Even if seasonal gaming announcements are heating up lately with Summer Game Fest and the Xbox & Bethesda showcase, consumer spending here in the States is cooling off. Considerably.
That’s according to the latest monthly U.S. video game sales report from tracking firm The NPD Group. While this made sense based on where we are in post-lockdown times, supply challenges on the hardware side plus a low number of new software titles, the impact on May’s result was greater-than-expected.
Total spending declined almost 20% last month to $3.68 billion. That’s the lowest monthly amount since the early parts of the pandemic back in February 2020. All major categories of Video Game Content, Hardware and Accessories experienced drops, the first two by double-digits.
This marks seven consecutive months of sales declines.
Now almost at the halfway mark, 2022 is proving to be an off year for big budget spending on games. I predicted more game delays due to the knock-on effect of making them in a pandemic, and that’s having a significant impact on spending even when publishers have more ongoing or evergreen titles than ever.
There’s the reversion towards normalized spending down from quarantine highs, weakness in mobile, lacking inventories for consoles and a dearth of AAA games. Plus, I believe rampant domestic inflation is clearly impacting discretionary spending. When a gallon of gas here jumps above 5 bucks and the Consumer Price Index rises at its fastest pace in four decades, people tend to spend less on entertainment.
The largest segment of Content dipped 19% in May, weighed down by a lower mobile contribution and no blockbuster releases. Evil Dead: The Game was the only debut among the Top *50* best-selling titles, starting at an impressive fourth place on the overall chart. Compare this to even as recently as March when five of the Top 10 were new to market.
Within Hardware, a category that declined 11% in May, Nintendo Switch continued its consistency this time as the top-selling box by both dollars spent and units purchased. Nintendo’s hybrid console is 2022’s best-seller by units, though Xbox Series X|S is still in pole position when measured by revenue. Notably bolstered by its premium price and occasionally better availability as of late.
“We have a very light new release slate, we have a return to experiential spending, and we have higher pricing in everyday spending categories like fuel, groceries, and dining,” NPD Group’s Mat Piscatella said to GameDaily. “Each of these factors may be playing a role in the declines we’re seeing right now.”
Even on an off month, we dig into the numbers. Because it’s fun! Read on for more.
United States Games Industry Sales (May 1st, 2022 – May 28th, 2022)
Across the full domestic market of games, consumers spent that $3.68 billion in May overall or 19% lower than a year prior. This leads to a year-to-date figure of almost $22 billion, which is down 10% from the $24.4 billion during the first five months of 2021.
It’s important to keep in mind the annual chart above showing movement in recent years, displaying the trajectory compared to pandemic months. During early months, 2022 was trending above those except for last year’s historic highs. Now, it’s reverting back towards where it was in mid-2019. It’s proving to be a challenging second quarter, no doubt exacerbated by software delays out of this period and publishers still feeling the effect of remote working.
The largest category of Content covers mobile, software and various additional add-on purchases. It experienced the same 19% dip in May, falling to $3.33 billion from over $4.13 billion due to downward mobile pressure and softness in premium. It made up 91% of the total during both time frames.
Expanding to the current annual figure, Content has generated $19.3 billion in sales through May which is down 10% year-on-year from $21.45 billion.
Focusing on mobile first as the segment’s primary indicator, this is at least the third straight month of declines. Google Play revenue in particular is having a rough go, dipping 23% in May, while Apple’s App Store lowered less than 3%. At least the Top 10 sellers rose in contribution, adding 1% to the total. So there’s some silver lining in the current cloud of dreariness.
Elden Ring regained the top spot on the premium best-sellers list for May, boosted by topping Xbox and Steam platform charts, flipping spots with Lego Star Wars: The Skywalker Saga which moved to second place. This means FromSoftware’s Elden Ring has led each month since its launch except one. It’s still the best-selling title during both 2022 and the latest trailing 12-month period.
