Xbox 360 consoles, led software sales for the month, one of three titles from Take 2 to make the top 10. Sales of “Duke Nukem Forever,” which landed in the No. 2 spot, gave Take 2 the top two releases of the month.

NPD’s monthly point-of-sale data reports on US game industry sales occurring from new physical purchases at retail, which is the largest channel for game sales, but it does not represent 100 percent of industry sales. The numbers do not account for consumer purchases made via digital distribution, used game sales, subscriptions, mobile game apps, rentals or social network games.

NPD’s Games Industry: Total Consumer Spend, a new report on the total consumer spend against the games industry, will be issued quarterly and will be NPD’s official estimate of the consumer spend on the industry going forward.

Gaming Gloom

While the numbers may look gloomy, the recent acquisition of PopCap games by publishing giant Electronic Arts (EA) suggests industry confidence in online and mobile gaming, two areas that continue to see growth as mobile multimedia devices gain traction in the marketplace. “We picked EA because they have recast their culture around making great digital games,” said David Roberts, CEO of PopCap. “By working with EA, we’ll scale our games and services to deliver more social, mobile, casual fun to an even bigger, global audience.”

In a deal announced 12 July, EA will pay approximately $650 million (£404m) in cash and $100 million (£62m) in shares of EA common stock to be issued to certain stockholders of PopCap.

The company is one of the largest digital and social gaming companies, with more than 150 million games installed and played worldwide on platforms such as Facebook, RenRen, Google, iPhone, iPad and Android. In calendar year 2010, approximately 80 percent of PopCap’s revenue was on high-growth digital platforms.

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