Video Games Market Research & Business Solutions

Downloadable content (DLC) and microtransactions deliver the enhanced experiences gamers not only want, but expect. Our PC and Video Games — DLC and Microtransactions Purchasing Report shows you exactly what’s happening with gaming behavior, purchasing, attitudes, and perceptions related to DLC and microtransactions. And we’ve incorporated a focus on non-casual games for both consoles and the PC. This report is the only source for current, in-depth detail about this market.

Our new eSports and Streaming Gaming report reveals exactly what’s happening and surfaces specific detail on the threats and opportunities that warrant your attention. Based on an online survey and augmented by our analysts’ deep industry expertise, the report focuses on eSports awareness, participation, and gamer demographics. Use it to explore discovery, motivators, and gaps and understand this new gameplay behavior. You’ll find out what impact eSports and streaming gaming are having on traditional gaming habits and purchasing, how awareness and participation are growing, and much more.

Our Mobile Gaming 2014 provides the latest insights, straight from consumers. Explore mobile gaming market size, device ownership, gaming behavior, app ownership and abandonment, and more. No other source connects you so closely to the mobile gaming consumer’s mindset.

Core gamers are committed to their video games. They just keep on spending – new content, new consoles — despite the industry’s changes. It’s essential that you understand what they want and how they play. Get a fresh look at core gamers, how they’re adapting to your changing industry, and what they think of the newly-released consoles.

Digital gaming might not be new anymore – but it’s still growing fast and offering plenty of opportunities to profit. To win in this competitive arena, you have to understand who plays digital games today and what they want more of. Our new report, Exploring Digital Gaming, reveals data and insights important for you and your business to know. New detail about the evolution of digital gaming. Comparisons to data from 2014. Plus deep analysis from our team of games industry specialists to put it all in context.

What captures kids’ time and parents’ spending? Understanding why kids do what they do can be a challenge for toy marketers (and parents!). Now there’s a source for new data and insights about how and where parents spend money on children age 14 and younger and how kids spend their time.

Video games, electronics, and apps make up a combined 22 percent of kids’ licensed product dollar sales in the U.S.* – on par with the volume represented by toys, which is the number one licensed industry at most retailers, according to the U.S. Kids License Report from global information company The NPD Group.

According to PC and Video Games – DLC and Microtransaction Purchasing, the latest report from global information company, The NPD Group, among the U.S. population of males and females age 13-54, 28 percent have purchased additional video game content in the past three months, with males and teens being the primary purchasers. Microtransactions are purchased more often than downloadable content (DLC), at 23 percent and 16 percent, respectively.

According to Gamer Segmentation 2016, the latest report from global information company, The NPD Group, the avid omni gamers segment continues to see an upward trend in growth and is close to surpassing the largest segment, free & mobile gamers. The avid omni gamers segment, up three percentage points from 2014, is closing the gap on the largest gamer segment, free & mobile gamers, which exhibited a decrease of two percentage points.

The NPD Group, a global provider of information and advisory services, has signed an agreement to acquire EEDAR, a specialist market research and data analysis firm for the video games industry. Combining the complementary assets and expertise of the two companies will give clients access to a full suite of services covering data, insights, and analytics and facilitate innovation to meet the rapidly changing needs of the industry.

Political ideology aside, consumers share a lot of common ground in their entertainment choices, and they also have some very distinct differences, according to data from global information provider The NPD Group. According to NPD’s BrandLink, the most popular movie genres, music types and video games are favored equally by both Republicans and Democrats.

The NPD Group today announced that it has launched a digital point-of-sale (POS) sourced service, tracking SKU-level sales data on digital games. NPD’s Digital Games Tracking Service is the first service to provide the U.S. gaming industry with publisher-sourced data on digital game sales, aggregated from the participants of a Digital Panel that includes leading publishers in the industry.

According to eSports and Streaming Gameplay, the latest report from global information provider, The NPD Group, 44 percent of current gamers have watched either formal eSports competitions or informal video streaming of gameplay in the past six months.

More than half (52%) of all U.S. Internet homes have at least one TV connected to the Internet, representing an increase of six million homes over the past year, according to The NPD Group Connected Intelligence Connected Home Entertainment Report.

