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US video game spending increased 30% in Q1
Even as signs of life after the pandemic have begun to emerge here in the U.S., increases in video game spending continue. There’s no doubt that much of last year’s big numbers were driven by stay-at-home requirements in much of the country and the world. All said, U.S. spending on the industry increased 27% for 2020.
There remains a broader question, however, around whether this momentum can maintain, as people start to, you know, leave the house more. For now, at least, things are continuing to look rosy for the industry. NPD noted this morning that U.S. spending on the category jumped 30% y-o-y for Q1 2021, to $14.92 billion.
When we break the number down a bit, however, it becomes clear that the driver goes beyond mere pandemic entertainment. Content was up 25% for the quarter, accessories jumped 42% and hardware went up 82%.
The motivator behind that last figure should be immediately obvious to anyone who follows the industry with any amount of interest. Where Nintendo’s Switch dominated the conversation for most of 2020, Sony and Microsoft both launched their next-gen consoles late last year.
“While we are still seeing elevated rates of both engagement and spending resulting from changes in consumer behavior driven by the pandemic, we are also seeing cyclical gains from the November launches of both the PlayStation 5 and Xbox Series consoles,” analyst Mat Piscatella said in a release The growth driven by these new platforms, combined with gains experienced in mobile, PC and VR content spending, as well as the continued strength of Nintendo Switch, have pushed the market to new highs.”
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Video game spending increased 27% in 2020
If you’ve been following the gaming space — or just the state of the world, generally — over the past 12 months, this shouldn’t come as a major surprise. Spending saw big increases pretty much across the board in 2020 as a homebound populace sought comfort and distraction in gaming. This comes in stark contrast to much of the rest of the consumer electronics space, in which economic uncertainty curtailed purchasing on non-essentials.
According to the latest figures from NPD, spending on gaming hardware, software and accessories was up 25% in December and 27% for the full year. Hardware specifically increased 38% year-over-year for December to $1.35 billion, with the arrival of next-gen consoles from Sony and Microsoft.
That’s the highest figure since the $1.37 billion hit in December 2013, the year the Xbox One and PlayStation 4 arrived. In spite of this year’s new arrivals (which were hampered by limited availability), Nintendo’s Switch once again dominated sales for the month, with the PS5 grabbing the No. 2 spot. The Switch’s 2020 was the second-highest annual performance for a console, after the Wii in 2008.
The Switch — which turns three this March — got off to a slow start, courtesy of its own limited availability. But the arrival of a new Animal Crossing title helped rocket it to the top, as isolated consumers looked for new venues for social gaming. That title took the number three spot for the year, finishing behind Call of Duty: Black Ops Cold War and Call of Duty: Modern Warfare (the former also topping the list for December).
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US gaming industry records another excellent quarter as pandemic fuels sales
The COVID-19 pandemic has utterly decimated a number of industries over the past several months, but the U.S. gaming industry continues to benefit as people continue to be stuck at home. Yet another report from NPD highlights an excellent quarter, with spending hitting a new Q2 record in the States.
According to the figures, gamers spent $11.6 billion, marking a 30% increase over a year prior. It was also a 7% increase over Q1’s 10.9 billion, as spending continues while the pandemic continues to rage.
Games themselves comprised $10.2 billion of that figure (itself a 28% increase y-o-y), with some familiar titles occupying the top spots, including Animal Crossing: New Horizons, Call of Duty: Warzone and Call of Duty: Modern Warfare. The gaming hardware category saw a 57% increase from 2019, with Nintendo Switch, PlayStation 4 and Xbox One all seeing strong sales.
The Switch isn’t a surprise, given shortages experienced earlier in the year. Perhaps a bit more unexpected are continued sales on the PS4 and Xbox One, given that both consoles are set to be eclipsed by next-generation devices later in the year. Of course, those upcoming systems aren’t doing gamers much good during the current moment of stay at home orders.
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COVID-19 has driven engagement for an already thriving gaming industry
A few days after releasing new figures for the month of June, NPD is offering up some broader trends for the gaming industry at large. It likely won’t surprise you to hear that the industry continues to thrive in 2020, and COVID-19-driven stay-at-home orders have only further contributed to gaming adoption here in the U.S.
