Retail video game sales plunge 23 percent in August

The summer has been something of a nightmare for the sales of video games in U.S. retail stores. In August, the trend continued as overall retail game sales fell 23 percent from a year ago, according to market researcher NPD Group.

That comes after a 26 percent drop in July and a 10 percent drop in June, NPD reported.

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While it may seem like the game industry is in a funk, these sales numbers reflect only retail sales. Other digital sales – including used games, rentals, online games, mobile games and social games — show constant growth. Of course, a lot of disruption may result if the retail sales fall off faster than the digital sales rise. And there are different players, such as Zynga, that may benefit more from the rise of digital games than traditional game companies.

All categories except portable games were down. Anita Frazier, an analyst at NPD, said that the numbers aren’t necessarily a disaster, since the shift of Electronic Arts’ Madden from an early August release to a late August release means that the bulk of its sales will come in September. That was enough to cause a big shift in sales for August.

“Even though year to date performance of the new physical portion of the industry is down 5 percent, more than half of industry sales in this channel are still to be realized in the back four months of the year,” Frazier said.  “Given the strong release schedule in the coming months, new physical retail sales could still be flat to slightly up once full year sales are tallied.”

Total video game hardware, software, and accessory sales at retail stores were $699.9  million in August, down 23 percent from $873.8 million a year ago. Overall console video game sales (excluding PC games) were $648.9 million, down 21 percent from $822.3 million a year ago.

Game hardware sales were $249.4 million, down 12 percent from $282.9 million a year ago. While that is weak, Frazier said that sales of hardware in all categories were up in August compared to July. And game software sales were $264.8 million, down 34 percent from $403.5 million a year ago. Accessory sales, which in earlier months this year were up thanks to strong sales of Microsoft’s Kinect motion-sensing system, were $134.7 million, down 1 percent from $135.8 million a year ago.

If you throw in the sales of PC, console and portable games, the total is $285.9 million, down 37 percent from $455.0 million a year ago. That means that PC games continue to be weak.

Last year saw the release of RockStar Games’ Red Dead Redemption, while this year RockStar (which is owned by Take-Two Interactive) released the highly acclaimed LA Noire detective game in May. LA Noire dropped off the top ten list already. The bright spot of the month was Deus Ex Human Revolution, the futuristic detective/shooter game from Square Enix. The game was the No. 1 seller.

The other top sellers this month, in order, were NCAA Football 12 from Electronic Arts, Call of Duty Black Ops from Activision Blizzard, Phineas and Ferb Across the 2nd from Disney, Cars 2 from Disney, Just Dance Summer Party from Ubisoft, Just Dance 2 from Ubisoft, Lego Pirates of the Caribbean from Disney, The Legend of Zelda Ocarina of Time from Nintendo, and Zumba Fitness Join the Party from Majesco.

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Frazier said that digital game sales were strong in the month in part due to the launch of Fruit Ninja for Kinect on Xbox Live, as well as the launch of anew map pack for Call of Duty Black Ops. September looks like it will be a hot month due to new launches such as Gears of War 3, Resistance 3, and the bulk of the sales from late August releases such as Deus Ex and Madden. Deus Ex was on the market for only five days in August.

Microsoft said it held a 43 percent share of the hardware market in August, selling 308,000 units in the month. The company said it was the sixth month that the Xbox 360 had more than 40 percent of the current generation console market share. Total spending on the Xbox 360 during the month was $232 million.