PlayerUnknown’s Battlegrounds is the most popular and best-selling entertainment property you may have never heard of.

It may also be one of the most important games releasing in the console space this holiday period.

You shouldn’t feel too bad about not knowing a lot about PlayerUnknown’s Battlegrounds.  After all, it only launched in March as an Early Access game on Valve’s PC digital distribution platform STEAM.

It’s a game that is bucking all AAA market trends.  There are no cutscenes, no celebrity voice actors, no in game advertisements, no high production value graphics, no quick time events, no achievements or trophies, there isn’t even any music.

PlayerUnknown’s Battlegrounds is play in one of its purest forms.  One hundred players parachute onto an island, one player wins by eliminating all other players in the style of the 2000 film Battle Royale.  There are no respawns, no super powers and no levelling.  Players make their own stories, either alone or with squads of friends.  And the winner gets the most sought-after congratulations in gaming, a simple screen that says only “Winner Winner Chicken Dinner.”

It’s a game that, looking at the rest of the market, probably shouldn’t be this successful.

Since PlayerUnknown’s Battlegrounds March launch, however, it’s done what many would say was previously impossible.  Over the weekend, PlayerUnknown’s Battlegrounds took over the top spot in peak concurrent worldwide players on STEAM, displacing Valve’s own DOTA 2.

Oh, it’s also been a sales juggernaut.

In the five months since PlayerUnknown’s Battlegrounds launched, it has achieved eight million units in global sales on PC.

By August 17^th, it had reached seven million.

By July 25^th, six million.

By July 21^st, five million.

I’m guessing you can see a pattern here.

Bluehole, the publisher of PlayerUnknown’s Battlegrounds on STEAM, has certainly enjoyed the remarkable rise of the game on PC.  It is a sales and player engagement darling.  On Twitch, PlayerUnknown’s Battlegrounds is now carrying view counts more than three times that of longtime leader League of Legends.

And for the market leaders in the console space, the impact of PlayerUnknown’s Battlegrounds is just getting started.

PlayerUnknown’s Battlegrounds is Microsoft’s exclusive crown jewel in what will be a highly competitive holiday 2017 sales period.  The company, which is releasing the Xbox One X on November 7^th, has faced criticisms for a somewhat sparse exclusive content slate in recent months.  Microsoft will be publishing the Xbox One version of PlayerUnknown’s Battlegrounds, which will be exclusive to the platform in the console space throughout the holiday window at least, although it’s uncertain just how long the exclusivity window will last.

And with just this one game, Microsoft could very well not only potentially have the best-selling exclusive product of the holiday quarter, but one that could drive significant sales of Xbox One hardware as well.

The only hang up?  PlayerUnknown’s Battlegrounds release date has yet to be confirmed. 

Early results for Xbox One X hardware pre-orders are reportedly positive.  Microsoft is claiming the highest initial pre-orders in Xbox history, although specifics around what that pre-order level is are fleeting.

While Sony’s PlayStation 4 has led the US market during the generation that began in 2013, the launch of the iterative Xbox One X console along with PlayerUnknown’s Battlegrounds console exclusivity on the Xbox One platform could have competition heating up.  If the game launches this holiday, of course.

How console players react to PlayerUnknown’s Battlegrounds market-defying structure and play style will go a long way towards determining just how hot that competition will get.  Earlier this year I’d predicted six hundred thousand Xbox One X units to sell to US consumers in 2017.  If PlayerUnknown’s Battlegrounds launches on Xbox One this holiday, and if the game can find a receptive market of gamers in the console space, Microsoft may be seeing its own version of “Winner Winner Chicken Dinner.”

2017 has been a fantastic year to be a video game fan. 

The Nintendo Switch has experienced a strong launch, supported by The Legend of Zelda: Breath of the Wild and Mario Kart 8 Deluxe.  Highly reviewed games like Persona 5, Resident Evil 7: biohazard, Horizon: Zero Dawn, What Remains of Edith Finch and NieR: Automata have given consumers broad choice in genre and gameplay.  And the Games as a Service model is being embraced by consumers, with games like Tom Clancy’s Ghost Recon: Wildlands, For Honor, Grand Theft Auto V and NBA 2K17 experiencing prolonged sales and sustained consumer engagement.