According to the report, three out of four people in the U.S. play some amount of video games. That’s 244 million people — up by 32 million from 2018. Among those who play, 39% are light gamers, playing less than five hours a week; 32% are classified as moderate, at five to 15 hours, and 20% play more than 15 hours a week, putting them in the heavy camp. On average, gamers surveyed play around 14 hours a week, up from the 12 hours reported in 2018.
The novel coronavirus has driven adoption, as gaming sales have suggested for several months now. Of those surveyed, 35% say they’re playing more than they were prior to pandemic restrictions. Though most are simply playing on non-gaming-specific devices they already owned — primarily things like smartphones, tablets and computers.
Only 6% of respondents say they began gaming on a new platform. The relatively low figure seems to reflect some of the dire economics of the last several months. Few were purchasing new consoles. In the case of the Switch, Nintendo ran into some serious supply issues that have found the console out of stock in many online stores. Microsoft and Sony, meanwhile, are launching new systems before the end of the year, meaning current systems will be outdated in the not so distant future.
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In spite of an uncertain economy, US video game sales remain strong
May marked another extremely strong month for gaming sales, according to the latest figures from NPD. Between software, hardware, accessories and game cards, Americans spent around $977 million. That’s a 57% jump since the year prior and the highest it’s been for the month since 2008, when the country was feeling the strain of the Great Recession.
All of this is made more remarkable by the fact that the United States has been struggling with COVID-19-related pains for months now. This week, another 1.5 million Americans filed for unemployment, bringing the total number to 44.2 million since the beginning of shutdowns. But as countless other venues for non-essential spending have suffered, gaming has thrived.
It’s clear that games are how Americans are choosing to spend whatever sort of disposable income they might have, as they’re stuck at home, away from other humans. And that spending has continued for a few months now, even after Microsoft and Sony have begun hyping their next-generation consoles — both due at at the end of the year.
That, perhaps, is part of why Nintendo continued to dominate console sales with the Switch, in spite of hardware shortages. Animal Crossing: New Horizons remained the top-selling title for the console (and third over all), owing to the online cult it has amassed through social-first gameplay. Call of Duty: Modern Warfare and Grand Theft Auto V took the No. 1 and No. 2 spots, respectively, on both the PlayStation 4 and Xbox One.
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US video game sales have record quarter as consumers stay at home
New numbers from NPD confirm what we’ve known for a while: The first quarter of 2020 was a very good one for gaming companies. The new report notes that sales hit a record $10.86 billion in the States between January and March of this year, marking a 9% increase over a year prior; $9.58 billion of that figure was from video game content.
The primary driver is, you guessed it, COVID-19. As stay at home orders have been enacted on the federal and state levels, people are coping with the ongoing daily horror that is life in 2020 by playing video games. Lots and lots of video games.
Here’s NPD’s Mat Piscatella further confirming our suspicions: “Video Games have brought comfort and connection to millions during this challenging time. As people have stayed at home more, they’ve utilized gaming not only as a diversion and an escape, but also as a means of staying connected with family and friends. Whether it was on console or mobile, PC or virtual reality, gaming experienced play and sales growth during the first quarter.”
According to NPD’s Q1 2020 Games Market Dynamics: U.S. report, overall total industry consumer spending on #videogaming in the U.S. reached a record $10.86 billion in the first quarter of 2020 (Jan. – Mar.), an increase of 9 percent compared to the same time period last year.
— NPD Games (@npdgames) May 15, 2020
That last bit is, in part, key to many consumers’ choice of game titles. As already noted by the firm, Animal Crossing: New Horizons had its own record-setting first quarter. That, in turn, helped drive Switch sales, in spite of Nintendo’s well-documented supply issues. The title arrived just in the nick of time for stay at home orders in the U.S., delivering a kind of front-facing social experience that much of the competition lacks. Also, turnips.
Matter of fact, the Switch’s success actually helped supplement losses of other platforms. Microsoft and Sony will no doubt make up gains at the end of the year with their next-gen consoles. For now, however, many consumers are likely holding out until their holiday arrives to invest in Xbox or PlayStation hardware, in spite of the pandemic. The U.S.’s soaring unemployment rate no doubt also had an impact on the industry’s bottom line.
