Microsoft’s Xbox Division Sets New Annual Sales Record in 2021

During Microsoft’s fiscal fourth quarter results presentation yesterday for the period ending June 2021, the massive American technology conglomerate shared how its gaming division is faring amidst the global pandemic and early in this latest console cycle. This presentation revealed how the Xbox team achieved a handful of impressive records.

First, Microsoft’s gaming revenue for the trailing 12-month period back from Q4 is its highest in reported history. The Xbox division generated nearly $15.4 billion in annual sales. That’s 33% higher than the same 12-month period this time last year, when it was almost $11.6 billion.

That makes this the second quarter in a row that annual gaming sales were above the $15 billion threshold for Microsoft, showcasing how both hardware momentum and subscription expansion are boosting results even as third-party software contributions slow from highs in 2020.

In terms of the new generation of Xbox Series X|S platforms that launched late last year, Chief Executive Officer (CEO) Satya Nadella said on the earnings conference call they are the fastest-selling boxes in the 20-year history of the Xbox brand. These have “more consoles sold life-to-date than any previous generation” according to Nadella. This led to Xbox Hardware growth of 172% during Q4, with the caveat being of course this compares to a low point at the end of a prior generation.

Which is notable especially in terms of the current hardware supply environment for all manufacturers. Xbox is selling every single box its suppliers can make, as consumer interest far exceeds production capabilities right now. I anticipate this will continue for the foreseeable future, at least through the next fiscal year ending in mid-2022.

Parallel to the hardware performance is that of gaming software and related services, represented by the Xbox Content & Services sub-segment. This is the one notable lackluster portion of the report, with a fourth quarter decline of 4%. Increases in Xbox Game Pass and first-party releases couldn’t outpace declines in third-party.

Speaking of the Xbox Game Pass service, unfortunately Microsoft executives didn’t share updated figures for its paid subscriber base. Last count it was officially 18 million as of 2020 year-end, though more recent media reports have estimated the figure at upwards of 23 million as of April. My current estimate is 25 million, though I imagine Microsoft would share that milestone so it might be just below it for now.

Knowing these records and high level performance, I’ll now dig a bit into underlying numbers and executive comments.

If you pop open these gallery images above, you’ll see a.. number of insights.

First, the annual revenue figures for Xbox based on reported growth. Overall, gaming revenue for Microsoft rose 11% in Q4 bolstered by a major contribution from hardware and subscriptions. Based on historical sales figures, this equates to roughly $3.74 billion in quarterly revenue. That’s the highest sales ever for Xbox during a fiscal fourth quarter i.e. April to June.

Aggregating this quarterly figure into annual results and you’ll see the trend line for 12-month revenue is at that record $15.4 billion level. Even if slowing its growth trajectory, there’s no denying Microsoft’s combination of hardware launch and ecosystem play are at least pumping up Xbox’s top-line.

One note. Technically the quarterly result for gaming revenue is currently an estimate based on growth figures reported in Microsoft’s earnings slides. The company hasn’t formally filed its 10Q with the Securities & Exchange Commission (SEC) where it reveals exact gaming revenue figures. It should be very close.

For context here, how does this compare to peers in the industry?

Well, since I know you checked out my July to August 2021 earnings calendar, you’ll see both Sony and Nintendo report their respective first quarter results next week. So using recent annual figures from March 2021, Sony’s Gaming & Network Services segment reached over $24 billion while Nintendo’s overall sales totaled roughly $12 billion at the time. Essentially, Microsoft sits between the two other hardware manufacturers. And all of them are doing very well lately.

Unlike its competitors, Microsoft doesn’t reveal profit metrics for its Xbox segment. That doesn’t mean we can’t infer from what it does share. Might get technical here, bear with me. The broader More Personal Computing business unit, of which Xbox is a part, saw operating income of $4.87 billion in Q4, up from $4.09 billion. However, gross margin percentage declined 1% since last year due to a shift to gaming. Margin as a metric basically accounts for expenses deducted from total sales.

Now there’s a variety of factors impacting profitability within this segment. Suffice to say that a slight dip in margin percentage caused by this shift means gaming was a bit less profitable than others here which are Windows, Devices and Search Advertising. It’s impossible to back into exact numbers, unfortunately.

Xbox is selling every single box its suppliers can make, as consumer interest far exceeds production capabilities right now. I anticipate this will continue for the foreseeable future, at least through the next fiscal year ending in mid-2022.

When it came to growth during Microsoft’s latest Q4, Xbox Series X|S hardware was certainly the star.

The aforementioned 172% growth for Xbox Hardware is the result of simply high demand meeting limited supply. It’s effectively the best it can be right now, as Xbox consoles are consistently selling out.

With Xbox Series X|S being the fastest-selling in the company’s history, how does that translate to unit sales? Well, we don’t exactly know formally because Microsoft stopped sharing these a while back.

Still, there are estimates out there. Friend of the site and analyst at Niko Partners Daniel Ahmad attempts to estimate units shipped for Xbox Series X|S at roughly 6.5 million since November 2020. Aligned with Nadella’s comments, this figure would outpace the prior record holder of Xbox 360 at 5.7 million starting in 2005 plus 2013’s Xbox One with roughly 5 million shipments across the same 6-month span.

Which makes sense, especially given recent performance in its largest market of the United States. The Xbox platform had its best June month ever according to The NPD Group, as I wrote about recently. Definitely check out that piece to see more specifics.

The other sub-segment within gaming is Xbox Content & Services, which saw somehwat mixed results during the fourth quarter.

Revenue here was 4% lower than this time last year, mainly because of software published by third parties available on the Microsoft store or retailers. This makes sense because the prior four quarters all experienced growth above 30%. It was bound to revert from those prior peaks.

Amidst this decline, executive comments still indicate expansion in services and player interest in particular. Chief Financial Officer (CFO) Amy Hood noted the team saw “strong engagement across the platform” during Q4.

The management team said Xbox Game Pass is “growing rapidly” while referencing certain statistics, similar to those we’ve heard in the past about how subscribers play and spend more than their non-member counterparts.

There was specific mention of cloud gaming this time, a service that Xbox has embedded within its top-tier Xbox Game Pass Ultimate and expanded to more countries in recent months. While not specific, Microsoft said that “millions” are streaming to their various devices.

What this mix of results and comments around Xbox Content & Services tells me is that last year was really fantastic during the height of pandemic quarantine orders, the audience base is still there yet spending less than that time especially on software. Subscriptions are propping it up, which is exactly what the team wants from pushing ecosystem and its robust Xbox Game Pass library.

Growth could slow a bit near-term for the Xbox division. I do think the baseline has been reset by newer audience members plus lapsed gamers sticking around and spending lately, which will help comparing growth against those high points last year.

Taking a step back to the company overall, Microsoft posts some staggering results in the scheme of things. Over $46 billion in fourth quarter revenue, an increase of 21% and well ahead of analyst estimate of $44.2 billion. Operating profit of $19.1 billion is 42% higher than this time in 2020, leading to an earnings-per-share figure above consensus as well.

Then what’s next after this record year for Xbox? Beyond healthy guidance for the firm overall, gaming is expected to grow into the first quarter of fiscal 2022.

“We expect revenue growth in the low double-digits,” said Hood in reference to gaming. “Console growth will again be constrained by supply. And on a strong prior year comparable, Xbox content and services revenue should grow low single digits.”

I can see that, consistent with its release schedule and hardware inventory limitations. There’s no flagship first party launches until Halo Infinite, and even that has a nebulous holiday release at present. There’s higher profile third party multi-platforms like Madden NFL 2022 from Electronic Arts in August and NBA 2K22 in September, which will contribute on the content side. There’s also a slew of new versions, smaller or indie titles in the coming months. The Ascent. 12 Minutes. Psychonauts 2. Hades and Microsoft Flight Simulator on console.

It might be tricky for Xbox to match the sales highs of the last 12 months, given the previous global stay-at-home situations and leading into a new console generation. Growth could slow a bit near-term for the Xbox division. I do think the baseline has been reset by newer audience members plus lapsed gamers sticking around and spending lately, which will help comparing growth against those high points last year.

Xbox Hardware will be strong, even if supply increases at a slower rate than originally anticipated. I believe subscriptions will keep pace, though am tapering expectations on content and software spend until the quarter ending December.

All in all it’s big results for 2021, like we’re seeing most places in the games industry. The question becomes where will it go from here.

Feel free to reach out here in the comments or on social media with your reactions or questions. Thanks for visiting!

Sources: Microsoft Investor Relations, The NPD Group, Wu Yi (Photo Credit).

-Dom

Xbox & Ratchet & Clank Set Records in June 2021 U.S. Games Industry Sales Report

I know it feels like 2020 never ended. Yet somehow, the front half of 2021 is now in the books. It was another challenging one for a variety of reasons, yet one of the bright spots continues to be video game sales which I hope has provided some much-needed joy and respite for everyone.

And with that, we have.. numbers, of course!

Recently, industry tracking firm The NPD Group dropped both a monthly and second quarter 2021 report on the domestic games market. With it, sharing some notable records in the process and showing how spending on all categories this year is trending upwards.

In terms of growth, overall monthly consumer spending on games in the U.S. rose a steady 5% against a high comparable last year, set in the middle of stricter quarantine guidelines. Led by a Hardware category that more than doubled its level this same time in 2020. Within that, Microsoft’s Xbox Series X|S topped dollar sales. Even setting a new June record within the Xbox platform’s 20-year history. Separately, Nintendo Switch maintains a staggering streak when it comes to leading on unit sales, which it did again in June, as it has every month for 31 consecutive months! Both of these impressive feats occurred amidst a global chip shortage, signaling a boost in otherwise limited stock lately.

Content i.e. software, subscriptions and add-on sales moved up slightly, propped by usual suspects like Call of Duty and MLB The Show plus three new releases in the Top 5 on the general chart: Sony’s Ratchet & Clank: Rift Apart, Nintendo’s Mario Golf: Super Rush and Scarlet Nexus from Bandai Namco. Accessories was the only segment showing a decline in June 2021, though only 1% as PlayStation’s DualSense continues its consistency there.

Expanding to second quarter, total spend inched up 2% compared to the same three month period last year. However for the full first half of 2021, total sales climbed a solid 15% as all categories exhibited double-digit bumps. Spending on games isn’t slowing down compared to the height of the pandemic, proving new audience members are sticking around and core players are keeping up the hobby.

It’s time to delve deeper into each segment individually, including a close look at the software charts for both June and 2021 to date!

United States Games Industry Sales (May 30th, 2021 – July 3rd, 2021):

During June 2021, overall consumer spending in the domestic games market reached $4.93 billion, rising 5% compared to the same time last year. That’s now two consecutive months of year-on-year growth after a dip back in April.

While Content remained the leading segment by spending, it was Hardware making the biggest splash as production slowly yet surely ramps up. The last category of Accessories dipped slightly in June, cooling off a bit in the hot summer months domestically.

“Hardware was the obvious big story of June,” said The NPD Group’s Mat Piscatella. “Xbox Series was the star of the month, but all major platforms showed double or triple digit dollar sales growth vs year ago. Demand is nowhere near satiated, supply is still a massive challenge.”

Across the second quarter between April to June, total spend in the U.S. hit $14 billion. That’s up 2% since the same time in 2020. The NPD Group reported Q2 growth across a variety of sub-groups: personal computer (PC), cloud, non-console virtual reality, mobile, subscriptions plus, of course, gaming consoles.

“Consumer spending has not only maintained the elevated levels reached a year ago, but exceeded them in key areas such as hardware, mobile and subscription spending,” said Piscatella in the Q2 report at the firm’s website.

This trend is illustrated even more when looking at the entire first half of 2021. The total for consumer spend jumped 15% to $28.94 billion during the six month span ending June, driven by console growth in particular. Demand for new consoles still outstripped inventories, though manufacturers proved resilient with production even as it’s difficult to source certain parts in the supply chain.

When focusing on Content alone, sales in June reached $4.32 billion. Up a modest 1% year-on-year. Looking at second quarter, this major category saw $12.6 billion in sales, growing 2%. Notably driven by subscription spend, showing double-digit growth in Q2 (although the firm wasn’t specific in that figure). Across the time frame from January to June, Content bumped upwards of $25.36 billion, 13% higher than first half of 2020.

New releases wrote the narrative here for June. Sony published Ratchet & Clank: Rift Apart, the month’s top-selling software title. The latest mainline Ratchet & Clank action-adventure platformer achieved the best dollar sales ever in franchise history, a staple within the broad portfolio of developer Insomniac Games. The prior record holder for the series was April 2016’s Ratchet & Clank, a counterpart to a movie launched that same month.

Right behind chart mainstay Call of Duty: Black Ops Cold War, which ranked #2, was Nintendo’s latest sports offering in Mario Golf: Super Rush. Within the States, this title set a new Mario Golf record for first month dollar spend, outpacing that of GameCube’s Mario Golf: Toadstool Tour way back in 2003. Nintendo hasn’t yet shared global unit shipments for its latest Switch exclusive sports game, though I expect a similarly solid start when it does on August 5th.

