The NPD Group Is Irrelevant To The Video Game Industry[OPINION]

By Trevor Ruben , Updated Apr 20, 2013 09:09 AM EDT
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The NPD Group does a lot of good work. They analyze stupid amounts of numbers, they correlate, predict and conclude as well as they can and they do it for as many varying industries as possible. One of those industries is video games, and while I respect the NPD's efforts to, month in and month out, report hardware and software sales to the public as accurately as possible, one thing is becoming clearer with every year: the NPD is currently irrelevant to games.

As simple as that conclusion is, the reason why is even simpler. The NPD Group only reports retail, physical sales. And every month, over and over again, we get the same "industry in decline" rhetoric that, due to the NPDs limitations, holds increasingly less ground as a worthy statement. The industry may very well be in decline, but the NPD sure as hell doesn't have even the slightest idea about it. It very well may be that digital sales are increasing faster than retail sales are going in the opposite direction. We just don't know, and the NPD is resorting to generic estimates to try to fill in the gap.

Gamespot put out the NPD numbers on Friday. Mostly normal stuff, from Bioshock Infinte's reign over March and a generally healthy showing for the 3DS, was overshadowed by an uncharacteristic acknowledgement from the NPD's top gaming analyst, Liam Callahan.

In the same report Callahan informed us retail sales slipped by 10 percent from last year's March numbers ($992.5 million), he also said those sales numbers, under his estimate, only account for roughly half of all industry sales.

"When you consider our preliminary estimate for other physical format sales in March such as used and rentals at $190 million, and our estimate for digital format sales including full game and add-on content downloads including microtransactions, subscriptions, mobile apps, and the consumer spend on social network games at $670 million, we would estimate the total consumer spend in March to be just under $1.9 billion," Callahan said. Note he called his estimate for used and rental sales "preliminary" while shuttering the qualification for digital sales.

Bottom line is the NPD doesn't have access.

Nintendo, on the other hand, can easily track those numbers, as Nintendo, you know, is a digital distributor. In an interview with Games Industry International, Nintendo of America President Reggie Fils-Aime emphasized the company's lucrative push into day-one digital distribution for most of their games.

"We have 15 Nintendo-published titles available, both physically and digitally [on the 3DS]," Fils-Aime said. "So far in 2013, of those 15 available in this format, 11 percent of sales have come through full digital downloads of those games."

11 percent may not seem like that large a number, but consider this: Nintendo is the last of the big three hardware developers to truly embrace digital distribution. It was only in August of last year with New Super Mario Bros. 2 on 3DS when the company started doing the whole retail/digital day-one thing. 11 percent, in so little time, is a huge shift, and that's a shift the NPD has no capability of measuring.

That's no fault of the NPD, of course. Nintendo, Sony, Microsoft and PC distributors like Steam aren't transparent with these kinds of numbers because they consider them proprietary information. But the fact is if the NPD can't start counting digital sales somehow then most of what the group has to say is utterly irrelevant. Digital sales are grabbing a larger percentage of industry money with every new release. Post-release digital content in particular is changing the way gamers are investing in their favorite hobby. Now, instead of having to buy a new game every month, players devoted the right games can spend well over the initial price of those games for just digital content.

And then you have indie games, PC, iOS or otherwise, which never see disc releases. Both Sony and Nintendo are making a huge push for indie support with their latest consoles. Microsoft, on the other hand, may very well release an always-online required console. Digital sales should shoot through the roof when you absolutely must be connected to the internet to play a game.

Yet the NPD still thinks they have a handle on what's going on. Ironically, it may very be well the NPD Group, an industry watcher, holding that industry back by failing to report what's really necessary. For all the talk of (relative) dinosaur publishers desperately holding on to the past, it's us, the gaming press and gaming public, which need to recognize this total fallacy and find a new source of information.

Or maybe we should just drop the whole fascination with sales numbers and let the industry vet that for itself. After all, what better barometer for a game's success than when a development studio is either shut down or tasked with a new sequel within a month of a game's release?

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