Game-related spending edges up, tops $3 billion in Q4
Research firm NPD says consumers spent a tidy sum on used games, game downloads and rentals, and add-ons. The figure doesn't include sales of actual new-game disks.
Although physical game sales have historically been the lifeblood of the gaming industry, a new study from research firm NPD has found that things are going quite well elsewhere in the market, as well.
During the fourth quarter of 2011, consumers across the U.S. and Europe spent $3.33 billion on used games, rentals, digital titles, social games, and downloadable content. The U.S. portion of that figure rose nine percent over the same period in 2010, NPD analyst Anita Frazier told CNET.
The figure doesn't include physical retail sales--the actual discs bought in stores or online. That's because NPD reports physical retail sales of new games on a monthly basis. This report sums up all other game-related spending for the quarter. Frazier told CNET that new physical game sales were down 3 percent year-over-year in the fourth quarter of 2011.
For developers, NPD's findings are a mixed bag. On one hand, game companies are undoubtedly excited to see that so many people across the U.S. and Europe are willing to spend cash on digital content and social titles. But the popularity of used games is enough to make them cringe.
Unlike new games, which developers see revenue from, used-game sales go directly to retailers. Companies like GameStop, Best Buy, and others have been amping up their focus on used games, which offer tidy margins thanks to the markup retailers charge over what they pay customers who trade in older titles.
In 2010, Codemasters CEO Rod Cousens said that used game sales are hurting both developers and gamers that want the latest and greatest content.
"The way it's structured today is destructive, and it's negative to creativity and innovation," Cousens told GamesIndustry.biz a couple of years ago. "I believe it has to be managed. There's an element of it which is acceptable, and there's an element that isn't."
Used games have become such a concern among gaming's elite that a report surfaced earlier this year, claiming Microsoft was considering installing a feature in its next Xbox that would block attempts to play used titles on the device.
GameStop is one retailer that has played the used-game market to great effect. And over the last several months, the retailer has apparently benefited greatly from massive spending on non-physical-retail offerings.
"I think the market will like our outlook," GameStop CEO Paul Raines told Reuters in an interview published today. "Our digital growth and pre-owned and mobile growth will give us a pretty healthy earnings and margin improvement."
GameStop's success with used and digital content might have something to do with its geography. According to NPD, fourth-quarter spending was highest in the U.S., hitting $2.04 billion. The U.K., Germany, and France combined for $1.29 billion in total spending.