June’s biggest surprise to me was Scarlet Nexus fighting to the five spot on the combined platform chart. An action Japanese Role-Playing Game (JRPG) from Bandai Namco is the latest in splendid starts for Japanese titles expanding overseas during simultaneous global launches, echoing examples like Square Enix’s NieR: Replicant at #5 in April 2021, Capcom’s Monster Hunter Rise in the second spot during March 2021 plus Dragon Ball Z: Kakarot also from Bandai Namco, the best-selling title in January 2020.

Through the first half of 2021, chart composition is familiar. Call of Duty: Black Ops Cold War was the best-seller with Resident Evil: Village and MLB The Show 21 right behind it at #2 and #3, respectively. One notable position is the 9th-ranked Outriders from Square Enix, a quietly consistent seller during the first half even if it lost some ground compared to May.

It’s time for the lists themselves, both monthly and first six months of the year.

Top-Selling Games of June 2021, U.S., All Platforms (Physical & Digital Dollar Sales):

  1. Ratchet & Clank: Rift Apart
  2. Call of Duty: Black Ops Cold War
  3. Mario Golf: Super Rush*
  4. MLB The Show 21^
  5. Scarlet Nexus
  6. Resident Evil: Village
  7. Mario Kart 8*
  8. Minecraft
  9. Marvel’s Spider-Man Miles Morales
  10. Mortal Kombat 11
  11. Animal Crossing: New Horizons*
  12. Call of Duty: Modern Warfare 2019
  13. Super Smash Bros. Ultimate*
  14. Assassin’s Creed Valhalla
  15. Super Mario 3D World + Bowser’s Fury*
  16. Mass Effect: Legendary Edition
  17. Tony Hawk’s Pro Skater 1+2
  18. The Legend of Zelda: Breath of the Wild*
  19. Pokémon Sword & Shield*
  20. Sea of Thieves

Top-Selling Games, 1st Half 2021, U.S., All Platforms (Physical & Digital Dollar Sales):

  1. Call of Duty: Black Ops Cold War
  2. Resident Evil: Village
  3. MLB The Show 21^
  4. Super Mario 3D World + Bowser’s Fury*
  5. Marvel’s Spider-Man: Miles Morales
  6. Monster Hunter Rise
  7. Mario Kart 8*
  8. Assassin’s Creed Valhalla
  9. Outriders
  10. Minecraft

Moving onto gaming consoles during June 2021, the Hardware category saw gains across all three major platforms in PlayStation, Xbox and Nintendo, driving exceptional growth of 112% to $401 million. That’s the top June sales amount for Hardware since June 2009’s $617 million.

I mentioned before the great, record-breaking month for Xbox where Series X|S led by dollar sales. That’s the first time since its launch in November 2020. It recorded the best June month ever for an Xbox platform, beating out June 2011. No doubt driven by new content for console exclusive Sea of Thieves, continued pace from MLB The Show 21 plus the allure of Xbox Game Pass as the best value proposition in games.

Microsoft wasn’t the only manufacturer with an exciting month. Nintendo Switch led by unit sales in June 2021, as it has every month for years now during its wild run of success. PlayStation 5 continues its extremely quick start. Sony’s new generation (big ol’) box is still the fastest-selling home platform in tracked history, as measured by unit sales during the first 8 months on market. Note this statistic excludes handhelds, since Game Boy Advance is still the fastest-seller overall.

Stretching the time frame to second quarter, console spending moved up 12%. Then between January and June, this Hardware category earned $2.35 billion. That’s a fantastic 45% increase, even if compared to a time that was later in the console cycle last year.

It’s worth repeating that numbers during the early portion of a new platform generation are driven by supply rather than demand, more now than ever given the inventory environment. Essentially, Xbox produced enough Xbox Series X|S units to lead by dollar sales during June. Demand is for all platforms is stellar, even Nintendo Switch four years after its debut. This contrasts a chip shortage expected to block higher production output for a year or two, at least.

The only mildly disappointing category during both June and second quarter was Accessories, unable to keep pace with its counterparts. Understandable given the strength of spending this time last year. Although it did exhibit growth when looking at the aggregate during the first half of 2021, an encouraging sign.

Monthly spending on this category comprised of game pads, headsets etc declined 1% to $207 million in June and was 12% lower than last year when looking at the second quarter. Still, it saw 14% growth during the first six months of 2021, rising to $1.23 billion.

Sony is the consistent leader here. The PlayStation 5’s DualSense Controller Midnight Black edition topped this accessory group during June. Out of the four best sellers last month, three of those were DualSense game pads. Similarly, DualSense’s base White variant led the segment for the year so far.

It appears additional spending on these pieces of ancillary hardware is slowing in the early summer months, so will see where it goes leading into the back half.

The domestic games market saw many bright spots during June, especially for platform holders. Each of them had bragging rights in their own way, and all of them are doing well despite production challenges.

Individual software titles, subscriptions and mobile are keeping up consistency in spending, proving how the industry was not just able to grow its audience during the last year or so, but keep it around to maintain commercial momentum and interest in the medium.

Which makes sense to those tracking closely. Gaming is somehow both the most massive entertainment segment in the world and the quietest, a trend that last week’s reporting clearly shows especially when considering double-digit gains across each category since the year’s start.

I hope everyone stays well until next month when July marks the start of 2021’s second half, always an exciting time for those of us that love to follow. Feel free to drop a comment here or on social media. Be safe and thanks for reading!

*Digital Sales Not Included, ^Xbox Digital Sales Not Included

Sources: Billy Freeman (Photo Credit), The NPD Group, PlayStation Press Center.

-Dom

Resident Evil Feasts During Upbeat May U.S. Games Industry Sales Report

It’s the middle of E3, gamers have finally seen more from Elden Ring, yet nothing can stop this sales train!

The NPD Group returned today with its monthly sales report for the U.S., this time for May 2021. It’s clear the industry is continuing to build momentum, considering spending is up slightly compared to this time last year when everyone was a couple months into stay-at-home restrictions. This movement is mostly due to upticks in the content category with the performance of new releases and attraction of ongoing titles.

Capcom’s Resident Evil franchise and a collection of Mass Effect titles from Electronic Arts headlined the Content segment, while the non-stop Nintendo Switch maintained a momentous streak on the Hardware side. Both of these categories saw single-digit consumer spending growth. Accessories was the only one of the three that saw declines year-on-year, though less than double-digits as new hardware supply is impacting consumer behavior for supplementary spending.

Still, year-to-date growth is nearly 20% for the domestic industry at large to upwards of $24 billion as of May. Each category is up 15% or more for 2021 to date right now, a great number during a lighter than usual release calendar with the impact of COVID-19 still being felt on publisher timelines.

“Tremendous demand for new hardware, supply will dictate performance.” said The NPD Group’s Mat Piscatella as a part of the report online. “Subscription spending is hot, no evidence of cannibalization yet. Confidence growing in market ability to [compare] to 2020.”

Speaking of those latest consoles, PlayStation 5 is officially no longer the fastest-selling ever in the United States in this its seventh month on market. It had a good run, but right now it’s feeling that inventory limit and semi-conductor shortage. A situation that might not drastically improve until 2022.

See more about that and many other details in the sections below, as I dig right into the numbers.

United States Games Industry Sales (May 2nd, 2021 – May 29th, 2021):

In total, spending across the U.S. games industry hit $4.5 billion in May 2021 which is a modest increase of 3% since last year. Which is quite good news, considering the April decline plus how last May proved to put up a sizeable fight with its own quality performance.

As I alluded to up top, 2021 to date spending rose 17% to more than $24 billion as of last month. Contributing to this growth is the combination of ongoing content and subscription strength, two new releases at the top of the software chart plus Nintendo Switch continuing as the hottest console out.

The largest segment of Content (software, add-ons etc), achieved $4.07 billion in spending during May, which is 91% of the full month’s total. This number is up 5% versus the same month in 2020, when it was $3.96 billion. For the first five months of the year, Content boosted 15% to just over $21 billion, again the largest contributor by a wide margin.

Partially pumping up this growth is the top-selling game on the software rankings, Resident Evil Village. The latest in Capcom’s long-running survival horror franchise achieved the best launch month for any game of the year. It’s immediately the second best-selling title of 2021 behind only Call of Duty: Black Ops Cold War. This means it’s the best single month launch for any new game this year.

Resident Evil Village topped PlayStation, Xbox and Steam individual charts here in the States during May. We also know that it’s doing well globally, considering Capcom shared that the title hit 3 million units shipped + downloaded within days of launch then tacked on another million within its first three weeks, for a total of 4 million copies to date.

Second place on the aggregate software chart went to Mass Effect: Legendary Edition. Developed by BioWare under the publishing of Electronic Arts, this compilation of the first three games in the beloved space opera role-playing series reached #3 on PlayStation platforms and the second spot on Xbox.

Compare this to prior titles, as 2017’s critically-panned Mass Effect Andromeda hit third on the total chart while the divisive Mass Effect 3 led its launch month in March 2012. (One thing to note is that back then, ranks were based on unit sales while it’s dollar revenue these days.)

One major trend that stands out to me is the continued performance of MLB The Show 21, carrying over from being last month’s chart-topping smash hit. As I mentioned in April, it’s the first time the game is multi-platform rather than a PlayStation exclusive. This is proving a smart decision commercially, considering the game rounded out the Top 3 in May, outpacing the juggernaut that is Call of Duty: Black Ops Cold War. And that doesn’t even include digital contribution on Xbox platforms! This is exactly why Major League Baseball made the call to open up its potential audience, and they are scoring big as a result.

Elsewhere on the chart is the resurgence of 2019’s Mortal Kombat 11, maintaining its spot at sixth place for the second straight month with that classic movie bump. The latest franchise film debuting in late April. Ultimately makes me wonder what’s next for developer NetherRealm Studio, especially given the team will be impacted by the shake-up at Warner Bros Media. No one knows, at least not publicly, where it will end up.

As for new titles, Biomutant is the only other May release on the aggregate chart, reaching #16. The first effort from a new studio called Experiment 101 and published by THQ Nordic, it did make the Top 10 on both PlayStation and Xbox ranks at #8 and #9 respectively.

That said, it’s chart time folks!

Top-Selling Games of May 2021, U.S., All Platforms (Physical & Digital Dollar Sales):

  1. Resident Evil Village
  2. Mass Effect: Legendary Edition
  3. MLB The Show 21^
  4. Call of Duty: Black Ops Cold War
  5. New Pokémon Snap*
  6. Mortal Kombat 11
  7. Mario Kart 8*
  8. Returnal
  9. Animal Crossing: New Horizons*
  10. Minecraft
  11. Call of Duty: Modern Warfare 2019
  12. Marvel’s Spider-Man: Miles Morales
  13. Super Mario 3D World + Bowser’s Fury*
  14. Super Smash Bros. Ultimate*
  15. It Takes Two
  16. Biomutant
  17. Assassin’s Creed Valhalla
  18. Monster Hunter Rise
  19. The Legend of Zelda: Breath of the Wild*
  20. Pokémon Sword & Shield*

Top-Selling Games, 2021 Year-to-Date, U.S., All Platforms (Physical & Digital Dollar Sales):

  1. Call of Duty: Black Ops Cold War
  2. Resident Evil Village
  3. MLB The Show 21^
  4. Super Mario 3D World + Bowser’s Fury*
  5. Monster Hunter Rise
  6. Marvel’s Spider-Man: Miles Morales
  7. Outriders
  8. Mario Kart 8*
  9. Assassin’s Creed Valhalla
  10. Minecraft

Hardware is up next, where strength in Nintendo Switch helped to alleviate supply headwinds as category spend rose 5% year-over-year to $244 million. Last year’s figure was only a bit lower at $233 million. This led to the figure for 2021 so far to jump 36% against the same period last year, upwards of $1.9 billion in spend last month compared to $1.43 billion. Out of the three major categories, it experienced the best annualized growth by far.

The usual headliner is Nintendo Switch, and that’s no different in May. It has now led the hardware rankings by unit sales for 30 (!!) consecutive months, an ongoing record that I don’t think will be broken until new generation manufacturing ramps up during the holidays or even 2022.

Switch was also the best-selling platform as measured by dollar sales last month, and of course Nintendo retained the top spot when expanding to the full year. The steadfastness of the Japanese publisher’s hybrid hardware is more impressive every single month, leading me to wonder if those rumors about a more powerful, revised model aren’t as close as some think. (Well, some claimed it would be announced before the big E3 show, which clearly did not happen.)

On the PlayStation 5 side, The NPD Group didn’t share much in the way of details. I was able to confirm that its status as the fastest-selling console in tracked history has ended at six months. Its usurper is the Game Boy Advance, which had a tremendous holiday back in 2001. This is more due to production than demand, of course, a theme that you’ve seen me mention many times recently.

