Digital game sales grow during the lull before the console launches

A wealth of data about the summer of gaming has appeared as NPD, SuperData, and Cowen & Co. all produced reports on the state of games during August.

SuperData Research said today that August produced $846 million in digital sales for U.S. game publishers, up 4.1 percent from a year ago. That positive news was paired with NPD’s report on U.S. retail game product sales, which rose 1 percent over a year ago, the first upswing in monthly video game retail sales since October 2011. Game software sales were up 23 percent from a year ago, exceeding expectations of 21 percent growth, Cowen & Co. said.

On the console and PC game front, sales of an unusually plentiful number of triple-A game releases boosted sales. Electronic Arts’ Madden NFL 25 led the retail sales, followed by Saints Row IV, Disney Infinity, Splinter Cell: Blacklist, and Minecraft. Digital companions for those games also came out in August.

SuperData CEO Joost van Dreunen noted that Take-Two Interactive said its digital revenues grew to $75 million, or 52 percent of total revenue in the second quarter. For Activision, that percentage was 63 percent, and for EA, it was 76 percent, while Ubisoft said that digital is 11.7 percent of total sales. 

“Social game revenue increased slightly month-over-month, reaching $166 million,” van Dreunen said. “Despite an ongoing decline in the overall numbers of monthly active users in the segment, average spending continues to improve.

“Several shutdowns by leading publishers characterize the month of August. Zynga, on the other hand, closed its Slingo game after RealNetworks acquired the Slingo name for $15.6 million in late July. Similarly, King is focusing its efforts by shuttering Bubble Saga, Hoop de Loop Saga, Miner Speed, and Puzzle Saga in mid-September. We expect the shuffle in available title inventory by these publishers, and their accompanying marketing budgets, to positively affect the overall social game segment.”

Meanwhile, free-to-play online games shrank a little. The total audience now includes 46 million players, with spending at about $36 per paying player.

“In August several of the major publishers declared their increasing focus on free-to-play as a revenue model,” van Dreunen said. “Most notably Sony’s announcement of the much-anticipated EverQuest Next. Activision’s The Hearthstone: Heroes of Warcraft beta was officially launched, providing further evidence that the company is experimenting with free-to-play monetization.”

For pay-to-play MMOs, van Dreunen said, “The overall subscription-based category saw a 26 percent decline year-over-year, dropping to $83 million in total sales in August. The overall audience base remained relatively steady, and conversion rates, for microtransactions, climbed back up to 15 percent across the segment.”

World of Warcraft, the biggest paid MMO, lost 200,000 subscribers, while Eve Online grew to 550,000 paid subscribers in August.

The U.S. mobile game market saw a slight decline in August from July, the result of a drop in average spending to below $20. Compared to August 2012, the mobile category shows clear signs of maturing as its overall audience base declined by 2 percent, Van Dreunen said.

Downloadable content revenues were also down, at $116 million in August.

Doug Creutz, analyst at Cowen, predicts that retail game series in September will be up 30 percent thanks to the pending release of Grand Theft Auto V. Cowen also said that its study of preoders accurately predicted that Saints Row IV and Splinter Cell: Blacklist would have strong sales.

Cowen predicts that Call of Duty: Ghosts will have strong demand, ahead of challenger Battlefield 4 from EA. But Ghosts is running 30 percent below last year’s preorders for Call of Duty: Black Ops II. Blizzard’s Diablo III on the consoles is expected to sell 600,000 units to 800,000 units by the end of the year.