May Retail Video Game Sales Numbers Take a Nosedive

According to sales data collected by NPD Group, sales of new videogame products fell 25 percent in May, with game sales of consoles hitting their lowest levels in more than a decade. While NPD and other analysts are chalking this decline up to anticipation for new consoles like the Xbox One and PS4, they fail to mention the dramatic shift to digital sales not covered by the NPD.

Collectively (hardware, software and accessories) sales at U.S. retail stores fell to $386.3 million in May, down from $517 million a year ago, according to NPD Group. Video game software sales were down 44 percent at retail to $187.6 million from $335.2 million a year ago.

Big sellers of the month at retail were Warner Bros. Interactive’s Injustice: Gods Among Us, followed by Call of Duty: Black Ops II and Donkey Kong Country Returns.

NPD said that total retail spending on new videogame products represented about half of total videogame sales, with the rest split between $91 million in rentals and used games, and $339 million on subscriptions, game apps for mobile devices and DLC.

On the hardware front, Nintendo’s 3DS edged out Microsoft’s Xbox 360 as the bestselling videogame platform in the U.S. for the month. Hardware sales fell to $96 million in May. Accessories sales fell 6 percent to $115.3 million.

Because NPD doesn't collect data on digital sales, many have lost faith in its monthly and annual reporting. For example, Gamasutra announced that it would no longer report on NPD numbers because it does not provide a full picture of sales.

Earlier this month the Entertainment Software Association said that the NPD was doing a grave disservice to the video games industry by not adequately covering digital sales in its monthly reporting. While it may have a point, the ESA and the video game industry have not been vocal about the trend that has been going on for more than a few years. Digital sales are not a new phenomenon – but the industry didn't care until the NPD's reporting painted the industry as weak because it relied too heavily on retail data.

During E3, ESA President Michael Gallagher renewed that call, saying that the retail-only number misrepresents industry sales, but acknowledged that his organization had limited power to do anything about it.

Of course building better relationships with companies like Valve and new players like Ouya would probably go a long way. The ESA antagonized Ouya, which is a fully digital platform, during E3 for not participating within the E3 venue last week – instead opting to host a venue right outside the LA Convention center….

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