Performance of Xbox Series X|S isn’t clear from May’s report, other than Piscatella’s comments about very high demand. It seems like Microsoft is outputting the least amount of consoles, though that’s complete speculation. And we won’t know, because it won’t ever again share hardware units sold, instead opting towards Xbox Game Pass subscription and other player engagement statistics.

The final category is Accessories, which had the toughest time during May 2021. Monthly consumer spending here dipped 8% to a total of $142 million versus last year’s $154 million. No doubt impacted by its correlation with new hardware production, as new buyers often scoop up accessories with their purchases of a shiny new gaming box.

Still, for the year as a whole, Accessories segment crossed $1 billion in spending during May, which is 17% higher than the $877 million back in 2020.

As I confirmed directly with Piscatella, Sony’s White DualSense controller was the top-selling game pad of the month, reflecting a consistent trend since the PlayStation 5’s start. Personally I say it’s well-deserved as a great piece of modern tech, enhancing the experience of traditional input controls.

The report did share a bit of detail into Steering Wheels too! This sub-category jumped 45% year-on-year. Apparently the Logitech G920 Driving Force Racing Wheel is.. hm, driving this growth, since it’s the year’s top seller as of the latest report.

Another month, another big sales reaction piece!

Domestic spending proved resilient last month, as we’re in an era where subscriptions and ongoing content bolster the traditional delivery methods and console generational cycles. Demand for gaming is still high even as vaccinations increase, it’s just a matter of hardware companies keeping up with output. Which is somewhat out of their control, given the global chip situation.

For even more behind the numbers, including a variety of different software charts and further reading, check out Piscatella’s helpful thread here or The NPD Group’s website.

Moving into the heat of the summer here in the U.S., June’s release schedule boasts some of the biggest platform exclusives of the year in PlayStation 5’s combat platformer Ratchet & Clank: Rift Apart then Mario Golf Super Rush from Nintendo, which I anticipate will both chart very well. Bandai Namco’s stylish action game Scarlet Nexus also debuts later this month, will be curious if it can garner enough interest here to gain a Top 10 spot.

Anything surprise you in May? Have you played any of the new games charting here? What’s your prediction for best-selling title in June? As always, thanks for stopping by. Be safe and stay well, all!

*Digital Sales Not Included

^Xbox Digital Sales Not Included

Sources: Capcom, Chris Lynch (Photo Credit), Onur Binay (Photo Credit), The NPD Group.

-Dom

MLB Shows Well in April During Slight Decline in U.S. Games Industry Sales

While not quite another month full of record highs, April 2021 still boasted numerous commercial highlights for the U.S. games industry in the scheme of things.

Yesterday, The NPD Group shared its monthly sales report for consumer spending on various parts of the games industry within the domestic market.

More than a year into the COVID-19 pandemic, we’re starting into the time period where the impact from stay-at-home restrictions caused some of the biggest months in tracked history. Which means tough comparisons when looking at this year versus the same time in 2020.

Overall, total consumer spending was down a bit in April 2021 driven mainly by lower hardware output, offset by new launches, mobile, subscription and downloadable content within the software category. Still, consumers have spent nearly $20 billion on Content, Hardware and Accessories during the year so far. Which is over 20% higher than the same time period in 2020.

While Nintendo Switch and PlayStation 5 continue impressive runs, it wasn’t enough to stave off a double-digit decline in Hardware and Accessories for the month. No doubt affected by global semiconductor shortages and manufacturing slowdowns. Both of these categories are still showing notable spend increases when aggregating 2021 to date.

New annual sports release MLB The Show 21 stepped into the spotlight during its release month, snatching the top spot on the overall and PlayStation software charts. The ever-present Call of Duty series plus a brand new Pokémon side entry in New Pokémon Snap rounded out the Top 3, while strong debuts from both NieR Replicant ver.1.22474487139 and Returnal led the Content category to an increase.

“Hardware shortage impact [is] being felt, will continue to be felt throughout 2021,” said NPD Group’s Mat Piscatella. “Accessories [are] now being impacted by supply chain/logistics as well.”

That said, there’s still plenty of growth to cover, so it’s time to dig into all the numbers.

United States Games Industry Sales (April 4th, 2021 – May 1st, 2021):

Consumer spending in general declined 2% to $4.6 billion in April 2021. This marked the first time monthly overall sales have dipped since back in February 2020 i.e. right before the start of country-wide quarantines plus the massive success of Animal Crossing: New Horizons.

It feels like forever ago, I know.

Now, this isn’t actually a bad sign. In fact, it’s a perfectly healthy month historically. It’s just slightly lower because last April set the record for setting records when it comes to domestic industry spending as I documented at the time. (Note that since that time, NPD Group has reclassified its categories and added to its coverage, so the public numbers themselves aren’t necessarily comparable.)

When expanding the timeline and looking at the first four months of 2021, total spending is up 21% since this time last year to $19.6 billion. Mainly because of momentum during the first couple months of this year driven by demand for next generation consoles and games to play on those systems, especially mobile, services plus add-on content for existing titles.

Speaking of software, the largest category of Content generated $4.2 billion in sales during April. This is up from $4.1 billion in April 2020. Year-to-date is even more impressive, hitting upwards of $17 billion when compared to $14.3 billion.

Expansion in Content is due to the release schedule picking up, ongoing appeal of subscription services plus legacy title support as the biggest older games still continue to chart.

Taking the lead on the overall software rankings in April 2021 was MLB The Show 21, which is dual published by Sony Interactive Entertainment on PlayStation devices then MLB Advanced Media on the Xbox family. This is a huge year for the annual franchise, marking the first time it’s been available on Microsoft’s consoles. Not only that, it launched directly into the Xbox Game Pass subscription service. Judging by its placement, the impact on sales seems to have been additive rather than cannibalizing.

A combination of PlayStation’s usual player base plus a new audience of Xbox fans led the baseball game developed by Sony’s San Diego Studio to set a series record for launch month dollar sales. Because of this, it’s immediately the 3rd best-selling title of 2021. And this isn’t even considering digital revenue from Xbox. Is this an appropriate time to say that the team knocked it out of the park?

Another impressive start was Nintendo’s New Pokémon Snap, landing at the third spot overall. Similar to above, this also doesn’t even consider digital sales since Nintendo notoriously doesn’t participate in that part of reporting. Predictably, it was the biggest title on Nintendo platforms during April. First month retail sales more than doubled that of July 1999’s Pokémon Snap debut, marking a picture-perfect return for the previously dormant spin-off from one of the world’s most successful brands.

Elsewhere on the software ranks, Outriders now has a full month on record and dropped one spot to fourth place. Square Enix’s third person action game was another with a simultaneous release on Xbox Game Pass, a rare occurrence for third party titles. The shlooter attracted 3.5 million unique players during its first month, a result that saw its publisher hinting at future content by saying it’s on track to being its next hit franchise. Unfortunately, it’s still unstable for many folks, resulting in continuous patches from development team People Can Fly.

In what I’d call more than a pleasant surprise, another Square Enix title landed at #5 this time in NieR Replicant ver.1.22474487139 (yes, I always have to Google the full title like most of us). The “version update” of the first NieR game that released a couple generations ago was handled by Toylogic. Replicant charted well above 2017’s NieR: Automata which started at ninth in its March 2017 debut month, popularity no doubt bolstered by Automata engaging more mind-share towards the cult classic franchise.

Two other notable titles within the Top 10 were PlayStation 5 exclusive Returnal, with only two days of tracking, then It Takes Two published by Electronic Arts as part of its EA Originals indie program. Returnal at the 8th spot is a strong debut for new IP from Housemarque Games, long-time Sony collaborator and arcade game specialist. It Takes Two continues its quietly consistent success, climbing a dozen spots to #9. The co-op adventure game from Josef Fares’ Hazelight Studios recently sold a million units globally in under a month.

Full charts incoming.

Top-Selling Games of April 2021, U.S., All Platforms (Physical & Digital Dollar Sales):

  1. MLB The Show 21^
  2. Call of Duty: Black Ops Cold War
  3. New Pokémon Snap*
  4. Outriders
  5. NieR Replicant ver.1.22474487139
  6. Mortal Kombat 11
  7. Monster Hunter Rise
  8. Returnal
  9. It Takes Two
  10. Mario Kart 8*
  11. Call of Duty: Modern Warfare
  12. Marvel’s Spider-Man Miles Morales
  13. Super Mario 3D World + Bowser’s Fury*
  14. Minecraft
  15. Animal Crossing: New Horizons*
  16. Super Mario 3D All-Stars*
  17. Super Smash Bros. Ultimate*
  18. Assassin’s Creed Valhalla
  19. Pokémon Sword & Shield*
  20. The Legend of Zelda: Breath of the Wild

Top-Selling Games, 2021 Year-to-Date, U.S., All Platforms (Physical & Digital Dollar Sales):

  1. Call of Duty: Black Ops Cold War
  2. Super Mario 3D World + Bowser’s Fury*
  3. MLB The Show 21^
  4. Monster Hunter Rise
  5. Marvel’s Spider-Man Miles Morales
  6. Outriders
  7. Assassin’s Creed Valhalla
  8. Mario Kart 8*
  9. Minecraft
  10. Animal Crossing: New Horizons

Hardware and Accessories tell a marginally different story, declining from last year’s staggering highs.

For Hardware, overall console dollar sales came in at $296 million which is 30% lower than April 2020. Console manufacturers are facing supply-side constraints as inventories can’t keep up with rabid demand. This is going to continue even throughout the full year, as explained by executives from Nintendo, Sony and Microsoft alike during recent earnings presentations.

Even so, year-to-date figures aren’t as gloomy. These are up 42% compared to the same time frame during 2020, hitting $1.7 billion compared to $1.2 billion.

Nintendo Switch continues to be the bellwether, leading both units and dollar sales for the month of April. By my calculation, that’s 29 consecutive months of Switch leading the U.S. by unit sales. An incredible streak, I’d have to imagine it’s the best in domestic tracking history for a single console. It remains the top seller for 2021 so far, and that’s ahead of rumors swirling around a potential new model. (Which, in fairness, have been happening for a while. It’s only recently they have solidified into more tangible information.)

I wrote recently about how Nintendo reported its most profitable year ever, driven by global annual Switch unit sales of nearly 29 million for last fiscal alone ending in March. The introduction of a more powerful iteration, estimated around September or October based on the rumor mill, would continue its consistent pace into the holiday season and beyond even at a higher price point.

That’s not to say competitors aren’t doing big things either. Now in its six month on sale, Sony’s PlayStation 5 remains the fastest-selling console ever domestically. No doubt driven by the appetite of early adopters purchasing new and old games alike then many PlayStation 4 versions carrying over to the current generation, making for a smoother transition.

Not much in the way of information on Microsoft’s Xbox Series X|S performance on the hardware side. At present, it’s about production rather than customer appetite. It seems like Sony is outpacing Xbox in its supply chain, thus leading in the early goings.

In a theme that parallels Hardware, dollar sales for Accessories were down in April though are still exhibiting strength when taking the year as a whole.

The Accessories category dipped 23% in April, generating $168 million in domestic consumer spending. However, its total is $885 million for 2021 to date which is growth of 22%.

Sony’s PlayStation 5 accessories continue their category dominance. The DualSense White Controller led dollar sales for April and retained its spot as the year’s top seller. The Pulse 3D Wireless headset was the month’s runner-up. These often go as hardware goes, and PlayStation 5’s record pace is driving its accessories to be the most popular right now.

Note: The new DualSense colors with fancy names from the image aren’t out until June. Midnight Black (dope!) and Cosmic Red (not for me) are currently up for pre-order.

April 2021 saw various industry trends continuing. These include content growth supplemented by services, mobile and additional content, Nintendo’s evergreen titles constantly on the charts plus PlayStation 5’s record early momentum. Though it couldn’t contend with last year’s record April month itself when combining the various sales vectors. I won’t hold that against it, the year so far has been extremely impressive even with manufacturing limitations for hardware platforms.

“Given where we are with both supply and the pandemic-driven year ago comparable period, the market is holding remarkably well,” Piscatella added in additional commentary on the monthly report.

Looking ahead, next month’s report will be available in just a few short weeks covering May 2nd to May 29th. I expect a phenomenal start for Resident Evil Village, high demand for Mass Effect Legendary Edition plus ongoing strength for major third parties and Nintendo exclusives. Switch will probably lead again, though PlayStation 5’s record start should continue as well.

Until then, enjoy some fun games, stay healthy, and especially my American friends, please continue to be safe things as things open up here with vaccinations on the rise. See you again.

*Digital Sales Not Included

^Xbox Digital Sales Not Included

Sources: Electronic Arts, Enrique Vidal Flores (Image Credit), MLB Advance Media, NPD Group, PlayStation Blog, Square Enix.

