Video Game Sales Soar in April
Sony's network woes may have dominated headlines in April, but they didn't do much to hurt overall sales in the video game industry.
Software sales, the most closely tracked data, climbed 26 percent to $503 million, according to The NPD Group, which tracks video game sales. (Analysts had expected a 15 percent increase.) This is the first month software sales have posted a year-over-year increase since November and only the third time they have done so in the past year.
Overall, brick and mortar sales were up 20 percent for the month to more than $930 million. The delayed Easter holiday and a strong slate of titles are being credited for the increase.
"Mortal Kombat," from Warner Bros. Interactive topped the sales charts for April, with Valve Software's "Portal 2" coming in second place. Other winners included LucasArts' "Lego Star Wars III" and Electronic Arts' "Tiger Woods PGA Tour 12".
Nintendo's latest Pokemon series, which dominated two spots in the charts last month, nearly fell off the top 10 list, taking ninth.
"We initially expected the launch of the 3DS to spike overall software sales growth back into positive territory beginning in April, but the handheld is off to a slow start, as a lack of compelling software has kept many consumers on the sidelines for the expensive hardware."
"Portal 2" was a bellwether of sorts for Sony's troubles. While NPD no longer breaks out sales to the media by platform, people who had seen the full results said the version for Microsoft's Xbox 360 outsold PlayStation 3 version by more than 60 percent.
That's significant, since Valve had pushed the PS3 version for its multiplayer aspects.
More telling, Sony's "Socom 4" was nowhere to be seen in the monthly top 10. That multiplayer-heavy franchise is typically a big one for the company, but this year's installment hit store shelves just one day before the company took its PlayStation Network offline due to a hacker attack.
Sony, though, is focusing on other parts of the report.
"PS3 hardware sales are up nearly 13 percent and our PS3 software sales showed a 40 percent increase year-over-year," said Patrick Seybold, Sr. Director of Corporate Communications at SCEA. "We continue to see a lot of great momentum at the retail level, and appreciate the support we've received from our partners, retailers and customers since the criminal attack on the PlayStation Network."
Hardware sales for the industry were up 12 percent over last year to $279.9 million, largely on the strength of the Xbox 360, which sold 297,000 units.
Nintendo's 3DS continues to underwhelm. After selling just under 400,000 units in March, sources tell CNBC that number fell by 50 percent in April.
Analysts say the weak software lineup and high price are the likely culprits.
"We initially expected the launch of the 3DS to spike overall software sales growth back into positive territory beginning in April, but the handheld is off to a slow start, as a lack of compelling software has kept many consumers on the sidelines for the expensive hardware," said Michael Pachter of Wedbush Securities.
April's impressive sales jump could encourage investors, but analysts warn it might be short-lived.
"Going forward, we continue to believe that sales will be down modestly for 2011," says Pachter. "We think that the shift of playing time in favor of multiplayer online (for games like 'Call of Duty,' 'Halo' and 'Battlefield') and co-op (for games like 'Portal 2') divert gamers’ attention and available time away from considering new purchases, and have a deleterious effect on new game sales."
As encouraging as the April brick and mortar sales might be, keep in mind that the overall industry numbers are even better. Brick and mortar sales now represent just 60 percent of the overall revenue in the video game industry. Used games, game rentals, subscriptions, digital full game downloads, social network games, downloadable content and mobile game apps all contribute to the bottom line of publishers — and are a growing force.