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NPD: Gaming industry looking good

DICE 2009: Despite recent rash of layoffs, analyst Anita Frazier tells conference attendees that signs are pointing up.

LAS VEGAS--Gray skies are going to clear up, so put on a happy face. That was the heart of the message, if not the exact words, delivered by NPD Group analyst Anita Frazier at the D.I.C.E. Summit today.

In a half-hour session, Frazier said that many media accounts of the recent rash of game-industry layoffs and setbacks have had a "sky is falling" effect reminiscent of Chicken Little. Pointing out that there was a similar tone to media coverage in mid-2006, just before the launch of the Nintendo Wii reshaped the gaming landscape, Frazier chose instead to characterize the industry as Kung-Fu Panda, "kicking butt and taking names."

PC retail game sales have declined sharply in recent years, down more than 50 percent from their 2001 high of $1.6 billion, Frazier said. However, the NPD Group believes much of that loss is being offset by online game sales, subscriptions to online games, and other forms of revenue that don't fall into the retail sector. According to estimates that Frazier emphasized were very rough, about half of the current PC gaming market comes from those nonretail sources.

Although the recent layoffs have cast a cloud over the industry, Frazier said that there may be a silver lining to even those events, considering that many publishers "got a bit fat and bloated" with the industry's growth in recent years. Though she didn't mention it specifically, Frazier was echoing a sentiment from EA CEO John Riccitiello's presentation yesterday.

To back up her case, Frazier pointed to a number of indicators that the industry is growing. An ongoing NPD survey found that by August of 2008, US consumers were eating out and making home improvements less, two signs of a worsening economy. However, among the activities that people did more were going online, watching TV, playing board games, and playing video games. Frazier also said more people are playing games than ever before, and the medium is making up a larger portion of the consumer's entertainment dollar than any other single activity.

"We're going to get to the point where we don't talk about gamers because they're just people who game," Frazier said. "It's like we don't talk about TV watchers or movie watchers. It's just something people do."

18 Comments

  • eternity21

    Posted Feb 23, 2009 10:48 pm GMT

    Gaming is like drugs... it's addiction wouldn't go away...

  • sieg6529

    Posted Feb 22, 2009 7:03 pm GMT

    @joevit: Obama has not already spent more than Bush. He's spent a lot, but he would need to start a 3 trillion dollar war to match Bush.

  • joevit

    Posted Feb 21, 2009 10:49 pm GMT

    I would also like to add that in 2 years we will hurt even more when it comes to the economy. Obama just made are buck weaker. Funny how Bush spent alot of are cash in 8 years but Obama spent even more in just over 30 days doing the same thing bush did but add crap to the bill. I think things will slow down in 2 years but games will still do well.

  • akiwak

    Posted Feb 21, 2009 11:18 am GMT

    I have personally spent more money on staying in than going out. It's just cheaper to buy a game and escape reality for a bit.

  • Ripper_TV

    Posted Feb 21, 2009 5:02 am GMT

    "We're going to get to the point where we don't talk about gamers because they're just people who game," Frazier said. "It's like we don't talk about TV watchers or movie watchers. It's just something people do."
    I'm waiting for it.

  • gameking5000

    Posted Feb 21, 2009 12:53 am GMT

    Let's hope for an improvement.

  • combatsoldier

    Posted Feb 21, 2009 12:52 am GMT

    damn thats some bad news.

  • kavadias1981

    Posted Feb 21, 2009 12:27 am GMT

    We'll just see how things are at the end of the year. The predictions of some silly cow means nothing in these unpredictable times.

  • phase4illini

    Posted Feb 20, 2009 4:42 pm GMT

    Wow... because the NPD has really been on the ball the past 6 months.

    They predicted back at the end of last summer that the game industry would be immune to the economic crisis, and despite huge holiday sales, publishers have been cutting back and devs have been getting shut down for the past 2 months.

    NPD analysts are about as accurate as Ralphie and his Red Ryder BB-gun.

    Donteatcream,
    There are plenty of fantastic devs that have been fed to the fire as well.

  • Merl57

    Posted Feb 20, 2009 4:36 pm GMT

    I like that last quote a lot. Lol TV watchers

  • nintendoboy16

    Posted Feb 20, 2009 4:36 pm GMT

    This better be true. All I heard this week was crud news on the economy.

  • DontEatCream

    Posted Feb 20, 2009 4:26 pm GMT

    Agreed. While this hellfire economy is awesome for purging the crappy game developers from the market, it still sucks cause plenty of people are losing their jobs. Here's hoping all these displaced programmers find another place to work and get back on their feet.

  • Gohan_Egret

    Posted Feb 20, 2009 3:02 pm GMT

    While her sentiment rings true, it is still disheartening to see so many people lose their jobs in such a short amount of time.

    And, the reality is that the tide is not raising all boats. So, while "The Industry" may be seeing record revenues as a whole, the picture is not as rosy when you break it down by who is actually making money.

  • snakes3425

    Posted Feb 20, 2009 2:52 pm GMT

    Finally some good economic news

  • jrabbit99

    Posted Feb 20, 2009 2:15 pm GMT

    yay! Gaming is finally socially acceptable!

  • Kashmir1089

    Posted Feb 20, 2009 1:15 pm GMT

    PC sales are way down because of the spike in pirating. I mean really; spore was the most pirated game of 2008 and that was one of the top PC titles along with Crysis and WoW(guilty as charged). For an avid WoW and Guitar Hero player i like to say to give us good software but really give us quality online content. I have spent almost a hundred dollars on DLC for Guitar hero and Rock band and over a thousand dollars on WoW over the past 5 years. I am very satisfied.

  • joevit

    Posted Feb 20, 2009 12:47 pm GMT

    I dont see game sales going bad any time soon. I still dont think that a economy is hurting the PS3. Teens will do anything to buy game systems and games. They dont have bills to pay. I take that back, they might have a bill or 2 but not like my wife and I.

  • raahsnavj

    Posted Feb 20, 2009 12:38 pm GMT

    "US consumers were eating out and making home improvements less, two signs of a worsening economy"

    Really? When I tighten the belt I rennovate the house (to keep it as marketable as possible) and eat at home a lot more to save from paying for overpriced fast food and such.

    I can't deny though that most, if not all of my personal entertainment money goes to Video and board games...

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