In January I published my 2017 predictions for the video game industry.   Here I’ll take a pre-E3 pass at what the holiday quarter may bring for U.S. packaged video games:

• Call of Duty: World War II will be the quarter’s best-selling game, with sales growing more than 25 percent versus last year’s Call of Duty: Infinite Warfare.
• At least 4 titles will achieve $100 million or more in Q4 packaged consumer sales.
• The top 5 selling games this Q4 will combine to generate at least 20 percent more packaged consumer revenues than the top 5 one year ago.
• This year’s top 5 selling games of Q4 will be Call of Duty: WWII, Star Wars Battlefront II, NBA 2K18, Super Mario Odyssey and Destiny 2. 
• By the end of Q4, approximately 320 packaged titles will reach retail shelves, up from 271 a year ago, and up from the 21^st century low of 230 games in 2015. 
• At year’s end, the time-aligned installed base of the PlayStation 4 and Xbox One will exceed that of the PlayStation 2 and Xbox by 5 percent, and will be ahead of the PlayStation 3 and Xbox 360 by at least 25 percent.
• Sales of portable hardware and software will be down by at least 40 percent versus Q4 2016.
• At least 90 percent of Q4 packaged software sales will come from the PlayStation 4, Xbox One and Switch.

Of course, E3 is just a month away, and some surprises are certainly in store. 

The full reveal of Microsoft’s Project Scorpio will be my primary focus as pricing, software support and additional services are expected to be clarified during the E3 period.  I am bullish on the potential of Scorpio, but absolutely want to know more detail around what the consumer offering will be.  I want to believe, but there are currently more unknowns than knowns. 

The Nintendo Switch has had an amazing start.  Are we looking at the new way people want to experience games, with similar experiences on the TV and on the go?  Seeing what content is coming after Super Mario Odyssey will provide much needed guidance for what the future may hold.  In addition, in a market environment where Games as a Service are becoming more ubiquitous, and where revenues from subscription services are on the cusp of achieving exponential annual growth, what will Nintendo’s online offering for the Switch be?

Sony’s PlayStation 4 has achieved success that few predicted prior to its launch.  Sony has been able to sell enough hardware to create an installed base where titles of all types and sizes can succeed.  Persona 5 is just the latest in a series of Sony platform exclusives that have performed better than historical benchmarks.  Sony’s strength in the current generation has been delivering exclusive content and appealing hardware bundles.  I expect more of the same at E3, but am open to more surprises from a company currently firing on all cylinders.

Finally, sales performance of virtual reality gaming has been somewhat disappointing thus far.  Significant investment continues, as do the promises of VR eventually becoming the primary way people play games.  I don’t buy it, at least not yet.  I see more barriers to entry than entry points, and I think this E3 is put up or shut up time for this generation of VR gaming systems.  I hope I’m wrong, but I don’t expect VR to deliver mass market returns in the near future.

2017 has been an amazing year so far, full of significant industry changes and evolutions.  I’m not sure we’ve had a more surprising year since the Wii took the world by storm a decade ago.  What other surprises are in store?

Bring on E3!

What a week.

One would normally expect the release of a new console platform to dominate gaming news in the days leading up to its launch. This is 2017, however, and it has seemingly become normal to have the sands shift underfoot on a more frequent basis.

Two market moving initiatives were announced this week, one potential game of the year has been released with another on the way Friday and, lest we forget, the Nintendo Switch just happens to be launching as well.

• Twitch as video game sales engine – Amazon’s purchase of Twitch in 2014 was a bold move with a billion-dollar price tag. Since that time, viewership has grown to 9.7 million daily active users with 106 minutes watched per person per day. The next step for Twitch, selling video games and downloadable content, will potentially allow each of the 2 million Twitch streamers per month (or at least the 17k most popular streamers termed Twitch Partners) to become commissioned salespeople for the games industry. Twitch’s vice president of commerce Matt McCloskey calls this “the idea of social commerce” and it presents both significant opportunity, and change, for the games marketplace.
  
