Peter Skerritt Avatar Posted on 5/4/2012 by Peter Skerritt

Peter Skerritt examines reports on what could be a surprising month for software sales for April 2012 in his pre-NPD analysis.

Written by Peter Skerritt (editor-at-large)

Mass Uneffected?

In my last column, I focused on projections for last monthís console hardware sales. While predicting the exact ranking order can be a challenge, itís getting pretty easy to assume sales declines because of where we are in this console generation. The Wii is on its way out. The Xbox 360 had a huge run for most of last year. The PlayStation 3 is the only console to show anything close to flat year over year (YOY) sales comparisons versus 2011.

I usually donít dabble too much in software, primarily because NPD data is usually much more restricted and selective. Itís also harder to accurately analyze the industry based on NPDís numbers because there isnít yet an accurate tracking method in place. We know that digital sales are trending higher, but without specific data released by publishers - usually during earnings statements and calls - weíre only seeing one side of the story.

Analyst firm PiperJaffray has shared its software projections for last month with Gamasutra, and if itís close to accurate, April will be another in a series of poor software sales months. The projection is for a decline in software sales of 25% versus a year ago. This isnít completely unexpected, since none of Aprilís releases were comparable to Mortal Kombat or Portal 2, which hit stores in April of 2011. Whatís interesting to me is the ranking order that PiperJaffray is predicting, courtesy of Gamasutraís Matt Matthews:

01. Mass Effect 3 (X360, PS3, PC)
02. Prototype 2 (X360, PS3)
03. Xenoblade Chronicles (Wii)
04. The Witcher 2 (X360, PC)
05. Naruto Shippuden: Ultimate Ninja Storm Generations (X360, PS3)
06. NBA 2K12 (X360, PS3, Wii, PC, PS2, PSP)
07. The Elder Scrolls V: Skyrim (X360, PS3, PC)
08. Street Fighter x Tekken (X360, PS3)
09. Mario Party 9 (Wii)
10. Call of Duty: Modern Warfare 3 (X360, PS3, PC, Wii, DS)

Two other interesting projections were made. Combined sales of Mass Effect 3 are projected to total less than 500,000 units, and combined sales of Modern Warfare 3 are projected to be right around 100,000 units.

Before analyzing this information, itís worth mentioning that NPD data has not yet been released. PiperJaffrayís projections are not necessarily going to be proven correct; however, given how close weíre getting to the release of the data and that the information has been shared with the press, I think itís worth going over.

The first thing that leaps out at me is the presumably strong sales of Xenoblade Chronicles. The game wasnít available everywhere, so moving more than 100,000 units is pretty impressive to me (if the data verifies). Itís not necessarily shocking that Xenoblade may have outsold The Witcher 2, but I think it raises a few eyebrows. If Xenoblade did this well, credit Nintendo for choosing to ship in a month that was generally quiet.

The projected strength of Prototype 2 is also a bit of a surprise, especially considering the relatively late release of the game in the reporting period. Itís good news for Activision, although not being able to outrank a game that was nearly two months old can be a point of criticism. Prototype 2 is basically this yearís Portal 2, in terms of release importance. I donít think it sold 635,000 copies, though, so itís another negative comparison to last year and boosts confidence of a significant YOY decline once again.

The final observation about the ranking chart is that Kinect Star Wars isnít on it. This is despite an early-month release and having the Star Wars name attached. If PiperJaffray is correct, Kinect Star Wars would have sold less than 100,000 copies in April, which would be a tremendous disappointment. While Iím not completely sold on the idea that Kinect Star Wars sold that poorly, seeing GameStop selling the Kinect Star Wars bundle at a $50 discount after only a month is a peculiar coincidence. Itís now going to be interesting to watch the NPD Top 10 Software list to see if the game cratered, as PiperJaffray has suggested.

I do think that we should be prepared for another NPD report filled with disappointing news. Spin will be applied to try and lessen the blow of significant declines, but this is becoming a trend. Perhaps new consoles will win back consumers and fuel spending once again, but thatís far from a guarantee. PiperJaffray posits that the console gaming sector is hemorrhaging consumers already:

ďGamers are exiting the market for alternative forms of entertainment and leisure activities. Consumers are increasingly demanding interactive experiences that are social, mobile, and free to play. These activities include photo/video sharing and social gaming, all of which are activities that the current consoles and new handhelds do not support effectively.Ē

Even if the bubble has not burst in the console gaming sector, itís leaking air at a steady rate. Itís not a doomsday scenario by any means, but a corrective pattern is taking shape which will more than likely see declines in consumer numbers and in revenue in the near term and possibly continuing into the first phases of the next console generation. There will still be some successes here and there, but the console gaming boom is quite possibly at an end.

Weíll see what we can learn from the NPD data when itís released next week.

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