I’m back to the domestic sales beat!
Yesterday, The NPD Group posted its first monthly report of 2023 showcasing January’s consumer spending across the games industry. Since this currently matches year-to-date, this recap will be shorter than usual. There’s still a lot of juicy data to uncover.
January’s results were mixed, moving down 5% since last year’s near all-time overall spending high which occurred in 2021. Ever since that peak, it’s been slowly reverting towards pre-pandemic levels.
In the context of recent figures, January was the first spending decline since September 2022 when it dipped 4%. This modest downward move was mainly due to the strong comparable last year, during which the massive launch of Pokémon Legends Arceus on Nintendo Switch.
Within the segments of Video Game Content, Video Game Hardware and Video Game Accessories, Hardware was the only category that didn’t show a reduction since this time last year. Still, console sales were flat, which limited the category’s upside push on the total even amidst inventory improvement.
The Content side often goes as mobile does, since it contributes upwards of the category’s sales. While the group’s report didn’t quantify mobile spending, it did cite a decline in this major area.
“Drops in mobile content, physical console content, and gamepad spending drove the January shortfall,” noted The NPD Group’s Mat Piscatella.
Call of Duty: Modern Warfare 2, as expected, continued to lead the overall premium software sales chart. As for new titles, the Dead Space Remake from Electronic Arts was the headliner in the second spot.
Within Hardware, just as Sony’s PlayStation 5 did during 2022 measured by dollar sales, it was the top-selling console in January. This time by both revenue and units, meaning Sony’s production ramp-up is in full swing in an attempt to offset shortages earlier in this latest generation.
I always say it’s crucial to keep historical context in mind when looking at monthly shifts. Consumer spending last January was down 1% from a best-ever result the prior year in the States. Which means that even though last month was the first decline in some time, this movement isn’t as poor a result as headlines might indicate.
That said, here’s a full recap of the numbers underlying this latest report.
United States Games Industry Sales (January 1st – January 28th, 2023)
Unfortunately, The NPD Group’s public report for January was more sparse than usual in terms of charts and graphs. The above graphic shows last month’s numbers.
Overall U.S. spending on games lowered 5% to $4.35 billion. Compare that to last year’s $4.59 billion, and 2021’s record of $4.8 billion. People are spending a bit less now, whether due to macro pressure like inflation or choosing other entertainment forms as they venture outside the house.
Content sales dipped to $3.79 billion, or a similar decline of 5%. Currently, this segment that includes software sales, mobile and subscriptions alike, makes up 87% of the country’s total. During the holiday season in December, this portion was 73% due to higher relative hardware output. It was recently much closer to 2022’s January contribution of 88%.
Mobile weakness continued, and this year’s new premium titles weren’t quite enough to match the performance of a major Pokémon franchise release back in January 2022.
Activision Blizzard’s Call of Duty: Modern Warfare 2 led the premium ranks for the fourth consecutive month since its start in November, now moving into a new season for the ongoing multiplayer shooter.
Next was the re-imagined Dead Space from Motive Studios as the first new entry in January, landing in second place. While The NPD Group didn’t share much in the way of comparisons, we can look at earlier rankings. During October 2008, the original Dead Space didn’t chart since it was a new offering. When the much-anticipated sequel Dead Space 2 debuted in January 2011, it was the third best-seller after Call of Duty: Black Ops and Just Dance 2. Lastly, in February 2013, Dead Space 3 secured top billing for the series’ best performance to date.
Back to last month, rounding out the Top 3 was Madden NFL 23, the same exact position it held for 2022 overall. This consistency was in part driven by the lead-up to Super Bowl LVII, during which Kansas City thankfully won over the Philadelphia Eagles. (Giants fan here, as if you couldn’t tell!)
The next new release to chart last month was Fire Emblem Engage on Nintendo Switch at #5. One caveat for this latest mainline entry in the long-running franchise is that Nintendo’s games don’t include digital share for the purposes of these domestic charts. Compare its spot to Fire Emblem: Three Houses in July 2019 when it took home #2 behind only Madden NFL 20.
There were two additional new releases within the Top 10 during January: Forspoken from Square Enix debuted in seventh, while Bandai Namco’s One Piece Odyssey kicked off in ninth. I’d say the former was in-line with modest expectations while the latter undoubtedly out-performed in that position.
Lower down the list, big movers for existing titles included The Last of Us Part 1 which jumped up from 36th to 11th on the heels of its HBO show’s popularity. Monster Hunter: Rise skyrocketed from 68th to 13th as its PC version hit market.
Check below for the full software chart for January.
Top-Selling Games of January 2023, U.S., All Platforms (Physical & Digital Dollar Sales):
- Call of Duty: Modern Warfare 2
- Dead Space Remake
- Madden NFL 23
- FIFA 23
- Fire Emblem Engage*
- Elden Ring
- God of War: Ragnarök
- One Piece Odyssey
- Pokémon Scarlet & Violet*
- The Last of Us Part 1
- Sonic Frontiers
- Monster Hunter: Rise
- Mario Kart 8*
- Need for Speed Unbound
- Just Dance 2023
- NBA 2K23*
- Marvel’s Spider-Man: Miles Morales
- NHL 23
Spending on Hardware ended up virtually flat year-on-year during January, at $393 million. The implication being supply is generally getting better, however the lower-priced Switch is still a significant portion of the pie while Sony and Microsoft still aren’t where they would like to be on manufacturing.