-Dom

Switch & Software Sales Milestones Produce Nintendo’s Most Profitable Year Ever

It’s no secret that Nintendo’s Switch hybrid platform was a game-changer for the company after its difficult Wii U era. The hybrid console’s success and its corresponding software sales, especially for those that the Japanese gaming giant has published, have lifted it to the best revenue in over a decade plus record profits during its fiscal year ending March 2021.

These are staggering results. Fitting for Nintendo, I’m jumping right into it.

Previously I covered Sony and Microsoft’s gaming business results this quarter, with annual sales for those two competitors at $24 billion and $15 billion respectively. Nintendo’s latest fiscal result falls between them, generating approximately $16 billion overall. That’s an increase of 34% since last year and, most importantly, the highest yearly sales since the roughly $16.7 billion over a decade ago in 2010.

When it comes to profitability, the report is even more impressive. Operating profit boosted a staggering 82%, reaching just above $5.8 billion for the last 12 months. This is the best ever result for a company that’s been around longer than any of us. It’s also the second best growth rate since 2010, behind only 2018 at the start of the Switch generational cycle.

These figures blew past the company’s targets by a substantial margin, even if those estimates were conservative. During its presentation, Nintendo executives attributed it to a strong hardware presence especially in Australia and Asia, a shift in the ratio of digital sales plus three dozen million-sellers on Switch this past year. It’s attracting new customers and encouraging owners to snag an additional console. 20% of Switch purchases are second devices. And that’s only going to grow.

When I break it down more closely myself, the near or at record figures come from a combination of various underlying factors. Main one being a Switch hardware push, since the console represents more than half of the company’s business. Also, the launch of third party exclusive Monster Hunter Rise, continued momentum of nearly all first party software especially Mario Kart 8 Deluxe and Animal Crossing: New Horizons plus impact from the end of the company’s 35th anniversary celebration of the Mario franchise. Particularly on Super Mario 3D All-Stars as it went off market simultaneously (and conspicuously) at the same time the fiscal year ended.

Now, the best part. To dig into the nitty gritty!

Profit is off the charts, top-line revenue is the best in years, Switch hardware is selling at a rate that not even the most optimistic predicted and Nintendo’s software figures are keeping pace in the current unpredictable environment.

After shipping 4.72 million Switch consoles in the January to March window, sales to date reached a major milestone in terms of broader industry comparisons. With a lifetime hardware figure of 84.59 million shipped, it’s now passed both Sony’s PlayStation Portable, upwards of 82 million, in addition to the 81.51 million of Nintendo’s own Game Boy Advance family of devices. And depending on which source, it’s close to if not above the beloved Xbox 360 from Microsoft.

(I say that because there are slightly different reports of Xbox 360 sales since launch in 2005. It’s anywhere between 84 million and 85.5 million since Microsoft stopped reporting exact hardware statistics. Suffice to say, Switch may have passed it by now when taking into consideration the month since March end.)

Based on the latest quarterly numbers, Switch units reached 28.83 million for this past fiscal year. Its best to date. This is a increase of 37% year-on-year, plus more than 2 million units above guidance. Which Nintendo had even raised. Twice.

Within the console segment, 20.32 million of those shipments were the standard Switch model. Switch Lite contributed 8.51 million. Both of these are up the same 37%, consistent with the platform’s aggregate growth.

Now at the start of this past fiscal year, Nintendo’s target for Switch hardware was unbelievably low. Even more so that it was issued right during the early part of the global pandemic and Animal Crossing: New Horizon’s meteoric early prosperity. Which is somewhat understandable. Companies tend to be conservative, that way it’s easier to beat guidance. It’s still no less impressive, proving there’s considerable demand still at this middle portion of its cycle. Nintendo doesn’t seem as affected by the global chip shortage that’s plaguing other manufacturers.

This sort of momentum is consistent with domestic results, and The Americas make up nearly 42% of Nintendo’s overall sales so it’s notable to compare. As I wrote in April, Switch has been the leading console by unit sales in the United States for 28 straight months. Over 2 years. Sure, most of this was during the last legs of PlayStation 4 and Xbox One. Which is why 2017 was the absolute perfect time for Nintendo to launch, supported over the past few years by the quality of its exclusives plus ongoing third party support, notably within the independent development space.

Expanding to a historical context, Switch is on a faster pace than the Nintendo Wii, launched way back in 2006, and 2013’s PlayStation 4 when measured by unit shipments. Both of which are ubiquitous within gaming, the former being Nintendo’s top-selling home console and latter as the second best-selling home platform ever. Switch strength has especially accelerated since this time in 2020, a period of notable growth for obvious seasons. I included a thorough chart from friend of the site Daniel Ahmad, Analyst at Niko Partners, which illustrates launch-aligned growth for many of the major console releases in history.

Lastly on the hardware side, out of its updated 84.59 million lifetime shipment figure reported today, 81 million have been sold through to consumers. Console sell-through during the quarter ending March alone surpassed the record high of the same period last year. When Animal Crossing: New Horizons launched!

Moving over to game performance, Nintendo Switch software unit sales topped off at 230.88 million for the fiscal year alone. This includes first and third party, retail and digital, remakes and ports, any and all individual games sold that works on the platform. That’s a jump of just under 37%, nearly perfectly in tune with hardware growth. This shows folks aren’t only buying up Switches with increased demand, it reveals that they are buying multiple copies of its most popular games. A trend we’ve seen for this platform since it started.

For the fourth quarter alone, Switch recorded 54.78 million software units shipped which is up from 45.59 million. All of this contributed to lifetime Switch software rising a whopping 65% year-on-year, to 587.12 million. It’s hard to even consider that type of figure in context.

Individual title growth stemmed a lot from newer games in the Mario franchise in addition to the most green of evergreen from Nintendo, then a particularly monstrous seller from Capcom.

Compilation Super Mario 3D All-Stars crossed the 9 million unit sold-in threshold since launch last September, no doubt boosted by Nintendo pulling it from stores in what I still consider a questionable decision for the sake of preservation. Subsequently, Super Mario 3D World + Bowser’s Fury launched this past February during Nintendo’s final fiscal quarter. Since then, it’s shipped 5.59 million and sold 4 million of that thru to buyers. For perspective, the original game on Wii U has only moved 5.87 million copies across its entire time on market.

In one of the more ridiculous numbers when stepping back, Mario Kart 8 Deluxe sold 10.62 million units last year alone. We’re talking an increase of 43%! This is for a game whose first version started on Wii U back in 2014. It’s the highest-selling Switch title to date and probably will always be, currently standing at 35.39 million copies worldwide. That’s over 5 million more than The Witcher 3: Wild Hunt or The Elder Scrolls V: Skyrim, the latter of which is frequently parodied for being available on nearly every platform in existence.

Just behind Mario Kart 8 Deluxe on the Switch top seller list, Animal Crossing: New Horizons shipped a cold 20.85 million in the fiscal year despite a dearth of seasonal updates lately. Even when some people are unhappy with it, plenty of others are still purchasing it. This brings its lifetime total to 32.63 million.

Rounding out the Top 3 Switch platform sellers from Nintendo is fighting game (yes, it’s true) Super Smash Bros. Ultimate, moving exactly 5 million units across the last 12 months. A bit more pedestrian in its growth at 27% for the title that hit market in late 2018. 23.84 million is its count to date.

In other updates, New Super Mario Bros. U Deluxe and Ring Fit Adventure both crossed the 10 million copies milestone in March. That second one is really incredible, considering it’s a dedicated fitness game at a higher price tag because of its included accessory. Even a title like Clubhouse Games: 51 Worldwide Classics is selling, hitting 3.14 million this past quarter.

Honestly, I could list even more and they would mostly show the same trend. Sometimes even I have to stop and take stock of these figures. Rattling them off is like binge-watching classic shows like Breaking Bad or The Sopranos or trying to speed-run an Assassin’s Creed or Grand Theft Auto in a single sitting. It’s impossible to appreciate the bigger picture without taking a breather and really thinking about how many copies these games are selling right now on the platform, not to mention the impact it has on the popularity of those published by third parties.

Out of the 36 million-sellers this year alone, 22 were published by Nintendo. The remaining 14 were third parties and “grew steadily.” This includes Monster Hunter Rise, a major growth driver towards Nintendo’s record results. Capcom’s brand new Switch exclusive in the long-standing franchise reached 4 million copies shipped within *three days* of its March 26 release. It moved a million more by early April, making it already the 3rd best-selling Monster Hunter title of all time. Notable here is the companies collaborated on a special edition Switch model, no doubt a factor during this time right before the fiscal year finished up.

While it’s not as prominent a segment as other companies in the industry, Nintendo experienced a marked rise in digital sales recently. In terms of revenue, digital generated $3.1 billion or around 20% of the overall business. That’s up from under $1.9 billion. Note this measure is a combination of full game downloads, online services and add-on content. Within dedicated video game platform sales by dollar amount, 43% is digital which is up from 34% previously. When talking unit sales, digital is now 47% compared to 41% and 42% for the two years prior, respectively. When charting quarterly trends, it’s clearly pushed up by ample demand last summer during the height of quarantine times.

Whew! Got all that?

The hybrid console’s success and its corresponding software sales, especially for those that the Japanese gaming giant has published, have lifted it to the best revenue in over a decade plus record profits during its fiscal year ending March 2021.

Certain smaller items that didn’t take up much in the fiscal report were its online service, mobile, IP licensing and playing cards businesses.

The company didn’t share an updated figure on Nintendo Switch Online paid subscribers. The last we heard was 26 million during its Corporate Management Briefing over six months ago in September 2020. All executives said this time was that “in addition to the growth in sales of indie titles and other download-only software without corresponding physical versions, Nintendo Switch Online sales were also steady” and that the team was investing in this part of the business, though didn’t specify exactly how much or to what extent.

Mobile and IP related sales grew 11% year-on-year, though still represent a small portion of the total business. $519 million to be clear. Within this, sales from smart devices were constant so it was actually bolstered by royalty income gains. This is not an encouraging sign when it comes to mobile expansion. Still, Nintendo said the Pikmin mobile collaboration with Niantic, the same team behind Pokémon Go, is scheduled for a global launch in back half of 2021. So I expect smart phone contribution will raise at least slightly in the near future.

On its conference call in Japan, executives expanded on various areas within the financial report. Based on notes from those listening, the most curious comment to me is how the company saw record research and development spending recently. For the year, this reached roughly $850 million and it will increase a bit into next year. The reason is partly because of investment in the successor to Switch. To my knowledge, this is the first mention of such a follow-up platform.

Intriguing..

Anyways, looking ahead, Nintendo also provided initial estimates for various parts for fiscal year ending March 2022.

In terms of overall revenue, it expects a decline of 9% to around $14.6 billion. Operating profit target is 22% lower, starting at $4.55 billion. When it comes to Switch, Nintendo estimates shipping 25.5 million consoles and 190 million software units in the upcoming 12 month span. Both of these would be declines as well.

So, why the pessimism?

“The consolidated earnings forecast is based on the premise that we will be able to secure the parts needed for the manufacture of products in line with our sales plans,” executives said. “But this could be impacted by obstacles to the procurement of parts, including the increase in global demand for semiconductor components. There also remains the risk associated with COVID-19, which is difficult to predict.”

To me, this is prudent given the circumstances. Uncertainty around component availability and the dubious nature of selling products in a pandemic once they are manufactured. However, I think it’s too conservative and will be raised at least once. Probably during the mid-way point of the year. Especially given the rumor as recently as last week from Nikkei that annual Switch production could be upwards of 30 million based on sources from part suppliers.

My estimate for Switch hardware is much closer to that figure than Nintendo’s. I’m assuming right now 28 to 29 million plus well over 210 million software copies. I think there’s a good chance it could be the best year to date for the hybrid console, even five years later.

I was way upbeat at the start of the generation. Though not as much to predict this sort of trajectory. And we still don’t know if the rumors around a New Nintendo Super Switch Pro XL model in the near future are true! Either way, Switch will certainly pass Wii lifetime sales sometime in the next 12 months in what will be a momentous occasion.

Nintendo’s software pipeline definitely looks lighter right now. But isn’t that always the case? It’s probably because the biggest releases either aren’t dated yet or haven’t even been revealed. New Pokémon Snap came out in late April. Miitopia, Game Builder Garage and Mario Golf Super Rush are slated for the early summer months. The Legend of Zelda: Skyward Sword HD is July, then there’s the trifecta of Pokémon games between “late 2021” and “early 2022” listed in its report.

There’s also Splatoon 3 and Square Enix’s Project Triangle Strategy (Temporary Title) currently slated for a broad date of 2022. The heavier hitters that could push sales above that guidance are Bayonetta 3, Metroid Prime 4 and of course the sequel to The Legend of Zelda: Breath of the Wild. Even if the last one is the only one of the three out this fiscal year, which I believe it will be, it’s going to be a special one for the company, its shareholders and audience alike.

