Notice : this article is a translation from the French version of this blog, references may be in French or based on French figures.
For several months now, I’ve been reading articles reporting sluggish sales in the video games market, which would be reason enough to call it a crisis. Those so-called journalists never stop short of writing bullshit when it comes to selling their papers. They really should analyze the figures before commmenting.
Les Echos, a French economic newspaper, goes wild when home console sales in France are down 20% year on year in 2012 (software sales are down 10%). But what Les Echos fails to mention is that Nintendo alone bears most of the decline. From the data I took from Vgchartz, we can see that yoy PS3 is down by only 11%, X360 falls 23% and Wii plummet by 48%. PS3 software sales are flat +1%, X360 software grows by 3% and Wii games sales collapses by 38%. So the overall decline is nothing more than the burst of the casual bubble that allowed rapid growth in 2007 (Gamasutra says +41%) and in 2008 (+23%). During the PS2 era, home console sold slightly over 200 million units. In this generation, which won’t be over before 2014 at best, we already have a 230-million install base. We can’t say the same for every economic segment : car manufacturers are cutting jobs despite public bailouts and consumer electronics declines 5-10% in one quarter. Not to mention the press, which loses every year so many advertisers and readers that many papers go bust. In short, it’s the folks who have to survive on rutabagas that write that kind of nonsense. I can understand their frustration, but they really should mind their own business rather than spelling doom on others. The Wii-collapse is the rightful punishment of Nintendo’s short-term policy that consists only in luring gullible but volatile casual gamers, while the hardcore gamer segment of the industry still flourish despite the lesser number of releases. Furthermore, reports show that accessory sales are up 23%, mainly thanks to Kinect and Move. Direct extension of PS3 and X360 hardware, those ones cannot be left out of the market as a whole. Finally, it’s interesting to notice that the Japanese market grew in 2011, after several years of decline.
Handhelds are also down in France (-14%), the responsibility lying in PSVita this time because it doesn’t offset the decline in PSP sales. 3DS makes up for the free-fall in DS sales, but cannot alone bear the weight of a decaying segment that is no longer fit for today’s commuters. Smartphones are cannibalizing the market at an astonishing pace : they have now 57% market share in the US, while DS and PSP had 80% only two years before. Even in Japan, where handhelds rule, smartphone software sales are up 200%. In France, 14 million people play on their mobile devices as far as this year, and 35% of them purchased a game. In fact, no need for figures to understand that : just ride any metro line with a PSVita in your hands, and you will find yourself alone in the middle of people playing freecell or Angrybirds. But why do we oppose smartphones and handhelds when talking sales volumes, and compare when considering market share? Isn’t a 2D mario comparable to Fruit Ninja? It’s now common among pulishers to develop Iphone versions of their biggest Ips (ex. SquareEnix and Final Fantasy) even if it means delaying traditional home console projects (ex. SquareEnix and Final Fantasy). Smartphones and handhelds belong to the same market in which casual gamers migrate to smartphones. In the end, the mobile market keeps growing.
The whole panic around the decline of boxed games sales is also hilarious. Many actors within the industry are worried, but it’s just because they don’t know how the digital transition goes. There is no proper tracking of digital games sales, even NPD said they would eventually look into the matter. Some figures can nevertheless be found here and there : OVUM, a market research firm, estimates at 17% the annual growth for non-physical games. Steam reported 100% growth in 2011, the general percentage of digital games sold has shot up 50%, not to mention the Iphone boom I was talking about above. DLC should also be taken into account, since it’s not charity. PSN was already growing by 40% in 2010, and no doubt download-only games like Journey or Limbo do help maintain that momentum. Of course, manufacturers are aware of this. Sony didn’t design PSVita at random : most of the recent PSP games like Shining Blade, Final Fantasy Type-0 or the upcoming Sol Trigger are compatible and playable on Vita. Rather than having to carry their old PSP, Japanese Vita owners are more comfortable using Sony’s cloud and cramming all their games into the new system.
Calling those figures a crisis is exaggerated : far from a downturn, the current situation of the gaming market reflects the high mobility of the mainstream public and the rise of new distribution channels and increasingly varied forms of gaming. Generally speaking, it just illustrates that capitalism is a constant renewal, as it’s been in our economies for the past six decades.
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