The end of an era is upon us.
Microsoft's Xbox 360 and Sony's PlayStation 3 video game consoles are on their way out and the game industry appears ready to move on.
That's according to the data in the latest report from industry tracker NPD Group.
After more than a year and a half of fluctuations and uncertainty with the arrival of new hardware from Microsoft and Sony, the US retail game industry grew in July -- its second consecutive month of growth, according to NPD. Overall sales of game hardware, software and accessories grew 6 percent while hardware sales rose 2 percent, despite a steep 56 percent dropoff in sales of the older Xbox 360 and PS3.
Such a dropoff has in previous months dragged hardware sales down into double-digit declines on a percentage basis. But sales of the newer Xbox One and PlayStation 4 consoles are starting to offset those declines.
The end of the Xbox 360 and PS3 has been a long time coming, with Microsoft publicly stating that support for its console will end next year, while Sony has hinted that it will follow suit. Meanwhile, many game makers have publicly dropped support for older consoles. For instance, Electronic Arts' upcoming Star Wars Battlefront space shooter with be available only for the Xbox One, PS4 and PC. The sharp dropoffs in older hardware sales reflect the lack of consumer enthusiasm for the near-decade-old devices.
Since the introduction of new game hardware from Microsoft and Sony in November 2013, the retail game industry has been struggling to stabilize itself as it transitions away from old hardware, released almost 10 years ago, to new devices released in the past two years. Sales of these upgraded consoles have been strong, but software sales have fluctuated. On the whole, game sales have tended to fall from year-ago comparisons as the industry waited for a larger number of consumers to upgrade to new hardware, which has been dependent on game makers offering compelling reasons to upgrade.
That appears to be changing now, as both newer hardware and software sales for those devices begin taking up a larger chunk of the overall market. Last month, sales of software for the Xbox One and PS4 grew 63 percent year over year, NPD said.
Software sales of games on discs on the whole remained flat at $184.4 million due to a lack of new games in the middle of the summer season. The best-selling retail game of the month was Warner Bros.' toy-film hybrid Lego: Jurassic World, followed by Warner Bros.' other big summer hit, the comic-inspired Batman: Arkham Knight in second. Microsoft's pixel-building game Minecraft came in third.
Although overall game console sales rose only 2 percent in July to $202.1 million from this time a year ago, sales of newer hardware like the Xbox One grew 9 percent. "After 21 months, combined Xbox One and PS4 hardware unit sales are close to 50 percent higher than the combined sales of Xbox 360 and PS3 after 21 months on the market," NPD analyst Liam Callahan wrote.
Sony was pleased with the results in July thanks mostly to a special bundled version of its PlayStation 4 along with Batman: Arkham Knight. The PlayStation 4 was yet again the top seller last month, the company said in a statement.
Sony expects the momentum to continue into the fall as it preps yet another hardware bundle with Activision Blizzard's space shooter Destiny, which releases a large update in September.
Microsoft said sales of its Xbox One console were up 44 percent year over year in July, yet it still fell behind Sony, which has brokered deals with big-name game makers to get exclusive hardware bundles like Destiny and Batman. Microsoft, however, is gearing up for a hardware boost of its own with the release of the next installment in its acclaimed sci-fi shooter franchise Halo in October.
As has been the case in previous months, sales of games over the Internet are an even brighter spot for the industry. SuperData Research, which tracks sales and deliveries over the Internet of games and game add-ons, said the market grew 12 percent in July to $1.03 billion year over year.
"The biggest growth drivers in July were mobile and PC, which combined accounted for about 60 percent of the total digital games market," wrote SuperData CEO Joost van Dreunen.