Indie support will naturally continue, with Switch being a most appealing platform due to its flexibility and on-the-go use case. Nintendo has shown more of a willingness for partnerships as well even with its most coveted brands, so could this be the year where we hear another collaboration with say Ubisoft? The most significant partnership would be anything with Microsoft when it comes to Xbox Game Pass or a Cloud offering. Talk about an industry-shaking event.

Overall, I can’t say much more about its financial year than I already have. It was record-breaking and wholly impressive 12 months, especially how hardware is penetrating to the point where 1 in 5 households currently buying a Switch already have one. Profit is off the charts, top-line revenue is the best in years, Switch hardware is selling at a rate that not even the most optimistic predicted and Nintendo’s software figures are keeping pace in the current unpredictable environment. Nintendo remains a company true to itself in quality, output and setting trends rather than chasing them. It’s the type of strategy that continues to, quite literally, pay off.

Thanks for reading!

Note: Exchange rate used for Japanese Yen to U.S. Dollar is as of today. 0.0091 JPY to 1 USD.

Sources: Capcom, Cláudio Luiz Castro (Photo Credit), Daniel Ahmad (Niko Partners), Guinness World Records, Manny Moreno (Photo Credit), Nikkei, Nintendo Investor Relations, NPD Group.

-Dom

Sony & Microsoft Gaming Division Sales Launch To New Record Highs

Two of the biggest gaming console manufacturers and technology companies reported recent financials back-to-back, and both of them set their own impressive new records in the process.

Sony, purveyor of PlayStation among other consumer electronics, reported full annual results earlier today while Microsoft and its Xbox division shared fiscal year 2020 3rd quarter figures yesterday.

(I hope you knew that because you checked out my latest earnings calendar already!)

Each report proves that traditional gaming is as popular as ever, racking up record sales figures and providing other insights into how the biggest players in the industry are reacting to the pandemic in terms of customer demand, part supply for hardware and development activity for software.

For instance, both companies just reported the highest ever revenue from their respective gaming divisions. Sony’s Gaming & Network Services (G&NS) segment, which houses its PlayStation brand, achieved annual sales above $24 billion for the first time ever. Microsoft has a shorter history in games, which means it’s been reporting figures over less time. Even so, it also reached a significant milestone with Xbox gaming revenue for the past 12 months moving past $15 billion for the first time since it began reporting that particular split.

Time to take a look into the reports, highlighting the records and notable figures along with trends that I spotted while reviewing the stats. And get ready for some super fun charts!

Overall for the year ending March 2021, Sony reported nearly 9 trillion yen in consolidated revenue, which equates to roughly $82.8 billion. This is an increase of 9% since 2019, and a beat compared to analyst estimates. Biggest contributors were significant increases in the aforementioned G&NS plus Financial Services unit while Sony Pictures saw declines due to lack of theatrical performance in a tough ongoing environment for films.

Yearly operating income for the firm as a whole rose 15% to 972 billion yen, or just under $9 billion. Driven by performance in PlayStation, Electronics Products & Solutions in addition to Music segments then offset by decline in Imaging & Sensing Solutions. While a double-digit increase, profit actually missed analyst estimates for the year.

(Yup. Sony has a lot of businesses.)

Focusing within G&NS i.e. the PlayStation division, this is the firm’s leading contributor in recent years. Total sales reached 2.66 trillion yen or roughly $24.44 billion, which is up 34% since last year and a record result for this unit during a full year. Operating income jumped 44% to $3.15 billion. This is the first time this particular business moved past $3 billion in annual profit, marking yet another record high.

Of course underlying these results is the PlayStation 5 launch back in November, a console which shipped 3.3 million units during its second fiscal quarter on market. That brings lifetime shipments after two quarters to 7.8 million, Sony’s best console launch ever as it surpasses the 7.6 million of PlayStation 4 back in fiscal 2013. I had estimated between 3.1 and 3.3 million PlayStation 5 shipments for the quarter, so it’s in-line with expectations and honestly an impressive result given the chip shortage and production constraints plaguing console makers right now.

“Supply has not been able to keep up with extremely strong demand for PlayStation 5, although constraints on the supply of components, especially semiconductors, is expected to continue this fiscal year,” said Chief Financial Officer Hiroki Totoki on the Sony conference call.

As presented in the below gallery, the notable part of this particular console transition for PlayStation is how well growth across all sub-categories is contributing to ongoing performance during a time where older hardware isn’t moving as many units and new consoles are constrained on the supply side of the equation despite massive demand. Digital Software and Add-On Content are both up 44% while Hardware jumped 39% in 2020, showing how players are consistently supporting software offerings and additional expansions or downloadable content on both prior and current generation.

Signaling an industry shift that’s been ongoing for a while and accelerating during the pandemic is digital split for PlayStation software, which hit an all-time best 65% compared to 53% in 2019. Implies nearly 2 out of every 3 games purchased for its platforms are now downloads.

Full game software unit sales reached 339 million during fiscal 2020, up from 276 million in 2019. Out of that, first party titles published by Sony contributed 58.4 million compared to 49.2 million last year. Signaling an industry shift that’s been ongoing for a while and accelerating during the pandemic is digital split for PlayStation software, which hit an all-time best 65% compared to 53% in 2019. Implies nearly 2 out of every 3 games purchased for its platforms are now downloads.

Swapping to user engagement, subscribers to Sony’s PlayStation Plus service rose 15% to 47.6 million. Monthly Active Users (MAUs) across all of PlayStation Network dipped a bit, now at 109 million compared to 114 million a year prior. Still, the rise in PlayStation Plus paid memberships is a more significant contributor to the gaming segment, pushing Network Services sales up 14% year-over-year.

Turning back to PlayStation 4 hardware for a moment, Sony shipped 1 million units of this now legacy console in its last fiscal quarter ending March. That brings lifetime sales to just over 116 million, maintaining its second spot on the all-time home console sales list. While this slowing momentum implies that it will never come close to the lofty 155 million lifetime sales of the historic PlayStation 2, it proves that there will be sparse demand for the immediate future and could realistically hit 120 million next fiscal year at this pace.

Looking into the future for Sony overall, the company starts its fiscal year 2021 sales forecast at an 8% increase over 2020 while projecting a 4% decline in annual operating income. The sales increase should be bolstered by a bounce-back for Sony Pictures plus continued performance of PlayStation and electronics categories. Profit will be negatively impacted by higher costs in development of games alongside other divisional declines.

In terms of gaming, Sony guidance shows a similar theme for the PlayStation business in that sales should increase 9% yet profit will show a bit of weakness, dipping 5% year-on-year. Hardware unit sales will naturally increase as supply broadens, as long as the global chip shortage doesn’t get any worse. And manufacturing costs will lighten as the production process is refined. Though consistent with the recent trend of game delays, Sony expects 3rd party games to contribute less in fiscal 2021 and that includes the coveted add-on content revenue stream.

In terms of a hardware unit projection, Sony executives played a bit coy on the conference call. CFO Totoki reiterated the expectation to ship “above 14.8 million” PlayStation 5 units during the fiscal year from April 2021 to March 2022. Which would bring lifetime to 22.6 million, ever so slightly above its predecessor’s 22.4 million during the same time frame. Basically saying to anticipate a slight increase this early in the generation. My first full fiscal year estimate is 15 million, with a tilt towards the downside if supply doesn’t strengthen quickly enough.

On the software front, Sony is intent on investing in its studios plus other partnerships as has been its successful strategy. The way PlayStation creates value and entices people to buy its hardware is by launching high quality games, especially from those talented studios that it owns. Naturally, it’s pumping dollars in order to attract talent.

“In terms of costs, we plan to increase development, personnel and other costs in our in-house studios by approximately 20 billion yen ($184 million) year-on-year as we further strengthen our in-house produced software,” said Totoki. “To enhance our software offering, we intend to continue investing in or partnering with external studios in addition to aggressively investing in our in-house studios.”

And I tend to agree with Sony’s overall and PlayStation guidance, though I remain tentative on the supply side of hardware and on first party launches like Horizon Forbidden West and God of War Ragnarok despite this strong ongoing investment. For example, I don’t project that both of these major titles will be out in the next 12 months. I expect only Horizon to release in fiscal 2021, perhaps even during the January to March time frame as holiday still seems like a tight deadline.

Moving to Sony’s main competitor in the traditional console space at least in Microsoft, it’s obviously a much broader company with enterprise cloud and Azure driving a bulk of its performance. So unfortunately it shares less details on its gaming results. Still, there are significant statistics and executive quote that guide towards where it’s at in its play towards ecosystem and services alongside its Xbox Series X|S console launch.

Note that these are quarterly numbers and compared to a year ago unless otherwise specified, since Microsoft reported its third quarter fiscal year 2021 figures.

In the quarter ending March, the company overall generated nearly $42 billion in revenue which is up 19%. Operating income increased 31% to $17 billion. It beat analyst estimates on both sales and earnings-per-share. Intelligent Cloud revenue reached over $15 billion, as the foundation of Microsoft’s business.

The Xbox division falls under its More Personal Computing (MPC) segment, which itself contributed $13 billion in sales and operating profit hit $4.6 billion. These 9% and 27% increases respectively were bolstered specifically by gaming results.

Drilling down into gaming alone, total revenue was $3.53 billion during January to March. That’s the first time a 3rd fiscal quarter recorded over $3 billion in sales, and a staggering increase of 50%. It accounted for 27% of revenue from MPC segment, a strong moment for a business that’s accelerating especially given the success of Xbox Game Pass and certain first party games like the ever-present Minecraft.

Xbox Content & Services, which basically means software plus subscriptions, alone grew 34% due to strength across the board in third party titles, Xbox Game Pass subscriptions and first party software.

“People are turning to Xbox more than ever to play and chat with friends, and we saw record engagement this quarter, led by strength on and off-console,” Chief Executive Officer Satya Nadella noted on its conference call. “With Game Pass, we are redefining how games are distributed, played, and viewed. Just last week, we added cloud gaming via the browser, expanding our reach across PC and mobile.”

What this quote and the results reveal is that Microsoft’s holistic strategy of attracting players to its ecosystem as opposed to a singular device is starting to pay major dividends. The team at Xbox is indifferent as to where someone plays its game or accesses its services. Just as long as they do.

Curiously, Nadella and team didn’t share new figures for Xbox Game Pass subscriptions. Back in January, Microsoft reported that the figure was 18 million. Rumors are that this figure is upwards of 23 million as recently as last week. Which would be consistent with Nadella’s remarks and recent Xbox Content & Services double-digit growth.

On the Hardware side, revenue more than tripled since this time in 2020 due to the start of a new generational cycle. Demand for Xbox Series X|S is vastly outstripped supply, the latter of which seems to be more significantly constrained than even the PlayStation 5.

Chief Financial Officer Amy Hood echoed the sentiment. “In Gaming, we continued to see record engagement and strong monetization across our platform, as well as demand that significantly exceeded supply for our Xbox Series X and S consoles,” she said.

Still, Microsoft isn’t sharing unit sales figures or giving any indication other than growth statistics for its hardware sales. It’s tricky to estimate, though friend of the site and Niko Partners Analyst Daniel Ahmad estimated that the Xbox Series X|S shipment figure was at 3.5 million last quarter. That would be slightly less than its predecessor the Xbox One, which did 3.9 million in its launch quarter.

I won’t put an exact number on it because it would be a complete guess, though wouldn’t be shocked if Microsoft shipped a couple million last quarter given the current inventory environment.

Annual gaming revenue jumped 46% since this time in 2020 plus achieved a record, the first time ever that yearly gaming sales at Microsoft crossed the $15 billion milestone.

Above gallery contains relevant information here, plus a handy chart that I’ll get into now.

Expanding to a longer timeline, gaming sales for Xbox totaled just over $15 billion for the trailing 12 month period ending March 2021. Annual gaming revenue jumped 46% since this time in 2020 plus achieved a record, the first time ever that yearly gaming sales at Microsoft crossed the $15 billion milestone. The recent direction under Head of Xbox Phil Spencer’s leadership of expanding to new audiences and devices isn’t just a concept, it’s proving to be a sound business decision.

One caveat here is that the $7.5 billion acquisition of ZeniMax happened during the quarter, so its contributions began in early March. Which definitely allowed for its record results. And is exactly why Xbox paid handily for it.

In terms of Xbox software, performance of first-party titles came in above expectations. Minecraft in particular, which recently saw MAUs increase 30% to 140 million. That’s an absolutely ridiculous number of people signing in every month on average for a game that’s over a decade old. Microsoft also shared that Minecraft creators have generated $350 million from over a billion downloads of mods, add-ons and experiences on the platform over the years.

Moving towards the future and guidance, Microsoft provides a specific number for its three broad segments then general comments about individual businesses. MPC revenue next quarter will be upwards of $13.6 billion and $14 billion.

“In Gaming, we expect revenue growth in the mid-to-high single digits. Significant demand for the Xbox Series X and S will continue to be constrained by supply,” said CFO Hood. “And on the strong prior year comparable, we expect Xbox content and services revenue to decline in the mid-to-high single digits.”