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The Nintendo Switch had a very good March
Nintendo is selling a lot of Switches. The convertible console has been a lifesaver for people sheltering in place around the world. COVID-19-induced travel restrictions and the long-awaited arrival of Animal Crossing: New Horizons have proven to be a perfect storm for the three-year-old platform.
New numbers out from NPD this morning shed some light on just how good last month was for Nintendo. Switch sales more than doubled their numbers from March 2019, per the analyst firm. It was a March record for the console, which launched in March 2017. It was also the best first-quarter unit sales for any gaming console since the company’s DS system, way back in 2010.
US NPD HW – Nintendo Switch set a new all-time record for hardware unit sales in a March month, besting the previous high set by Nintendo Switch in its March 2017 launch month.
— Mat Piscatella (@MatPiscatella) April 21, 2020
The arrival of Animal Crossing: New Horizons was no doubt a bit part of the sales bump. The latest addition to the popular sim series was both the best-selling game on any platform for March and had the third-best-selling launch month of any title in Nintendo’s history since NPD started tracking. Only Super Smash Bros. Ultimate and Super Smash Bros. Brawl (2018 and 2008, respectively) sold more physical units in their first month.
New Horizons is already the best selling title in Animal Crossing’s history, according to the firm. Both the timing of the title and its focus on social gaming play have been a huge boost to the game. It’s also been a hit with critics, currently sporting a 91% on Metacritic.
Stores have struggled to keep Switch units in stock amid a sharp bump in sales. Nintendo is reportedly boosting production of the system up by 10% in order to keep up with demand.
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The vast majority of US consumers aren’t spending $1,000+ on phones
Pricing in the smartphone wars has taken a sharp turn in recent years on the premium end of the spectrum. Ever since the arrival of the iPhone X, flagship devices have often arrived in excess of $1,000, as companies push toward more premium components in order to remain competitive.
Likely surprising no one, most consumers aren’t spending that much on devices. According to numbers from NPD’s latest Mobile Phone Tracking study, however, the numbers are pretty stark. Less than 10% of U.S. consumers are spending that much on devices. That could foretell some bleak numbers for 5G sales, as early units routinely run around $1,200.
Not an encouraging sign as many manufacturers look toward 5G as the next major driver amid flagging global sales. One thing to consider here is that most phones are good at this point. Even mid-tier smartphones are pretty solid. While the devices have become a commodity, few if any users truly need to spend that much on a product. There’s a reason Samsung, Google and even Apple have been focused on lower-cost alternatives of late.
There are, however, reasons for manufacturers to be hopeful. For one thing, the arrival of 5G is often cited as one of the primary sources of slowed sales. Many premium users are likely waiting for more network coverage and devices before purchasing their next phone. NPD says that nearly three-fourths of consumers are at least aware that 5G is a thing.
Also notable is Qualcomm’s recent 765 announcement, which should help make 5G devices accessible for consumers at a lower price point in the coming year.
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Nearly a third of US households don’t have a broadband connection
Over the past several years, many have suggested that broadband internet should be regarded as a public utility, like water or gas. Staying connected has become an essential part of nearly every facet of life, but according to a new report, high-speed connections may not be as prevalent here in the States as you may think.
In its new Rural America and Technology study, NPD notes that 31% of U.S. households don’t have broadband (25Mbps downloads and up) internet connections. The number works out to roughly 100 million per the report. That figure, unsurprisingly, is highly concentrated in rural areas — less than one-fifth of that population has a broadband connection.
While broadband was considered something of a luxury in the not so distant past, it’s grown into an increasingly essential aspect of modern existence, from work to health to entertainment. The concentration of access to the technology in urban versus rural areas has been a major aspect in what analysts have referred to as the “digital divide.” Rural areas make up nearly 97% of the total U.S. land.
On the upside, the report suggests that 5G could have a profound impact on those numbers. “The roll out of 5G will have a significant impact in rural America, disrupting the limited broadband carrier market and delivering broadband to many households that have not previously had access,” NPD’s Eddie Hold said in a statement released with the report. “This will inevitably provide an opportunity for manufacturers and retailers to reach new consumers with advanced devices.”
Given the speed and spottiness with which the technology has been rolled out thus far, however, coupled with the high prices of first-generation handsets, it will likely take several years before that comes to pass.
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