  I believe the magnitude and potential of this initiative is difficult to overstate. The integration of selling tools into the Twitch streaming service, coupled with incentivized streamers, provides significant incremental selling opportunities. I believe this has the potential to be the most significant change to the games marketplace since the creation of the digital marketplaces themselves. While complete details are yet to be announced, this could be the signal of a significant marketplace shift that changes how content is discovered and sold.
• Microsoft’s Xbox Game Pass as gaming’s version of Netflix – The service, launching later this spring, promises unlimited access to over 100 Xbox One and backward compatible Xbox 360 games for a $9.99 per month cost. Currently in testing with Xbox Insider Program members, the service will also allow subscribers to purchase games featured in the service at a discount.
  
  This is not the first subscription program on console. EA Access launched in August of 2014 and now has 43 games in the “Vault” which subscribers can access and play at no additional cost. In addition, subscribers have been allowed early exclusive trials of such games as Battlefield 1, and receive discounts across EA products on the Xbox One store.
  
  The Xbox Game Pass is not only an interesting proposition for consumers. Publishers can incrementally monetize back catalogs, measure interest and engagement in dormant franchises (potentially allowing for new development investment), and support new releases by allowing players to revisit favorite games in that series prior to the new titles in the franchise launching.
  
  Sales data suggest that EA Access has had a net positive impact to sales and engagement of EA products on Xbox One. I fully expect the same to be the case with the Xbox Game Pass for participating publishers and titles. I also expect gamer backlogs to swell considerably. Combined, these factors are potentially great news for all involved.
• Horizon: Zero Dawn and The Legend of Zelda: Breath of the Wild as early GOTY contenders – Getting one potential game of the year in a month is fantastic, getting two in one week is almost unfair.
  
  Horizon: Zero Dawn, currently rated 88 on opencritic.com, is Guerrilla Games’ latest, an action RPG published by Sony Interactive Entertainment exclusively for the PlayStation 4. Nintendo’s major title launch in support of the Nintendo Switch (and coming to the Wii U) is The Legend of Zelda: Breath of the Wild. While at the time of writing a review embargo is still in place leading to the games’ Friday release, previews have the title widely praised for its scale and depth.
  
  Review scores are a factor in determining sales potential, although many others play into how a title might ultimately sell. In any case, having two high-profile, critically acclaimed games releasing in the same week is a tremendous positive for gamers and the console segment.
• Launch of the Nintendo Switch – Finally, this week will see the launch of the Nintendo Switch. I am cautiously optimistic on the platform. The potential of the device is significant, while technical and library challenges are noted by many reviewers.

The Wall Street Journal’s Takashi Mochizuki reported that Nintendo’s worldwide shipment target for launch month was 2 million units. If this report remains the case, the US market could receive an estimated 0.6-0.9 million units of the device in March. While I believe there are certainly enough fans of The Legend of Zelda franchise to snap up these launch units, it will be more interesting to see how sales trend over the summer months leading up to the launch of Super Mario Odyssey this holiday.

There are few weeks in memory that have had as many events take place with as much potential impact to the games industry as this.

Twitch’s selling of games and content, Microsoft’s Xbox Game Pass, the launch of two potential game of the year candidates from Sony and Nintendo and the launch of the latest Nintendo console?

What a week indeed.

Games as a Service (GaaS) is a term gaining significant traction within the video game marketplace, for good reason.

These types of games, which frequently include digital add-on components such as downloadable content, virtual currencies, micro-transactions, consumables, cosmetic items and, of course, season passes bundling these items, have dominated the sales charts in recent months.

Titles like Grand Theft Auto V, Overwatch, Tom Clancy’s The Division, FIFA 17, and Destiny are among the games that feature a model of consistent digital updates and additions that work towards keeping players returning to the games.  This has resulted in longer selling tails, higher engagement rates, and significantly more digital content spending than more traditional games.

Perhaps there’s no better example of the possibilities presented by the GaaS model than Tom Clancy’s Rainbow Six Siege.

Despite a slow start when launched in December 2015, Tom Clancy’s Rainbow Six Siege has accomplished what most game makers and publishers only dream of: steady growth in its player base, even more than a year after launch, and continued growth in its revenues driven by add-on content.  In its most recent earnings call, Ubisoft announced that Tom Clancy’s Rainbow Six Siege achieved 15 million registered players, with record daily active users, more than a year after launch.