This is similar across both Microsoft and Sony, in that consumers will be buying as many pieces of hardware as they can produce. I’m most intrigued by software output for Microsoft, which I think will be quite stagnant until Halo Infinite later this year (which I’m fairly confident won’t be delayed again). So the question comes down to first party output combined with third party partnerships for Xbox Game Pass, the latter of which has been strong lately with games like Outriders and MLB The Show 21.

I anticipate Xbox Game Pass partnerships and console demand to drive results into the last quarter of Microsoft’s fiscal year ending June 2021, as opposed to any significant first party output. Minecraft will always be consistent, at least. Additional titles from its owned studios will come later, especially with Bethesda now incorporated into the mix and Halo Infinite looming as the flagship Xbox console exclusive later in calendar 2021.

Thanks to everyone for stopping by and checking out this analysis. Company reports have more details if so inclined, and I’m always active on Twitter for conversations around these results or my predictions. Would be interested to hear your perspective as well. Be safe!

Note: Exchange rate used for Japanese Yen to U.S. Dollar is as of today. 0.0092 JPY to 1 USD.

Sources: Daniel Ahmad (Niko Partners), Jez Corden (Windows Central), Microsoft, Newsweek (Image Credit), Sony.

-Dom

Familiar Franchises & New Hardware Lift U.S. Games Industry to a Record January

It’s the first U.S. monthly sales report of the new year, featuring formidable familiar faces topping the charts on the way to a record January for domestic games industry spending.

Call of Duty, Assassin’s Creed and Marvel’s Spider-Man among others drove a solid double-digit increase in content and software sales, while Nintendo Switch alongside PlayStation 5 combined to push hardware results to more than double the amount of this time last year. Even accessories increased over 70% year-on-year in January, bolstered by Sony’s most recent innovative controller.

It’s clear even with vaccine distribution thankfully happening around the globe, the video games industry is a primary beneficiary of continued shelter in place and quarantine orders. Even devoid of flagship releases charting on the software side, inventory constraints on the hardware front and following a major holiday season, January achieved a record.

This proves the strategy of many publishers in the current era providing ongoing content, seasonal events and cosmetic drops to engage an audience that wants to stick around longer than in prior generations. People love a reason to play the games they own, whether solo or with others, and this modern model certainly fulfills that.

Before I dig into the numbers and document my reactions, I want to again eternally thank the front-line, healthcare and retail workers for all the effort during an impossibly difficult time. I hope you are able to find some downtime and enjoy these games as a much-needed distraction.

United States Games Industry Sales (January 3rd, 2021 – January 30th, 2021):

Straight from NPD Group itself, plain and simple: January 2021 was a record January across its tracking history.

Consumer spend in the U.S. during the month reached over $4.71 billion, an increase of 42% since January 2019. Every single category of Content, Hardware and Accessories saw at least double-digit growth year-on-year.

Starting with the biggest contributor, Video Game Content sales exceeded $4.17 billion, comprising nearly 89% of monthly spend. This figure is up 36% when compared to early last year. Big results from Call of Duty: Black Ops Cold War, the resilience of Assassin’s Creed Valhalla plus a plethora of strong catalog titles from Nintendo highlight this category’s continued momentum.

As anticipated, Video Game Hardware saw the strongest movement: a staggering 144% gain over the same month in 2019, to upwards of $319 million. This time last year marked the last hurrah of the prior console generation, so naturally 2021 will bring about sizeable increases. I argue it’s slightly more impressive considering the public supply constraint issues admitted by both Sony and Microsoft.

As a knock-on effect of console launches plus Sony’s popular DualSense controller revision, Video Game Accessories bumped up 73% year-over-year to a spending amount of $222 million. A rising tide lifts all boats in this case, as displayed by all sub-categories here reaching all-time January highs last month.

Software is the leading category, which means it’s up first.

Call of Duty: Black Ops Cold War once again led the charge on the overall rankings, a spot its held each month since launching in November. It’s also the best-selling title over the past year. Not only that, the military shooter from Activision broke into the Top 20 best-selling games *of all time* in January, right at that #20 spot.

NPD Analyst Mat Piscatella called it “incredible” and said this particular statistic “made his jaw drop.”

2019’s Call of Duty: Modern Warfare is even in the Top 10. Activision Blizzard shared recently that both sales and engagement increased in the quarter ending December, namely how net bookings from the Call of Duty franchise rose over 50% in the quarter. Black Ops Cold War itself drove monthly active franchise users to increase around 70%. Lifetime spending across series history reached $27 billion in 2020, plus it entered this year with its largest user base to date.

In a similar success, Assassin’s Creed Valhalla ranked #2 on January 2021’s chart. It’s now the second fastest-selling game in the open world franchise from Ubisoft Entertainment, as measured by first three months U.S. dollar sales, behind only 2012’s Assassin’s Creed III.

As part of a quarterly report this week from Ubisoft where the company achieved record net bookings of over €1 billion ($1.21 billion), the French publisher noted how Valhalla generated record revenue within the long-running series.

Rounding out the Top 3 was PlayStation exclusive Marvel’s Spider-Man: Miles Morales. It’s also the 10th best-selling title of the last 12 months. Insomniac Games’ super hero action game achieved global unit shipments of 4.1 million since launch in November alongside the PlayStation 5, no doubt accelerated by Sony’s willingness to put out games simultaneously across both console generations. Smartly capitalizing on the 115 million PlayStation 4 consoles in the wild.

Another observation when perusing the list is again the sheer number of games from Nintendo even without digital sales reported, snagging 4 of the Top 9 spots. Animal Crossing: New Horizons returned to the Top 5 for the first time since July 2020, after surpassing the 30 million copies sold worldwide milestone. And Ring Fit Adventure among them at 7th overall, a further example of a clever bet from the Japanese company within the fitness sub-genre. Ubisoft’s Immortals Fenyx Rising, a late year gem, maintained a Top 15 finish after its Top 10 showing last month.

You might be wondering about the precipitous drop for CD Projekt’s Cyberpunk 2077 from second to 18th, barely making the Top 20. Or perhaps the notable absence of Hitman 3 after excellent reviews from IO Interactive’s latest? Well, it’s the same reason why Grand Theft Auto V and Red Dead Redemption 2 are no longer staples of the charts: No digital sales. While NPD Group has expanded its coverage of publishers sharing downloaded data, there are still a number that opt out.

Top-Selling Games of January 2021, U.S. (Physical & Digital Dollar Sales):

  1. Call of Duty: Black Ops Cold War
  2. Assassin’s Creed Valhalla
  3. Marvel’s Spider-Man: Miles Morales
  4. Madden NFL 21
  5. Animal Crossing: New Horizons*
  6. Mario Kart 8: Deluxe*
  7. Ring Fit Adventure
  8. Call of Duty: Modern Warfare
  9. Super Smash Bros. Ultimate*
  10. NBA 2K21*
  11. Super Mario 3D All-Stars*
  12. FIFA 21
  13. Immortals Fenyx Rising
  14. Mortal Kombat 11
  15. Just Dance 2021
  16. The Legend of Zelda: Breath of the Wild*
  17. Minecraft: PlayStation 4 Edition
  18. Cyberpunk 2077*
  19. Super Mario Party*
  20. UFC 4

Top-Selling Games, 12 Months Ending January 2021, U.S. (Physical & Digital Dollar Sales):

  1. Call of Duty: Black Ops Cold War
  2. Call of Duty: Modern Warfare
  3. Animal Crossing: New Horizons*
  4. Madden NFL 21
  5. Assassin’s Creed Valhalla
  6. The Last of Us Part II
  7. Ghost of Tsushima
  8. Mario Kart 8 Deluxe*
  9. Super Mario 3D All-Stars*
  10. Marvel’s Spider-Man: Miles Morales

Flipping over to Hardware, both Nintendo Switch and PlayStation 5 lifted category sales to well more than double the amount recorded this time last year.

Switch was the leading platform in terms of unit sales during January. This marks the 26th consecutive month atop the rankings by this measure, a record in the history of tracking dating back to the 90s. Switch unit sales reached the best result for a January month since 2010, back when even grandparents purchased the Nintendo Wii at the height of its popularity.

Last week, Nintendo updated its financials and it’s staggering stuff. Switch is approaching 80 million units on market, 79.87 million to be exact, exceeding the almost 76 million of Nintendo 3DS as of December. This means Nintendo exceeded its initial full year target for Switch shipments with a quarter to spare. Shoot, the Switch Lite model alone is approaching the lifetime sales of its predecessor the Wii U, at 13.53 million compared to 13.56 million respectively.

In terms of dollar sales domestically during January 2021, PlayStation 5 once again led hardware. Same as it did last month, when I wrote about how it achieved the best result for PlayStation consoles thru each platform’s first December. Sony said last week that PlayStation 5 shipped 4.5 million units in its first quarter on sale, a number that’s a bit higher now taking into account January sales.

There’s not much in the report about Microsoft’s Xbox Series X|S, so it’s hard to know where it lies in relation to its competitors. On a global scale, friend of the site and Niko Partners Analyst Daniel Ahmad estimated the family at around 3.3 to 3.5 million globally to date. Just hard to know how it did in January here in the States.

Lastly, here’s even more records when moving onto the final segment of Accessories. Not only did the category itself jump over 70% to achieve a January historical high on dollar sales, each of its sub-segments did as well. Game pads, headsets and headphones plus steering wheels. January month records for all!

Among the products themselves, Sony’s PlayStation 5 DualSense Wireless Controller (seen above) topped everything to be the best-selling accessory of the month. Another one of Sony’s offerings, the Pulse 3D Wireless Headset, topped headset/headphones.

Taken as a whole, January echoed the ongoing story of games industry sales, reaching a record January month on the back of catalog titles plus new hardware shipments. Individual software franchises from Activision Blizzard and Ubisoft plus both hardware and accessories from Sony were the winners, though many more boasted great results to start 2021.

Highly recommend checking out Twitter accounts for NPD Group and Piscatella for even more general commentary and data within platform rankings. Definitely worth it if you’ve made it this far!

Thanks to all for reading. Let’s regroup in February for more sales talk. Be safe.

*Digital Sales Not Included

Sources: Activision Blizzard, Nintendo, NPD Group, Ubisoft.

-Dom

Call of Duty & Nintendo Top a Record Year for U.S. Game Sales in 2020

Alright, I might have lied. Can’t get rid of 2020 just yet.

That’s because industry tracking firm The NPD Group released its final batch of statistics for the U.S. market last year, and it’s a monumental one. Between the continued dominance of Nintendo, steadfastness of Activision’s multi-tiered Call of Duty franchise and the start of a new console generation, it turned out to be a record one for the domestic video games industry.

This past week’s release covered the highly-coveted holiday month of December, plus a report on full year figures. We’ll start with December then move into the broader 2020 as a whole, pulling back for context on a mostly forgettable year except for when it comes to gaming. I’ll add commentary and context in various spots.

A couple things to note. All of these statistics are solely for the U.S. market, and include those publishers that participate in NPD’s tracking. In particular, certain publishers exclude digital sales when it comes to software charts (Why? Well, that’s for another day.) There are three sub-categories, each of which has its own reporting: Content (Software, Add-On etc), Hardware and Accessories. We’ll go through them all, with links and sources at the end.

Bring on the numbers.

United States Games Industry Sales (November 29th, 2020 to January 2nd, 2021):

Overall, industry spending in December within the States reached a record high for a December month. Upwards of $7.7 billion, which is an increase of 25% since this time last year.

Driven by Nintendo Switch demand plus the first full month on market for PlayStation 5 and Xbox Series X|S, spending on Hardware rose 38% to $1.35 billion. This is the best December for the sub-category since 2013, the start of the PlayStation 4 and Xbox One generation, which totaled $1.37 billion.

This slight decline in early generation hardware contribution stems from supply constraints rather than lack of demand, naturally. When talking about Xbox Series X|S in particular, though I imagine it also applies to PlayStation 5, NPD Analyst Mat Piscatella said they “quickly sold every unit made. Just not enough stock to keep up with demand.”

Switch was the top-seller as measured by both units and dollars. This marks the 25th consecutive month where it’s led on unit sales, a staggering record for Nintendo. As I’ll write in a bit, this holiday push led its annual sales to a near record level. The manufacturer hasn’t shared anything publicly on specifics, I’d love to know unit sales to gauge how it compares historically.

In terms of the new generation, NPD didn’t share much in the way of specifics on December numbers alone. Rather, I’ll comment on annual hardware results a bit later, which really covers both November and December in aggregate.

Industry sales of software and add-ons within the Content segment reached $5.8 billion, up from $4.7 billion in December 2019. This impressive growth was driven by top-selling franchises likes Call of Duty, Animal Crossing, Madden and Assassin’s Creed plus a plethora of Nintendo-published titles, which accounted for half of the Top 20 list!

