NPD May 2017 Analysis

We’re back with NPD data for the month of May. April was missed as I wanted to get some E3 related articles out. But we’ll press on with May.

From Venturebeat

May Results

  • Total: $542 million (down 11 percent from $610 million in May 2017)
  • Hardware: $147 million (up 7 percent from $138 million)
  • Console software: $271 million (down 20 percent from $339 million)
  • PC software: $12 million (down 48 percent from $23 million)
  • Accessories: $112 million (up 1 percent from $111 million)

“Total video game spending in May 2017, which includes hardware, software and accessories, fell 11 percent versus year ago to $542 million,” NPD analyst Mat Piscatella said in a statement. “Spending growth in hardware and accessories was offset by a decline in software spending driven by a lighter new release slate when compared to May 2016.”

Total spending saw a decline primarily from weaker software sales. The biggest reason seems to be Overwatch which released in May 2016. The game sold significantly well on release and is still selling. According to a press release from Activision Blizzard, the game sold 7 million units by June 2, 2016 (specifically states players). It would be hard to top this.

Software

  1. Injustice 2
  2. Mario Kart 8 Deluxe*
  3. Grand Theft Auto V The
  4. Legend of Zelda: Breath of the Wild*
  5. Prey*
  6. Tom Clancy’s Ghost Recon: Wildlands
  7. Fire Emblem Echoes: Shadow of Valentia*
  8. NBA 2K17
  9. MLB 17: The Show
  10. Overwatch**

“Video game software dollar sales in May 2017 fell 20 percent versus year ago to $271 million,” said Piscatella. “The new release slate of May 2016, led by Uncharted 4: A Thief’s End, Overwatch and Doom proved a challenging comparable.”

As I mentioned above, sales declined due to Overwatch being a huge hit last May. Injustice 2 was the big hit this month, but it couldn’t compete with Overwatch. Venturebeats noted that Injustice 2 beat out Mario Kart 8 Deluxe and was the 9th best selling game of the year. I point this out because Nintendo fans love to cite Mario Kart 8 Deluxe as evidence for more Wii U ports. Mario Kart 8 Deluxe sold so well because Mario Kart always sells so well. Any other Mario Kart would have dominated the charts similar to Overwatch and Grand Theft Auto V (just look at sales of the Wii version). In fact, Mario Kart isn’t in the top 10 best selling games of 2017 (while Zelda is). If anything, it proves the Switch can’t succeed on Wii U ports.

Additionally, in my March NPD analysis I noted how the analyst hyped Horizon: Zero Dawn and Mass Effect. Now, these titles sit at spot 12 and 15 respectively. On the other hand, The Legend of Zelda: Breath of the Wild remains in the top 10 at 4, and Tom Clancy’s Ghost Recon: Wildlands, too, sits at 6. Despite industry hype, these games are fading out.

“The launch of Nintendo’s Fire Emblem Echoes: Shadow of Valentia pushed May portable software spending up 10 percent versus year ago,” said Piscatella.

I’m pointing this out as more an interesting factoid. Nintendo achieved a certain rhythm with Fire Emblem. The fact that the game increased portable spending by 10 percent is impressive.

Hardware

“Hardware spending grew 7 percent compared to May 2016, to $147 million,” said Piscatella. “Nintendo Switch continues to be the primary catalyst for hardware spending gains, as it has since launching in March 2017.”

I’m sure Sony fans are jumping for joy over the PS4 outselling the Switch, but there is more to this story. The NPD analyst confirmed the reason for the increase was due to Switch. Hardware spending grew only $9 million from May 2016. If we assume the additional $9 million was just Switch, that would mean the system only sold 30,000 (9 million divided by the $300 sticker price). For comparison, the Switch sells over 20,000 in Japan every week. Furthermore, the US gaming market exceeds Japan’s, but even if we assume the Switch moved 80,000 units in May, this would account for $24 million in spending. The real number is most likely higher. This means Sony is seeing a decent decline in sales over the prior year. Sony’s victory is due to the Switch’s low supply. The real figures may be bad for Sony.

“On a time-aligned basis over each product’s first 43 months in market, the combined installed base of Sony’s PlayStation 4 and Microsoft’s Xbox One now exceeds the combined installed base of the PlayStation 3 and Xbox 360 by 29 percent,” said Piscatella.

For references, the point of time they are comparing to was around 2009 in the heart of the Great Recession. Hardware spending should be up. I believe this line may be a buffer from bad news about PS4 and XBox One.    

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