Intuitively, one may assume that this is bad news for traditional retail.  That assumption would, however, be incorrect.

At retail, nine of the top 10 selling packaged video games in 2016 featured a GaaS model, with over a quarter of all retail revenues from those nine games coming from premium-priced versions of those packaged games.  These premium versions frequently included digital items such as downloadable content, and virtual currencies or cosmetics, among other digital items.

These premium versions of the games offering this additional content were most often priced well above the standard $59.99 MSRP.  Sales of these versions were also embraced by consumers, as significant sales growth was seen on these premium-priced versions of GaaS games when compared to last year.

So, what can retail do to ensure its getting its fair share of the emerging GaaS market, and thus capitalizing on digital?

Carrying more copies of these higher priced SKUs in a retail assortment mix is one, as a dollar spent on digital products at retail is purely incremental to normal, baseline retail demand.  Second, offering exclusive versions of these premium versions of GaaS games could offer some differentiation between retailers.  Finally, and perhaps the most dramatic path, a retailer could consider carrying these premium versions of GaaS games exclusively, refusing to carry the lower-priced SKUs that do not offer digital content components.

Consumers have quickly adopted the GaaS model, with such titles showing a significant portion of sales coming directly from digital add-on content.  Retail can take advantage of the GaaS model, and thereby capitalize on digital, by ensuring that premium versions of GaaS model games become and remain a merchandising priority.

A dramatic change has been happening at gaming retail since the beginning of the decade. 

Retail game sections have shrunk, packaged game sales have declined, more games have been released exclusively through digital marketplaces, and it’s rare to see an optimistic forecast for future packaged game sales.

Over the same period, shrinking retail shelves have been taken over by the latest AAA shooter and action games almost exclusively.  Other genres, such as platformers, action RPGs and adventure games can go missing entirely, often because major publishers are no longer making packaged games to serve these audiences.

The good news is that video game retail has the opportunity and ability to increase on-shelf title diversity in both pricing and genres available to consumers.  By embracing physical versions of games that would at one point have been considered digital exclusives, retail can offer more reasons for a consumer to browse its shelves, to discover games she would have otherwise missed, and to make retail video game sections once again a destination for excitement and discovery.

Release Count may be a meaningful driver of retail video game sales

The drivers of the change in packaged video game sales might seem obvious at first glance.  Growth in digital and mobile channels is often singled out as the primary reason for the change in packaged video game sales.   

However, the data suggests that the number of titles releasing at retail is as meaningful a reason as any (perhaps even the most meaningful) for the change in retail sales.  The change in retail release count also happens to be the most quantifiable, and has what may be the highest correlation to the change in retail sales of any quantifiable metric over the period.

There are fewer publishers, and on average those remaining publishers are bringing fewer games to retail than they were at the start of the decade.

This has resulted in a dramatic reduction in release count; one that just so happens to correlate quite well to packaged retail sales.

In addition, the decline in release count has resulted in more homogeneity in the kinds of games on shelf, and in price points.  Most retail shelves consist primarily of AAA action and shooter games originally priced at $59.99.  Only rarely will a platformer, strategy or family game reach the shelf.  This, in turn, has made browsing and discovery far less compelling for consumers.

Release count grew in 2016, with new publishers bringing smaller titles, that would formerly be digital exclusives, directly to retail

The good news is that the decline in packaged release count stopped in 2016.  The market actually experienced an uptick (which was detailed by James Batchelor at gamesindustry.biz) thanks to the expansion of this concept.

GameStop has proactively taken the steps to enter physical publishing of smaller scale digital games with GameTrust.  Its first title, Insomniac’s Song of the Deep, launched in July, was supported with significant presence and promotion at retail and in consumer marketing.  GameTrust also has partnerships in place with developers of digital games such as Tequila Works, Ready at Dawn and Frozenbyte.

505 Games  has been quite active in this space, bringing to retail physical versions of such digital hits as Rocket League, Terraria and, announced today, Stardew Valley.

Soedesco Publishing brought former digital exclusives such as Ziggurat, Giana Sisters: Twisted Dreams, and Among the Sleep to retail in 2016, while Limited Run Games has sold physical versions of digital games such as Oddworld: New N’ Tasty, and Octodad directly to consumers, without entering retail - at least not yet. 