Call of Duty: Black Ops Cold War continued the lead from its debut month of November, driving another year of commercial success as well. In an incredible run, Activision’s first-person military shooter has led every single December during the past decade except for one: Super Smash Bros. Ultimate in 2018.

Even during a shaky launch, Cyberpunk 2077 sold well as pent-up anticipation drove significant demand. The futuristic, open world RPG landed at #2 on the overall chart. And CD Projekt Red doesn’t even provide the digital share. I’m not sure digital would cause it to overtake the staggering levels of Call of Duty, though I’d surely love to know.

Ubisoft produced two games in the overall Top 10 during December. At third place is the consistent Assassin’s Creed Valhalla, which the publisher previously said was the best launch ever in the franchise. Then, open world action-adventure game Immortals Fenyx Rising kicked off at #9. As a debut for new IP during the busiest of months, this is a notable start (for a game I really enjoyed).

Lastly on the software side, just look at how many Nintendo Switch games are on the Top 20. Beyond Animal Crossing, like darn every Mario game on the platform is there plus Smash Bros., Hyrule Warriors: Age of Calamity and even Ring Fit Adventure sneaking in at #19. And that’s without even considering digital sales for any of them, a significant portion of the market by now. Clearly reveals just how high Nintendo’s attach rate is when people snag a new device. Which they didn’t plenty of this holiday season.

Before moving to the software chart itself, it’s briefly worth noting the final category of Accessories. This segment rose 15% year-on-year in December to $546 million. Driven by Gamepad spending, as Sony’s brand new DualSense Wireless Controller topped the monthly list.

Top-Selling Games of December 2020, U.S. (Physical & Digital Dollar Sales):

  1. Call of Duty: Black Ops Cold War
  2. Cyberpunk 2077*
  3. Assassin’s Creed Valhalla
  4. Marvel’s Spider-Man: Miles Morales
  5. Madden NFL 21
  6. Animal Crossing: New Horizons*
  7. Mario Kart 8: Deluxe*
  8. NBA 2K21*
  9. Immortals Fenyx Rising
  10. Super Mario 3D All-Stars*
  11. Super Smash Bros. Ultimate*
  12. Just Dance 2021
  13. Hyrule Warriors: Age of Calamity*
  14. FIFA 21
  15. New Super Mario Bros. U Deluxe*
  16. Super Mario Odyssey*
  17. The Legend of Zelda: Breath of the Wild*
  18. Super Mario Party*
  19. Ring Fit Adventure
  20. Mortal Kombat 11

United States Games Industry Sales (2020):

Shifting into annual figures for the U.S., market, we’ll see similar trends within all three sales sub-categories especially at the top-end. Consumer spending across the games industry eclipsed a new yearly high during 2020, rising 27% to a whopping $56.9 billion. Driven mostly by the Content category, which accounted for 86% of the total.

Hardware achieved its best result since 2011, back when it was $5.6 billion. During 2020, this category jumped 35% year-over-year to $5.3 billion. Major contributors being Switch and transitioning generations, of course. Even if production limits cause the new boxes to under-perform a bit.

Nintendo Switch topped each monthly chart during 2020, and thus it was the best-selling piece of hardware on the year. Not only that, the hybrid console’s annual dollar result was the second best ever behind only Wii in 2008.

Flipping over to the fancy new generation, PlayStation 5 came in second during 2020 on dollar sales. Sony’s latest big (hah, literally) platform even achieved a dollar amount record for PlayStation hardware through each console’s first December. Separately, PlayStation 4 led the year on units sold. PlayStation 5’s dollar lead is attributed to a higher average selling price while its predecessor relied on discounts and higher inventory to clear boxes from retailers.

Call of Duty once again dominated the Software category, marking the 12th year in a row that a game in the franchise led the annual overall rankings. And not only that, the series occupied the top two spots! This year’s Call of Duty: Black Ops at numero uno then last year’s stellar Call of Duty: Modern Warfare at #2.

I’d have to look back over the entirety of tracked history since the start of Activision’s best-selling series in 2003. But I believe this is the first time since then that two titles in the same franchise led the combined chart. It’s a testament to the quality of Modern Warfare, its Warzone battle royale mode, continued free content updates and efforts toward cross-platform/cross-progression functionality that all keep players attracted to the ecosystem.

In a year full of notable milestones, Animal Crossing: New Horizons recorded yet another. It ranked #3 on the overall list. Its retail dollar sales, sans digital, were the highest for any game published by Nintendo since Wii Fit Plus in 2010. And we all remember how everyone and their grandmother bought the fitness board back then. (Likely even still collecting dust at a relative’s place, like ours.) I can’t wait to hear from Nintendo early next month on its global unit sales through year-end.

On a related note, the sheer number of exclusives on the 2020 sales list is wild. Both Nintendo and PlayStation platforms each boasted three games in the Top 10. Sony’s The Last of Us Part II ended at #6. Within Sony-published titles, it’s now behind only Marvel’s Spider-Man and God of War from 2018 measured by lifetime dollar sales. Ghost of Tsushima and Final Fantasy 7: Remake also landed in the Top 10. All of these prove the continued relevance of console exclusives, enticing players to spend on that platform.

There’s also certain titles noticeably missing to keen observers. No more Grand Theft Auto V. Farewell Red Dead Redemption 2. As I’ve discussed before, this is less a byproduct of slowing sales and more the way that publisher Take-Two now participates in NPD’s data gathering. “Take-Two remains a data sharing member of the Digital Leader Panel,” said Piscatella in a tweet reply. “However its digital sales are excluded from the published best-selling title charts.”

While not as major a contributor to overall results, Accessories generated $2.6 billion in spending during 2020. This is up 21% since 2019. On the year, Gamepad spend achieved a new spend record. Similar to December, the DualSense Wireless Controller for PlayStation 5 was the best-selling piece on units and dollar amount. Headset/Headphone actually surpassed its all-time spending high in 2020, with Turtle Beach’s Ear Force Recon 70 leading the charge. I hear ya!

Top-Selling Games of 2020, U.S. (Physical & Digital Dollar Sales):

  1. Call of Duty: Black Ops Cold War
  2. Call of Duty: Modern Warfare
  3. Animal Crossing: New Horizons*
  4. Madden NFL 21
  5. Assassin’s Creed Valhalla
  6. The Last of Us: Part II
  7. Ghost of Tsushima
  8. Mario Kart 8: Deluxe*
  9. Super Mario 3D All-Stars*
  10. Final Fantasy 7: Remake
  11. Marvel’s Avengers
  12. Marvel’s Spider-Man: Miles Morales
  13. NBA 2K21*
  14. Super Smash Bros. Ultimate*
  15. FIFA 21
  16. Mortal Kombat 11
  17. Dragon Ball Z: Kakarot
  18. MLB: The Show 20
  19. Cyberpunk 2077*
  20. Tony Hawk’s Pro Skater 1+2

Whew. That’s a whole lot to digest. Typical 2020, am I right.

It’s an easy conclusion to draw, yet I’ll do it anyway: It was an incredible year for gaming, with broad critical success echoed by commercial performance.

Switch is starting to trend like no one could have predicted, both in terms of hardware sales and the ridiculous number of software products charting month-in, month-out. Call of Duty is going nowhere, the hard work of the development teams behind the annual series rewarded for their consistent output. Animal Crossing became the year’s biggest surprise, launching in March during a time of much-needed distraction. Sony exclusives proved that quality results in mass adoption. Microsoft sold out of stock during the holiday months, even if supply can’t possibly keep up with demand.

I’ll have a piece soon on my 2021 predictions, yet I find it hard to determine right now if it will be a repeat. Depends on a lot of factors, some unknown. But what I do know is that 2020 set a high standard, despite the most tragic of scenarios.

Hat tip to NPD Games and Piscatella for the various stats plus the chart visual. Totally worth giving both a follow to read more there on individual platform details and other tidbits.

Thanks for checking out the last NPD thread for 2020. Be safe!

*Digital Sales Not Included

Sources: Nintendo, NPD Group, Ubisoft.

-Dom

CD Projekt Didn’t Have To Rush Cyberpunk To Meet Fiscal Demands, But Did Anyway

CD Projekt Group’s fiscal year ends in December.

Cyberpunk 2077 happened to be delayed three times then released in December.

Coincidence? Unfortunately, no.

Though it didn’t have to be this way, with a now historic launch debacle that began with complaints of rampant issues especially in PlayStation 4 and Xbox One versions then accelerated to various online stores and retailers offering full refunds plus, the cherry on top, PlayStation pulling it from its digital store in an unprecedented move within the games industry.

To understand why the company would have been fine, even benefited from, pushing out the launch of its new IP and latest flagship game past its fiscal year end, we have to look back at its general timeline and financial standing leading up to now. Plus, consider the reports brought forth by media like Bloomberg and others on difficult labor conditions and “crunch culture.”

Essentially: CD Projekt could have easily weathered a Cyberpunk 2077 release date in first quarter of 2021 financially, even if that coveted pre-order revenue smoothed out over time. The company boasted early on that pre-orders alone exceeded 8 million copies. The question becomes how many of those are being refunded or returned. And how many people will refuse to purchase it because of the company’s approach during a shaky launch.

My belief is that executives absolutely should have moved the date again to at least Q1, primarily to allow more time for developers to polish and ensure that previous generation versions were ready to go. The current debacle alone is proof that no flashy marketing push or early financial benefit is worth the dangerous publicity and loss of goodwill caused by a botched launch.

Until recently, Polish developer and publisher CD Projekt Red (the core games business of CD Projekt Group) was a one franchise studio with The Witcher fantasy games. The enormous success of 2015’s The Witcher 3: Wild Hunt and its subsequent support from the studio cemented it as one of the world’s preeminent action role-playing designers, and set the stage for exceedingly high expectations going into its next project.

In the time between then and present day, CD Projekt established itself as one of the largest and most financially successful publishers across all of Europe. It’s achieved at or above $100 million in sales each year since 2015, at times much more than that. At one point back in May, it even surpassed Ubisoft Entertainment as the region’s largest video game company by market valuation at over $9 billion in capitalization.

So, what happened?

The current debacle alone is proof that no flashy marketing push or early financial benefit is worth the dangerous publicity and loss of goodwill caused by a botched launch.

CD Projekt Red transitioned to a two-franchise studio as part of its mid-term strategy starting in 2016 when it kicked off pre-production on Cyberpunk 2077, a project that was actually announced a full generation ago way back in 2012. As its development continued and the company began to show the futuristic, first-person role-playing experience both privately and publicly, culminating with an appearance from Keanu Reeves, its legend grew to where it became one of the most anticipated games of the decade if not ever.

During this same time, the team continued support of the 28-million unit seller The Witcher 3 with two expansions in late 2015 and mid-2016, the introduction of a standalone version of its strategy card game GWENT, plus a Nintendo Switch version as recently as last year. While development costs along with marketing spend certainly ramped for Cyberpunk 2077 into this year, sales of these products bolstered its financial well-being throughout as its dedicated fan base showed support.

CD Projekt Major Product Launches:

  • The Witcher 3: Wild Hunt: FY15 Q2
  • Hearts of Stone: FY15 Q4
  • Blood & Wine: FY16 Q2
  • GWENT: FY18 Q4
  • The Witcher 3 Switch: FY19 Q4
  • Cyberpunk 2077: FY20 Q4

Overall, CD Projekt Group generated $140 million and just under $100 million in annual revenue during 2019 and 2018, respectively. Operating income hit nearly $50 million last year, over $30 million the year prior. That’s *growth* right smack between major titles, trending upward into a product launch even prior to the deluge of pre-orders. Does this happen without a level of trust built up over years of ongoing support and quality craftsmanship? Sure, The Witcher 3 had its issues at launch in 2015. But the whole reason CD Projekt garnered so much trust is its consumer-facing practices of constant improvement, support and attention to its audience.

At least, that’s how it used to be.

It’s clear to see when checking the charts in conjunction with its timeline of events. Even before pre-order dollars accumulated in recent quarters, CD Projekt had a stable revenue stream from the work its developers had already done and the goodwill it built with a sizeable base. Expenses will rise into a major, AAA release especially in the final push. It’s not always reinforced financially by work the team had already done on prior projects, like with the beloved Witcher series.

Subsequently, running parallel to its game development business was its GOG.com digital distribution platform. It sells a variety of PC games, and has become a notable supplement to the group’s structure in the lead-up to a big launch from its sister subsidiary. GOG.com has proven a reliable venture, contributing upwards of 40% to total sales at times over the past couple years.

While it seems at face value that CD Projekt goes as its major game franchises do, its distribution business offers a separate revenue stream even if some of that success is inevitably tied to its internally-published products. Producing games isn’t the sole driver of its direction, and this sort of supplementary source could have propped up the company into next fiscal year.