As I alluded to before, Evil Dead: The Game was the sole new title to chart, ranking fourth overall. It snatched up third place on both PlayStation and Xbox individual lists. Publisher Saber Interactive’s parent company Embracer Group said recently the title accumulated over 500K units sold during its first five days on market, echoing its early success here.
Otherwise, it’s admittedly somewhat of a snooze-fest amidst this pre-summer lull. Even without digital, Nintendo Switch Sports and Kirby and the Forgotten Land both moved up a couple spots to #3 and #6, respectively. There’s now three Call of Duty titles in the Top 20 as publisher Activision Blizzard tried to pump up interest by revealing trailers for second Modern Warfare 2. Keep in mind this is the publisher that Microsoft is acquiring and has a management team, led by a CEO in Bobby Kotick who still hasn’t lost his job, that fostered sexual harassment and mistreatment of marginalized groups for years.
Then there’s the games that just don’t quit. People are, somehow, still buying enough copies of Minecraft every month to keep it around the Top 10, this time holding ground at #11. And I assume in light of hype around Bethesda’s upcoming space odyssey Starfield maybe combined with discounting, folks are picking up The Elder Scrolls V: Skyrim enough to land it back in the Top 20 for the first time in almost five years.
Checking out the 2022 to date chart, it’s virtually the same as April. Elden Ring, Call of Duty: Vanguard plus Madden NFL 22 make up the Top 3. Lego Star Wars: The Skywalker Saga edges up into the Top 3, and of course Mario Kart 8 re-enters the Top 10.
Here’s a full look at the May and 2022 premium software lists.
Top-Selling Games of May 2022, U.S., All Platforms (Physical & Digital Dollar Sales):
- Elden Ring
- Lego Star Wars: The Skywalker Saga
- Nintendo Switch Sports*
- Evil Dead: The Game
- MLB: The Show 22^
- Kirby and the Forgotten Land*
- Call of Duty: Vanguard
- Mario Kart 8*
- Gran Turismo 7
- Pokémon Legends: Arceus*
- Minecraft
- Horizon Forbidden West
- Animal Crossing: New Horizons*
- Super Smash Bros. Ultimate*
- Call of Duty: Black Ops Cold War
- FIFA 22
- Mario Party Superstars*
- Pokémon Brilliant Diamond & Shining Pearl*
- Call of Duty: Modern Warfare 2019
- The Elder Scrolls V: Skyrim
Top-Selling Games of 2022 So Far, U.S., All Platforms (Physical & Digital Dollar Sales):
- Elden Ring
- Lego Star Wars: The Skywalker Saga
- Pokémon Legends: Arceus*
- Horizon Forbidden West
- MLB The Show 22^
- Call of Duty: Vanguard
- Gran Turismo 7
- Kirby and the Forgotten Land*
- Mario Kart 8*
- Madden NFL 22
- FIFA 22
- Minecraft
- Nintendo Switch Sports*
- Marvel’s Spider-Man Miles Morales
- Monster Hunter Rise
- Dying Light 2: Stay Human*
- Animal Crossing: New Horizons*
- Mario Party Superstars*
- Super Smash Bros. Ultimate
- Call of Duty: Black Ops Cold War
Sales of Hardware moved in a similar direction as Content, though its drop wasn’t quite as severe. This category moved down 11% in May to $216 million. Which means annual sales to date are 9% lower than the same period last year, or $1.76 billion.
The story remains market inventory with current generation boxes, as manufacturers and their suppliers wrestle with higher costs and limited part availability. At this point in the cycle, even with a good comparable last year, spending should be stronger.
That said, Nintendo was able to maintain enough stock to lead May hardware results by both dollars and units. By my count, that’s three straight months now where it’s led by unit sales after April’s milestone of passing PlayStation 4 on the all-time best-sellers list in the States.