“Growth in PlayStation 5 and Switch hardware spending was offset by declines across other platforms,” said Piscatella.
At the top end, PlayStation 5 won the month using both revenue generated and unit sales as barometers. On the dollar sales side, this is the same theme from 2022 when Sony’s platform dominated most months due to its higher average price point. The more impressive part is Sony outpacing all others by units, meaning that its suppliers are increasing inventories at market and consumer demand is steady even after the holiday months.
This sort of result also confirms Sony executives stating recently that it’s easier than even to find a PlayStation 5. Just a couple weeks back, during a record third fiscal quarter report, the Japanese consumer tech company raised its annual unit sales guidance for the family of devices. It now expects to ship 19 million globally for the fiscal year ending next month, up a million from the previous forecast. At present, it’s at 12.8 million through the first three quarters.
Refocusing on the U.S., Nintendo Switch slotted in second place on both metrics. Based on Piscatella’s comments, its console sales actually grew last month as it approaches its sixth birthday in March. While it’s a small tidbit in the general report, and it’s not specific on the amount of growth, this is a notable accomplishment for the aging platform.
Microsoft’s Xbox Series X|S family continues to lag its peers, seeing as it’s the remaining of the big three and falls into the group of consoles that did not grow in January. This echoes Microsoft’s latest financial results during which hardware sales reduced 13%. Even in the holiday quarter, when demand is at its highest. This signals a couple of points to me: it’s having difficulties getting quantities to market, and that demand might not be as strong as Sony’s offering. It also reflects Microsoft’s broad gaming strategy of reaching players with the appeal of ecosystem and subscription, being where they are with existing devices like mobile as opposed to requiring an Xbox for access. This model diverges compared to competitors, thus local hardware sales seem to be suffering for it.
The NPD Group’s final tracked segment of Accessories saw the most precipitous decline in January, the only one to fall in the double-digits, dipping 14% to $165 million. This comes after a 15% decline last year. In fairness, January 2021 was an all-time high. Still, peripheral spending is showing more severe declines than the other two categories.
Pushing this down was a stark decline in spending on game pads, which is a somewhat unfortunate result considering hardware’s more modest reduction. Game pad spending was the reason behind most of the segment’s softness last month.
Sony’s PlayStation DualSense Wireless Controller in midnight black started 2023 as the year’s best-selling accessory by dollar sales, outpacing all other peripherals in January.
Taking January’s report as a whole, it was a mixed bag coming off better spending during the beginning of 2022. There were positive signs, of course, in terms of PlayStation 5 availability and a more robust release calendar for premium gaming that will continue in future months. Mobile continued to be a main area of caution, as it was in the back half of 2022, along with retail software sales and peripheral spending putting downward pressure on the domestic industry.
Looking ahead to February, the Content side is tricky. Last year saw the record-breaking start for Elden Ring and the great debut of Horizon Forbidden West. Still, all signs point to a spectacular launch for Hogwarts Legacy from Warner Bros last week, which will stand up even against a high comparable and easily be the month’s best-selling premium title. There’s also a pair of “hearts” games in Wild Hearts and Atomic Heart that will bolster ranks here, plus Destiny 2’s Lightfall expansion. Thus, I’m thinking Content will be effectively flat year-on-year. Within 1 to 2% on either side. (Yes, it’s a wishy-washy prediction. Hogwarts Legacy is that huge.)
I’m more upbeat on Hardware for a few reasons, namely better supply and a weaker result last year when the category declined almost 30%. Potential PlayStation 5 buyers weren’t able to find one around then, and now they are seeing more at retail. Nintendo Switch is proving to be resilient. Even with Xbox’s tepid inventory, I’m seeing Hardware rising between 5% to 10% this month as PlayStation 5 will lead the charge as top-seller. As it will often throughout 2023.
I’ll even mention Accessories, mainly because of Sony’s PlayStation VR2 hitting market next week. While I’m mostly bearish on its commercial prospects over the short to medium term, I do expect an early boost in this context. I believe the category will see higher spending than February 2022.
That about wraps up the January wrap-up. What do you think of the latest results? Do you agree with my predictions for February? Are you picking up any new games or PlayStation VR2? I’d love to hear about it at the site or on social media.
As for suggested reading, I recommend Piscatella’s thread on Twitter. Thanks for reading through the first sales recap of 2023! Be well, everyone.
*Digital Sales Not Included, ^Xbox & Switch Digital Sales Not Included
Note: Comparisons are year-over-year unless otherwise mentioned.
Sources: Activision Blizzard, Electronic Arts, The NPD Group, Sony Corp.