Now of course, another pressure point when talking about the timing of launches is investor sentiment. From all indicators, shareholders bought into the downright outrageous hype cycle of Cyberpunk 2077, which initially had a launch date of April 2020 (Can you imagine?). It was pushed to September. Then November. And after that, to December. A convenient timing right before its financial calendar turned to 2021.

Notably after the first delay, CD Projekt’s share price rose. And kept going, reaching a peak around September. After a brief dip in November during the last delay announcement, it bounced right up again showing the ever-present appetite of investors for that juicy Cyberpunk 2077 profit. Would it have declined again if it was delayed to 1st quarter next year? Sure. But I doubt it would have experienced the precipitous drop since launch day, December 10th, which has eliminated over $2 billion in market value in just over a week.

The stock is now trading below where it started the year. And it was all avoidable.

My hope is there’s a lesson here: a general change towards optimal quality over financial gain, transparency over secrecy, giving people time to complete quality work rather than setting a date to meet a deadline that wasn’t realistic in the first place.

Briefly on the development side, it’s now obvious even December ended up being an unrealistic deadline based on the results and reporting around its challenging launch timeline. In addition to media reports of long hours and tough work as far back as over a year ago, another Bloomberg story today shares that management held a question and answer session on Thursday with employees. Luckily, they were able to vocalize their frustrations and press executives on various topics related to Cyberpunk 2077’s development cycle.

A “developer asked whether CD Projekt’s directors felt it was hypocritical to make a game about corporate exploitation while expecting that their employees work overtime,” the story’s author Jason Schreier writes, revealing a frustration bubbling up within the very people who are now tasked with fixing the game.

(Word is that all employees will be receiving their intended bonuses regardless of where critical reception ends up. Which is how it should be. People should be compensated commensurate with their labor. I won’t overly celebrate management paying their workers acceptable wages.)

The elephant in the room, of course, is the impact of a global pandemic. One which hit right during the final part of the project’s timeline. The coronavirus effect, which is difficult to quantify and impossible to ignore. CD Projekt employs a workforce of over 1,100 people, the majority of which transitioned to remote working for 2020 according to its mid-year filing. As if crunching for a major product launch and dealing with an impractical deadline wasn’t enough, these folks also had to adjust to a new working situation and team dynamics outside of the office.

What now, then?

Well, it’s time to rebuild. And more importantly, regain trust. I firmly believe that the loss of goodwill and faith in the management team wasn’t worth the short-term financial boon of launching right before the 2020 financial calendar ended. What a quarterly table or chart doesn’t show is the longer term effect of losing credibility as an executive team, or having a set of employees still working to the bone on a game that should have been delayed to a more reasonable schedule.

Management needs to be held accountable, by all parties: employees, media and consumers alike. They should have been more open to feedback from their teams ahead of time, not after the fact. I doubt CD Projekt will ever reveal how many of the millions upon millions of copies sold were actually refunded, but revenue numbers won’t lie when that time comes.

This is the type of industry-shaking event that doesn’t happen often. My hope is there’s a lesson here: a general change towards optimal quality over financial gain, transparency over secrecy, giving people time to complete quality work rather than setting a date to meet a deadline that wasn’t realistic in the first place.

CD Projekt can bounce back from the launch of Cyberpunk 2077. In three to six months, the game could very well be in solid shape and people will be more confident in management’s decision-making. Its employees may return to more stable hours and have an improved feedback loop with higher-ups. Over the next couple years, it could (and likely will) go on to sell tens of millions of copies and people will forgive management for their hasty decisions back in 2020.

But it didn’t have to be this way from the start.

Sources: Bloomberg, CD Projekt Investor Relations, Sony Interactive Entertainment.

-Dom

Marvel’s Avengers & Nintendo Assemble at the Top of September’s U.S. Game Sales Charts

It’s officially sales season in gaming, and is proving to be busy one at that.

September ushered a great start domestically for a polarizing game from Square Enix, while overall consumer spend achieved yet another double-digit increase even as the console cycle comes to a close. Plus, there were tons of debuts and new-ish games to discuss on the software side while Nintendo secured another dominant win within the hardware category.

Industry tracking firm The NPD Group has, hm.. assembled its latest monthly sales statistics for the U.S. games market. Stand-outs during September included Marvel’s Avenger’s achieving the top spot on the software chart, sports games occupying 3 of the Top 5 spots including a record performance from a familiar franchise, Crusader Kings III debuting within the Top 7 and Nintendo Switch besting hardware as it’s done every month since December 2018.

Total spending across the categories of Video Game Content, Video Game Hardware and Video Game Accessories reached a whopping $4.3 billion in the domestic market during September 2020. An increase of 10% since this time last year. While it’s not as robust as the growth seen in the spring and summer months, it’s still yet another double-digit rate which has been the case each month since March. Of course coinciding with the tragic rise of the pandemic, which has forced people to remain home for months.

“Mobile, hardware and accessories were among the largest growth segments,” said NPD Group Analyst Mat Piscatella. In terms of hardware, “growth in sales of Nintendo Switch offset declines on other console platforms.”

Expanding to the year-to-date figures, broad consumer spend in the games industry reached $33.7 billion through September. This is up 21% since last year. Continued stay-at-home guidelines and quarantine mandates combined with a variety of brand new titles from major publishers, namely licensed releases and sports titles, contributed to impressive growth this late in the console generation.

Let’s get more into the numbers and commentary.

United States Games Industry Sales (August 30th to October 3rd):

As mentioned before, September brought healthy gains overall and across all three major categories in the U.S. tracked by The NPD Group. The above chart shows monthly and year-to-date metrics.

The largest category of Content (i.e. game sales and in-game purchases) reached $3.84 billion in September and $29.8 billion for the year as a whole, increases of 8% and 21% respectively. Mainly driven by titles from some of the most popular companies in the business: Square Enix, Nintendo, Activision Blizzard and Electronic Arts.

Diving into the data, Marvel’s Avengers fought its way to the top spot on the total software chart which I’ll list out shortly.

The hero brawler slash live service game made by Crystal Dynamics received mixed critical reception at release in early September, yet brand power goes a long way when it comes to licensed titles. Not only was Square Enix’s latest the top-selling game overall last month, it held the top spot on both PlayStation 4 and Xbox One individual charts plus immediately became the 7th best-selling title of the year so far.

Its launch month dollar sales were quite impressive, reaching the second best in history for a super hero game behind only the record-setting 2018 title Marvel’s Spider-Man. While early success doesn’t guarantee momentum over time, which is key for an ongoing game like Marvel’s Avengers with regular characters and content updates, a solid start establishes a baseline audience that may come back during those intervals. We also haven’t heard yet from Square Enix on global sales, which I predicted would be strong in its launch window. Essentially, only the first chapter of its story has been told.

It wouldn’t be a software chart without a major Nintendo launch, and September was no exception. Super Mario 3D All-Stars, the collection of three classic games in the beloved series, jumped to the 2nd spot overall. Spanning 2020 as a whole, it enters the year-to-date chart at the 10th spot.

For context, Super Mario 3D All-Stars is also the 2nd best retail launch for any game in the U.S. during 2020 that isn’t called Animal Crossing: New Horizons, which is more an anomaly at this point with its incredible sales. Widening the time frame, it’s the 6th best start for any game published by Nintendo in tracking history, as measured by retail dollar sales. (Note that Nintendo doesn’t share digital in this context, so this particular statistic only encompasses physical sales.)

Madden NFL 21 rounds out the Top 3, scoring a second consecutive month of solid momentum after leading the chart in August. Publisher Electronic Arts hasn’t shared specifics in terms of units or engagement for the football game, though did say in a press release that this year’s Madden recorded 20% higher unit sell-thru to customers than its predecessor during launch week.

“After the most successful year in franchise history, fans are now playing more Madden than ever before,” said Executive Producer Seann Graddy. Personally, I’d prefer to hear exactly how many people are playing, unfortunately that’s wishful thinking for a major sports title these days other than maybe Take-Two and its 2K franchises.

Speaking of, September welcomed the resurgence of Tony Hawk with the release of Tony Hawk’s Pro Skater 1+2, a rebuilding of the first two games in Activision’s long-running skateboarding series. The remake carved its way to the 4th spot overall in the most impressive of ways: it set a series record for launch month dollar sales, outpacing the prior leader in 2004’s Tony Hawk’s Underground 2. Talk about grinding out the win.

Quickly reporting on the remainder of notable new games, Take-Two’s annual basketball release NBA 2K21 scored the 5th spot. This is noticeably lower than last year’s title, which led September 2019’s rankings. I’d say that’s mainly due to the publisher no longer sharing digital share for any of its products, which is even more obvious with how both Grand Theft Auto V and Red Dead Redemption 2 are no longer mainstays each month.

Since NPD Group doesn’t publicly state units or dollars, it’s difficult to determine an early performance comparison across NBA 2K history. Take-Two Interactive reports second quarter results on November 5th, and executives should share global unit sales at that time.

In what’s likely the surprise of the monthly chart, Crusader Kings III landed at #7. The strategy game from Paradox Interactive achieved the best launch month start in series history from both a ranking and dollar sales standpoint. Two October games that technically released right before the cut-off landed on the chart: Star Wars: Squadrons at #9 then Crash Bandicoot 4: It’s About Time at #11. More to come next month on these when they have more days on market.

Lastly, Call of Duty: Modern Warfare maintains its position as the year’s top-seller as it enters into its sixth and likely final season of content before Call of Duty: Black Ops Cold War hits stores on November 13th. I expect the latter of these to lead holiday charts. Yes, even with all the major games around the new console launches especially the hotly-anticipated Cyberpunk 2077 from CD Projekt Red, which will serve as stiff competition.

Check out the software charts below for September 2020 and the year so far, then I’ll switch over to hardware and accessories.

Top-Selling Games of September 2020, U.S. (Physical & Digital Dollar Sales):

  1. Marvel’s Avengers
  2. Super Mario 3D All-Stars*
  3. Madden NFL 21
  4. Tony Hawk’s Pro Skater 1+2
  5. NBA 2K21*
  6. Call of Duty: Modern Warfare
  7. Crusader Kings III
  8. Animal Crossing: New Horizons*
  9. Star Wars: Squadrons
  10. Mario Kart 8 Deluxe*
  11. Crash Bandicoot 4: It’s About Time
  12. Ghost of Tsushima
  13. Ring Fit Adventure
  14. Super Smash Bros. Ultimate*
  15. UFC 4
  16. New Super Mario Bros. U Deluxe*
  17. The Legend of Zelda: Breath of the Wild*
  18. Super Mario Odyssey*
  19. Mortal Kombat 11
  20. Super Mario Party*

Top-Selling Games of 2020 So Far, U.S. (Physical & Digital Dollar Sales):

  1. Call of Duty: Modern Warfare
  2. Animal Crossing: New Horizons*
  3. The Last of Us: Part 2
  4. Madden NFL 21
  5. Ghost of Tsushima
  6. Final Fantasy 7: Remake
  7. Marvel’s Avengers
  8. Dragon Ball Z: Kakarot
  9. MLB: The Show 20
  10. Super Mario 3D All-Stars*

Moving to the Video Game Hardware category, spending in September amounted to $277 million which is up 15% year-on-year. Nintendo Switch was the only console experiencing gains. Over 2020 so far, hardware spend rose 22% to $2.3 billion in total. In the least surprising stat this past month, Switch was again the best-selling console by both number sold and dollars generated. It nearly broke a September record as per comments from Piscatella, and retains its position atop the hardware list for the year as well.

This is a spot Nintendo’s hybrid has held since holiday season nearly two years ago. And I’m on record saying that even with the release of both Xbox Series X|S and PlayStation 5 upcoming in November, Nintendo will once again attain the top spot for each month during the 4th quarter. Animal Crossing: New Horizons is still the game to get, plus upcoming releases like Pikmin 3 Deluxe (October 30th) and Hyrule Warriors: Age of Calamity (November 20th) mean there’s still room for growth in the domestic market for Switch if you can believe it. Guaranteed to be a staple of holiday product lists.

The final category of Video Accessories is actually among the most significant of results last month. Accessory spend reached a record September amount, hitting $191 million or a 30% gain since this time last year. Over 2020 to date, this category has accumulated an all-time high result of $1.6 billion, an increase of 26% year-over-year. Within, Gamepad and Headset/Headphones sub-categories also hit historical highs for both a September monthly result and year-to-date through this same month driven by the Xbox Elite Series 2 Wireless Controller.

And that’s all for September’s numbers and positions. The late summer to early fall here in the States sees continued lock-downs in many areas as coronavirus tragically isn’t going away any time soon. The games industry continues to be a benefactor of people abiding by the rules, making the most of home entertainment and spending time interacting via online games as opposed to in-person gatherings.

For way more detail on The NPD Group release itself, head over to their Twitter page or the in-depth thread from Piscatella as well.

Until next time, stay safe and thanks for stopping by!

*Digital Sales Not Included

Sources: Electronic Arts, Nintendo, NPD Group, Square Enix, Take-Two Interactive.

-Dom