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Game Over For Consoles, While Mobile Wins Big

Friday, 13 Jul 2012 | 3:52 PM ET

Another month, another slew of bad numbers for the traditional videogame industry as consumers shift to mobile and social games.

Video game on tablet
Jonathan Alcorn | Bloomberg | Getty Images
Video game on tablet

The NPD Group reported that overall retail sales of new games, consoles and accessories plummeted 29 percent in June. The consoles themselves suffered the most, down 45 percent from the year earlier, as Nintendo, Sony and Microsoft face the end of a console cycle. Game software plummeted 29 percent, while the small sector of game accessories were a rare bright spot, up 4 percent from last year.

Game Over?
CNBC's Julia Boorstin reports on the rough year for video games.

There’s no question, people are shifting time — and their money — to mobile. The struggling retail sales are just 50 to 60 percent of the total amount people are spending on games. NPD calculates that consumers spent $491 million on digital content — mobile apps, virtual goods payments in social games, digital downloads.

NPD says mobile games are the second largest channel generating content sales, and it’s consistently been growing quarter over quarter. A whopping 57 percent of smartphone owners play games on their phones on a daily basis. And they’re not just turning to their phones because they’re bored on the go. Surprisingly, 65 percent say they’ve played a game at home, which means that mobile devices are direct competition for consoles.

A perfect example of the success of mobile games, the maker of hit "Angry Birds" has hit number one with a totally new brand. Amazing Alex became the number one paid app in the US — hitting number one on Apple’s iPhone chart in just eight hours, the shortest time any game without ties to an existing brand has become number one.

Now Rovio is no longer a one-hit wonder: Its valuation, which analysts say is $6 billion to $9 billion, is sure to be even higher. Rovio has said it’s considering going public on the Hong Kong stock exchange. This diversity — along with those growing mobile trends — is exactly what Rovio needs to prove investors it has staying power.

— By CNBC's Julia Boorstin
@JBoorstin

Questions? Comments? MediaMoney@cnbc.com

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  • Working from Los Angeles, Boorstin is CNBC's media and entertainment reporter and editor of CNBC.com's Media Money section.