Video game sales might not be as bad as they appeared in May

By Alex Pham

June 15, 2012 12 AM PT

May was another crushing month for video game sales. Or was it?

At first glance, the numbers look dismal. Game sales declined 16% in May to $335.2 million compared with a year earlier. Sales of game consoles and hardware peripherals dropped 23% to $261.2 million, according to the NPD Group Inc., a market research firm.

Overall sales of both hardware and games fell 19.7% to $596.4 million last month, down from $743.1 million a year earlier. Only game accessories saw an increase, fueled by gift cards for online games and brisk sales of physical toys for Activision Blizzard Inc.’s “Skylanders” game.

But those figures don’t take into account other rapidly growing segments of the game industry.

“To look at these figures in isolation and say, ‘Games are in trouble’ would be like passing judgment on the music industry based on how well CD sales are doing without considering iTunes or Spotify,” said Anita Frazier, NPD’s game analyst. “You’d be missing a large chunk of the game industry.”

Sales of games for mobile devices and social networks have exploded in recent years. And consumers are spending more on digitally downloaded games to their consoles and computers. Money spent on used games and game rentals has also increased in recent years.

Because those segments are relatively new, however, the industry has not had sufficient time to capture trend data beyond a year or two.

NPD estimated that the amount spent in May on game rentals via services such as Redbox and Gamefly was $155 million. Sales of digitally distributed games and add-on content downloads, as well as subscriptions, mobile games and social network games, totaled an additional $420 million. Because NPD has only recently begun collecting digital, social and mobile sales figures, it doesn’t have comparable year-earlier data.

Still, much of this revenue didn’t exist before 2007. That was the year Apple Inc. released its first iPhone, which now accounts for a large portion of mobile game sales. It was also the year Zynga Inc. was founded. Zynga later grew its annual revenue from social games on Facebook and elsewhere to more than $1.1 billion.

alex.pham@latimes.com

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Bestselling video games

Top 10 video games in the U.S. during May

(publisher)

1. “Diablo III” (Activision Blizzard)

2. “Max Payne 3” (Take-Two Interactive Software)

3. “Tom Clancy’s Ghost Recon: Future Soldier” (Ubisoft Entertainment)

4. “Prototype 2” (Activision Blizzard)

5. “NBA 2K12” (Take-Two)

6. “Call of Duty: Modern Warfare 3” (Activision Blizzard)

7. “Sniper Elite V2” (505 Games)