Increased consumer spending amid the coronavirus pandemic led to 163% growth for the video game hardware segment.
NPD Group has released its report examining sales trends in the games market for the month of April, and it seems the coronavirus has been a catalyst for major growth. NPD’s numbers indicate new records in nearly every segment, including software, hardware, and game cards and accessories. In total, the industry reached a record $1.5 billion in consumer spending in April, which is a massive 73% increase over the same month last year.
“I've never seen anything like this in the data. There are obvious drivers of this incredible swing in consumer behavior, but the results we saw in April are certainly above what I expected we'd see,” Mat Piscatella, executive director of games at NPD Group, told GameDaily.
On the hardware front, spending on consoles increased by 163% to $420 million in April, making it the highest-ever total for an April in tracked history. It was the Nintendo Switch that led the way in terms of both dollar and unit sales; the platform now holds the record for the best-selling console in the January to April tracking period. The previous record was set by the Nintendo Wii in 2009.
“Animal Crossing: New Horizons was certainly going to give the Switch a bit of a boost, and it was a growth platform at the beginning of the year,” Piscatella explained. “However, macro market conditions have clearly had a major impact not only on Switch, but hardware across the board. Switch does not reach this milestone in normal market conditions.”
The PS4 and Xbox one also saw sharp boosts in April, with sales increasing by more than 160% each. This level of growth, Piscatella noted, is unprecedented at this late stage in the console cycle.
“It is not just uncommon to see this, it's absolutely unheard of. This just doesn't happen,” he emphasized.
This month’s report highlights the symbiotic nature of the relationship between the Switch and the other two major consoles. In past cycles, consoles were viewed as mutually exclusive, but the Switch’s multi-use functionality lends it a supplementary quality that Piscatella said emphasizes the blurring of the lines between platforms.
“When it comes to the relationship between Switch and other consoles like Xbox and PlayStation, well I call it coopetitive, not competitive,” he explained. “According to our PlayerPulse research, the cross-ownership rates between Switch and the other two boxes is very high. Switch is a console that is owned in addition to a PlayStation or Xbox by a large portion of the gaming audience.”
Turning to the software numbers, Final Fantasy VII Remake led the way in April, followed by Call of Duty: Modern Warfare, Animal Crossing: New Horizons, NBA 2K20, and Grand Theft Auto V. Piscatella’s analysis notes that FFVII’s performance represents a new record for the franchise--April was the best launch month of a Final Fantasy game ever, a record that was previously held by FFXV in December 2016.
“This really is the golden age of JRPGs in the US. We consistently see sales of such games break franchise records and lead the charts when they are released. Even given that trend, Final Fantasy VII Remake was a bigger success than I had anticipated. A single-platform release is usually at a big of a disadvantage when going up against benchmark titles that are multiplatform. Final Fantasy VII Remake, however, exceeded those benchmarks. It really is a tribute to the hard work and effort from everyone who made the game happen.”
It’s also noteworthy that Animal Crossing continues to hang out near the top of the charts. When it released in March, its impact on the market was immediate and substantial, and it’s presence at number three illustrates its staying power. What makes it extra notable, though, is that NPD’s data only includes physical sales for Nintendo titles. If digital sales were made public, it’s realistic that New Horizons would be the best-selling game of 2020 so far, Piscatella said.
Call of Duty, of course,continues to be experiencing a golden age. Beyond just Modern Warfare, Modern Warfare 2: Remastered also snuck into the overall top 10 for April, and on the Xbox One charts Black Ops III made a surprise appearance at number eight. NPD’s data doesn’t include microtransactions, but the series’ strong free-to-play offerings, Warzone and Call of Duty: Mobile, certainly subsidized a great deal of the franchise’s revenue as well.
“We have seen strong catalog performance from Call of Duty franchise games for years. However, not quite at this scale,” Piscatella said. “The data suggests to me that efforts such as Call of Duty: Warzone and Call of Duty: Mobile have contributed to the success of the console games. Multiple franchise entry and touch points appear to have done a fantastic job of making the Call of Duty franchise an even bigger success overall.”
For Piscatella, this month’s software report drives home two important phenomena. First, evergreen games like GTA V and the NBA 2K franchise are continuing to grow their market share. More importantly, though, the coronavirus has exposed the unifying power of the medium.
“April is a reflection of gaming meeting some real human needs during a very difficult time,” he said. “The desire to not only be entertained, but to connect with family and friends, both on the couch together as a family, and online virtually when getting together is not possible. And with the incredible breadth and depth of gaming that is available right now, there is a game that can suit practically any mood or desire.”
Looking forward, the biggest question raised by April’s record-setting numbers revolves around sustainability. When the coronavirus pandemic eventually subsides and economies begin to reopen, will the games market remain as lucrative as it is now, or will it experience a collapse and consumers brace for recession?
“Eventually I have to imagine that Switch demand, and hardware demand in general, will regress more towards a baseline. The question is if consumer behavior has been permanently altered by current conditions,” Piscatella said. “Have the stay at home measures raised that baseline console demand? How many new console players do we have and how will their relationship with console gaming evolve?”
Trying to predict what the market will look like over the next six months is more prophecy than forecast, Piscatella explained. The extreme uncertainty is likely to result in jarring shifts with trends alternating between highs and lows. In the end, though, he’s glad that more people have discovered games as a means of connecting with loved ones and coping with the harsh conditions of the world.
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