When taking the first five months of 2022 together, Nintendo Switch has the best result so far by units sold driven by a lower cost to buy on average. Xbox Series X|S is best by revenue, followed by Sony’s PlayStation 5. Which is an intriguing stat. The volume of Switch sales on the year hasn’t been enough to earn more than its peers. To me, that signals the Xbox and PlayStation families aren’t far behind on units. (We don’t know for sure as NPD Group doesn’t share more detailed figures publicly.)
In addition to the struggles of supply that have plagued the industry since at least late 2020, I’m curious if a lack of so-called “system-seller” titles is also contributing to hardware performance. This is traditionally a major reason for folks to upgrade to a new console like PlayStation 5 or Xbox Series X|S, when they can find them, so it certainly doesn’t help in a slower part of the cycle.
“The industry needs more new games!” said Piscatella. “And the pressures that we’re seeing from other areas of the market, such as higher prices on everyday spending categories, and having more entertainment options available for folks, sure seem likely to be having an impact.”
While it’s the smallest segment by dollars, Accessories didn’t drop as much as its counterparts did last month. Sales here totaled $131 million, down 7%. However, a weak early portion of the year means it’s still experiencing the worst performance of 2022 as spending is off 15% through May to $743 million.
Intriguingly, last generation’s PlayStation DualShock 4 Wireless Controller Black again leads the monthly Accessories group, same as April. If people can’t find a PlayStation 5, they are playing its predecessor which benefits sales of corresponding game pads.
Even so, Microsoft’s Xbox Elite Series 2 Wireless Controller retains its position as the top seller of 2022 right now. That premium price is paying off.
I wrote last month that I expected a quiet one in May. That it was, and then some, with the lowest output in quite a long time.
Taking its report as a whole, it was an off month at the big budget level for sure. This tends to happen when there’s limited retail inventory, mobile drag, minimal major game releases and significant inflationary pressure impacting buying power.
“The market had been trending under pandemic highs,” said Piscatella. “But May 2022 brought a bigger dip, at least partially driven by the very light new release slate in the month.”
There’s also something I’ve been saying for a while that I think is overlooked: there’s a longer tail from the impact of shifting to hybrid and remote working. And it will continue in the near term, for years to come. I don’t think anyone should be surprised by delays, dry spells and lower spending on games this year.
On this subject briefly, there are also development studios in and around Russia suffering from the country’s invasion of Ukraine. In an especially heartfelt video this week, STALKER 2 developer GSC Game World shared a harrowing diary on how its team was transplanted. There are even employees fighting on the war’s front lines or supporting relief efforts. It’s a difficult yet important reminder of how the geopolitical landscape affects our beloved industry.
Going forward towards June, the good news for Content is there’s a couple notable titles. Nintendo’s Mario Strikers Battle League and Fire Emblem Warriors: Three Hopes will both benefit from the Switch effect. Take-Two Interactive published The Quarry, a campy horror title that may be a cult favorite. There’s even something like Fall Guys hitting new platforms and Diablo Immortal on the mobile side, albeit with pretty rough users reviews with its questionable monetization model. Not to mention downloadable content for Cuphead, Monster Hunter Rise and Outriders among others.
The bad news is sales during June the past couple years has been abnormally high, so I still expect a retraction overall.
What about the winners for Content and Hardware? Well, Elden Ring has a legitimate chance of winning again because of its ridiculous legs. I’ll take a chance and say it’s the new entry from Mario Strikers.
Subsequently, betting on Nintendo Switch in hardware is probably the safest for June. If I can even describe it as “safe.” I’ll wager Xbox Series X|S continues as top dog by dollars for 2022.
Until then, I recommend reading Piscatella’s thread here for further details. Thanks for stopping by. Have a safe rest of the month!
*Digital Sales Not Included, ^Xbox & Nintendo Switch Digital Sales Not Included
Comparisons are year-over-year unless otherwise noted.
Sources: GameDaily.Biz, The NPD Group, Embracer Group.
-Dom