Monday, 20 July 2020

US Video Game Sales Just Hit Their Highest Point in a Decade

US video game spending surged over the past six months, driving $6.6B in sales thus far in 2020. The last time the video game industry made more money over the same period was 2010, when sales hit $7B.

According to NPD, June sales were similarly stratospheric. NPD tracks data on video game hardware sales, software sales, and accessories + game cards. Total sales across all three segments was $1.2B, broken into $417M for accessories and game cards, $570M for software, and $191M in hardware sales.

Hardware sales are still down compared with earlier in the Xbox One / PS4 life cycle. But with both the PS5 and Xbox Series X launching later this year, fewer people are going to be interested in buying either older platform. Microsoft has already ended production of the Xbox One X and Sony may follow suit with the PS4 Pro.

A great deal of the sales volume was driven by The Last of Us, which went on sale in June and instantly became the third best-selling game of the half-year and the 8th best-selling game over the previous 12 months. It generated more first-month sales than any 2020 title has to date, and is the second-biggest game launch in history, right behind Marvel’s 2018 Spider-Man.

Is the Console Market Shrinking?

NPD doesn’t formally blame coronavirus for the surge of gaming sales, but it doesn’t take a genius to see that they’re obviously tied to each other. What’s more interesting is that it took a worldwide pandemic to drive video game sales almost up to the level of 2009 – 2010.

I pulled console sales data from VGChartz and compared overall console sales. Let me acknowledge up front that there’s no perfect way to do this. It’s easy to compare the Xbox 360 + PS3 against the Xbox One + PS4, but Nintendo doesn’t refresh at the same time that the other two companies do.

I’ve compared Xbox One, PS4, and Switch for modern systems and Xbox 360, PS3, Wii U, and 3DS for the older models. There’s an argument to be made for including both the Wii and the DS, but the DS is the best-selling video game platform of all time, and while the Wii sold a huge number of consoles, including both of these in our comparison would overwhelmingly tilt the scales in favor of the “Nobody buys consoles the way they used to” in a way that I don’t feel is fair. Also, stepping back to the Wii U and DS requires going back two generations for Nintendo products, while only going back one generation for Sony and Microsoft.

If we only compare Sony + Microsoft, the gap in sales is smaller, but within 8 percent. If we compare across a larger set of consoles, the older hardware sold 1.19x better over its lifetime than the Xbox One, Switch, and PS4 have collectively sold to date. Nintendo may sell another 42 million Switches before all is said and done, but it won’t do so for a few more years yet.

I’m not sure price explains this — the overall cost of modern consoles seems quite comparable with previous generations. I think the data we have here on comparative performance is interesting, but not necessarily indicative of an overall trend. The combined sales of the 3ds + Wii U dwarf the Switch, but given how Nintendo has combined form factors, you no longer have to buy two Nintendo platforms at all.

There are rumblings on the horizon that these new consoles might be significantly more expensive than what we’ve seen before; Sony is said to have limited production for reasons of cost, not COVID-19, though a more recent rumor states the company has boosted its orders by 50 percent. Microsoft is keeping the low-cost Xbox One S around and planning to launch two consoles if you believe the rumors. Put it all together and we could be headed for some significant price increases. If consoles are going to shed players, they’ll probably do it there…or the entire generation may get off to a slow start due to ongoing financial woes.

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