While bringing digital games to retail isn’t a new thing (both the Sony PlayStation 3 and Microsoft’s Xbox 360 received disc versions of digital game compilations while developers like Telltale have been bringing its games to market in packaged form for some time), the importance such titles could have in today’s market is.

It would be unreasonable to believe that any one digital title could offset the revenue generated at retail by a AAA game it may substitute on shelf for.  These smaller, formerly digital exclusives generally retail from $14.99-$19.99, while a AAA product retails for $59.99. 

However, what these smaller titles can do is generate additional sales of the games themselves while at the same time driving traffic to the video game aisle, leading to incremental sales of other games while reengaging consumers that have gaming interests beyond the latest AAA big budget shooter.

Bringing the joy of discovery back to the video game aisle

What better way to encourage discovery, generate incremental game sales, and improve the shopping experience than provide retail consumers with more titles, more genres and more price points, to make shopping for video games at retail more engaging and fun?

The risk is, if the expansion of smaller digital games into the retail space doesn’t happen, and with AAA packaged release counts falling so low, at what point will consumers simply choose to look towards digital marketplaces first, not only for these smaller games but also for the big AAA blockbusters?  At what annual AAA physical release count does retail lose its appeal as a shopping destination for video games?

Bringing smaller digital games to retail would benefit developers, retailers and consumers.  It’s time for the model to be more fully embraced so everyone can benefit.

Consumers of console and PC video games have never faced a more overwhelming level of choices.  There are more games, and more opportunities to spend, than ever before.  Iterative console hardware, digital distribution and subscriptions, free-to-play monetization models in full-price games gaining in prevalence, and multiple SKUs with competing offers across digital and retail have already impacted the market (and have been confusing consumers) for some time.

This overwhelming amount of choice will only grow in 2017.  Console and PC gaming consumers will have even more options, across more platforms and with a larger range of price points, than ever before.  Here are a few things I’m predicting will happen in 2017:

Over 5k games will release on STEAM in 2017.  For every title released on consoles or portables at retail, at least 25 titles will release on STEAM.

This is, of course, a double-edged sword.  It will bring far more variety to the PC platform, and allow for developers of all sizes to get games into distribution.  On the other hand, this expanding flood of releases will make discoverability an even more daunting challenge for both developers and consumers.

Users, not Units, will be firmly embedded as the planning currency for console game publishers, so expect more incentives to stick with one console game longer.

Topline planning at publishers used to be simple: units and average price for sales of a console game at retail or digitally.  Now, the shift towards ARPU-based planning for console games is accelerating.  Publishers looking to retain and grow the player base for a game, while offering that base more opportunity to spend, is what consumers should expect.

Virtual currencies and consumables will be baked into more (most?) console games.

Adopting free-to-play monetization in full-price console titles will become more prevalent.  Accelerators, cosmetics, loot crates and boosts purchased with real world money will become a normal and expected component of most major console releases.

Gold editions will become more prevalent, lifting average selling prices at launch well above $60.

Game base retail prices have held at $60 largely because consumers have purchased enough DLC and MTX over the past few years to make the model hold.  Now, given the success of titles offering gold editions (versions of the game that include bonus content like season passes, virtual currencies or exclusive content) effectively raising the average retail price well over $60 at and around launch, expect most major console titles to offer this type of offering in a SKU mix.  I also expect more exclusive content to be included in these higher-priced versions.

The Nintendo Switch will experience hardware shortages, alter the console landscape.

Nintendo has very quietly been experiencing a sales resurgence.  3DS hardware and software sales have been on an extended year-on-year growth run in the U.S. market, while Pokémon Sun and Pokémon Moon were the best-selling launch Pokémon combo in history.  Super Mario Run has also achieved market success in mobile, allowing gamers to reengage with the brand.  Finally, the NES Classic has been sold out at retail since launch and was one of the quarter’s hottest gifting items.  Given this success, Nintendo is poised to re-establish itself as a market leader in the console space, and strongly compete in the retail market.  “Never count Nintendo out” is the oldest mantra in the video game industry.  I suspect it will be revived.