Video game sales were down 6 percent in 2010

[Updated]

Video game sales were down 6 percent to $18.58 billion in 2010, compared to $19.7 billion in 2009, according to preliminary estimates for games of all kinds, according to market researcher NPD.

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Game hardware sales were $6.29 billion, down 13 percent. Game software — consoles and portable games sold in stores — was down 6 percent to $9.36 billion, and game accessories were up 13 percent to $2.93 billion. The latter rose because of sales of Microsoft’s Kinect and Sony’s PlayStation Move motion control systems.

But if you consider software only (excluding hardware and accessories), sales were flat or down 1 percent to $15.4 billion to $15.6 billion. That software number includes sales of games sold in stores such as console video games, PC titles, and handheld games. But, for the first time, NPD also included sales of digital downloads of games, social network games, game rentals, online game subscriptions, and sales of used games.

Overall, games are becoming one of the biggest forms of entertainment, competing favorably with music and movies as they vie for the attention of old and young, male and female audiences alike. With the vast growth of games such as CityVille on Facebook, the notion of being a gamer is becoming as meaningless as a “moviegoer,” since everyone’s playing.

It basically means that games had a better year than last year, when sales were down almost 9 percent. That’s because of strong holiday sales in the month of December.

Spending on games at retail stores still accounted for the majority of games sold. Sales of game software on the PC, portable and consoles was $10.1 billion, down 5 percent from $10.6 billion in 2010. The bright spots included sales of PC games in stores, up 3 percent thanks to blockbusters such as StarCraft II and World of WarCraft Cataclysm.

Other strong categories were used game sales, full-game digital downloads, downloadable content, mobile gaming apps, and social network games. Those helped offset declines in console and portable and new physical retail game sales, rentals and subscriptions.

“December 2010 represented one of the strongest monthly performances the industry has ever had at retail,” said Michael Gallagher, president of the Entertainment Software Association, the game industry trade group. “It was a robust finish to a year marked by innovation and engaging millions of consumers through a multitude of delivery models.”

Anita Frazier, an analyst at NPD, said the dynamics of game purchasing changed dramatically in 2010 with options ranging from retail to digital downloads on connected devices as well as in-store kiosks. While physical store sales will likely continue to decline, overall game playing and revenues will likely grow.

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The year was marked by a series of blockbuster game releases. Activision Blizzard launched titles such as StarCraft II on the PC, Call of Duty Black Ops on all platforms, and World of WarCraft Cataclysm on the PC. Black Ops was the best-selling game of the year. Microsoft also shipped 8 million units of its Kinect motion-control system in the last two months of the year, while Sony sold more than 4.1 million units of its new Sony PlayStation Move motion-control system.

A year ago, the video game industry was in worse shape. The recession took its toll on gamers in 2009, with overall sales falling 8.6 percent to $20.2 billion in 2009 compared with $22.11 billion in 2008, according to NPD’s report a year ago. NPD has since revised the 2009 number to $19.7 billion. In December, 2009, sales rose only 4 percent overall. Those numbers included only traditional console and portable game sales. NPD changed its methods to include broader game sales during 2010.

During 2010, Microsoft said it was the only console to show year-over-year console unit sales growth, up 42 percent. Overall, $6.2 billion was spent at retail on Xbox 360 hardware, peripherals and games. In December, Microsoft said it sold more than 1.9 million units.

During December, three of the top 10 console games were Xbox 360 titles: Call of Duty Black Ops, Assassin’s Creed Brotherhood and Kinect Sports. In order to keep up with holiday demand, Microsoft pulled both console and Kinect hardware units from its January and February production. Consequently, Microsoft expects to have shortages in January and February. For 2011, Microsoft believes that Gears of War 3 will be a big seller; it is also launching more Kinect titles such as Avatar Kinect.

Nintendo likely saw a fall off in sales as users may be waiting until March before they buy its new 3DS handheld, which allows users to see 3D images without glasses. Nintendo said it sold more than 8.5 million DS units in 2010 and 7 million Wii consoles in the U.S. In December, Nintendo sold 2.5 million DS units and 2.3 million Wii consoles.

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Since 2005, Microsoft has sold an estimated 51 million Xbox 360 consoles, Sony has sold 46 million PS 3 consoles, and Nintendo has sold 84 million Wiis, on a worldwide basis. Nintendo said that of the 250 million game devices sold in the past decade, Nintendo sold more than half.

Sony said it was happy that it was the only console to have a 32-percent increase in sales year-over-year. The company said that the introduction of the Move (while perhaps overshadowed by Kinect) has been a success. Big titles such as LittleBigPlanet 2 and Killzone 3 are also coming soon. Move launched with 50 titles and 20 more are still coming.

For December, game sales were $5.06 billion, down 9 percent from $5.55 billion a year ago. Console and portable game hardware was $1.84 billion, down 16 percent in December. Console and portable game software sold in stores was $2.37 billion, down 8 percent. Video game accessories sold in December were $853.2 million, up 10 percent.

The biggest selling game of the year was Black Ops. The next most popular games in order were Electronic Arts’ Madden NFL 11, Microsoft’s Halo Reach, Nintendo’s New Super Mario Bros., Take-Two Interactive’s Red Dead Redemption, Nintendo’s Wii Fit Plus, Ubisoft’s Just Dance 2, Activision Blizzard’s Call of Duty Modern Warfare 2, Ubisoft’s Assassin’s Creed Brotherhood, and Take-Two’s NBA 2K 11.

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For December, the top-selling physical store games were Black Ops, Just Dance 2, World of WarCraft Cataclysm, Assassin’s Creed Brotherhood, Nintendo’s Donkey Kong Country Returns, Disney Epic Mickey from Disney Interactive, Madden NFL 11, Ubisoft’s Michael Jackson The Experience, NBA 2K 11, and EA’s Need for Speed Hot Pursuit.