A popular story last week was a statement made by EA’s Labels president Frank Gibeau on the NPD Group’s sales tracking:
My point is it’s an irrelevant measure on the industry. It’s totally irrelevant. We don’t even really look at it internally anymore.
Statements like this have been pretty common over the years from both gamers and industry insiders alike. The game industry has changed since the year 2000. More and more people are buying games online instead of in stores. On top of that games have grown outside of the US and Japan. There is a massive games market in China. The European games market is now bigger than the US games market. Back in 2000, the NPD Group’s reports were capturing about 80% of the games market. These days they are only around 40% of the market. You could say 80% was representative of the market, but at 40%, that is no longer the case.
A lot of people are criticizing NPD Group for this. I mean how can they keep releasing reports and getting the media into a frenzy every month when their reports are not representative? Well, the NPD Group is not stupid. They know digital sales information is desired, and they want the information too. The problem is this information not available. I do not think it will ever be available. You see, there are not enough middlemen in digital sales.
In the retail sector, there are publishers and retailers but also shippers and manufacturers. If a publisher does not release retail sales data, the NPD Group can turn to the other three, the middlemen, to get a good picture of the overall sales. With digital sales there is no need for shippers and manufacturers. Consumers just download the games. Without that information, they really cannot do any analysis on digital sales.
Online there is the digital storefront middleman. Websites like Steam, Gamersgate, Green Man Gaming, and Good Old Games all exist as middlemen in between the publisher and the consumer. So far, however, they have been reluctant to release sales information. I believe this is because they do not want people to see how much money they are really making, lest the market become flooded with copycats and they make less money, but even further down the road, these middlemen will not exist either.
There is nothing stopping publishers from making their own digital storefront. Consumers can access their storefront just as easily as a middleman storefront. There is no place for the middleman in that situation. We already see this with EA’s Origin. For the most part EA games sold online are exclusive to Origin. You might be able to buy them on other websites, but you have to activate and play them through the Origin client. Eventually, all games will be exclusive to their respective publisher’s platform.
As you know publishers are big marketers. When a game sells well they are happy to make a big announcement on the success, but when a game sells poorly, you do not hear a peep from them. So NPD Group cannot get information from the middlemen right now. Even if they could get access to this data someday, it will not make a difference. Publishers will force those middlemen out of business eventually, and publishers will never release detailed sales data on all their games.
The NPD Group has no options here. They either continue what they are doing reporting retail sales only, or they abandon game sales tracking and focus on the other industries they analyze. I think retail sales do have their place though. Even if retail sales go down to 10% or 20% of the market, they can still show some trends in the industry. Just know that we will never have an accurate overall picture of the industry.