NPD: Gaming industry looking good

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."