Circana: Hardware Sales Up February Video Game Spending 6% to $4.6 Billion

Consumers spent $4.6 billion on video games, hardware and accessories in February, up 6% from $4.32 billion in the previous-year period, according to new data from Circana (formerly The NPD Group).

The uptick was driven in part by a 68% surge in video game console sales to $495 million from $295 million — the highest spending on hardware in a February since 2009. Consoles were led by Sony Interactive Entertainment’s PlayStation 5. Circana said console spending is up 29% in the first two months of the year to $888 million, from $688 million a year earlier.

Spending on accessories increased 13% to $212 million, from $189.3 million — driven by virtual reality headsets. For the year, accessory revenue is down 1% to $377 million, from $380.8 million.

Software sales inched up 1% to $3.89 billion, from $3.83 billion. Through two months, video game title revenue is down 2% to $7.68 billion, from $7.83 billion a year ago. Warner Bros. Games’ “Harry Potter”based Hogwarts Legacy remains the year’s top-selling title.

“February 2023 marks the highest monthly year-on-year percentage growth for the U.S. video game market since October 2021, when spending increased 13% compared to October 2020,” analyst Mat Piscatella wrote in a social media post.

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NPD: Internet Access, Speed Impact Consumer Electronics Ownership, Including Smart 4K TVs

Internet access and speed are key to determining the amount and type of consumer electronics devices in U.S. homes, including connected 4K UHD TVs, according to new data from The NPD Group.

While household internet and speed can vary widely from state to state, or even county to county, there are a number of consumer electronics devices that have reached parity levels among connected households in rural and urban U.S. markets. Those include TVs, video game consoles, smart watches, activity trackers and tablets, according to NPD.

However, NPD found that wider gaps exist in ownership levels of devices that are more dependent on an internet connection, such as 4K UHD TVs, where a broadband connection is required for high-definition streaming, and smart home devices, where higher download speeds are needed for live video streams.

In the United States, 50% of households do not currently have a broadband connection (25Mbps per second download speed or greater). In addition, 15% of homes in the United States have no internet access, while 10% use a smartphone-only solution. Based on NPD’s findings, this lack of internet access or lack of internet speed has the biggest impact on rural markets. As a result, in rural markets ownership of 4K TVs and home automation products have trailed ownership levels reported in urban areas.

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While other factors also influence the CE ownership gap, such as income levels, one theme that is consistent across 4K TV ownership for connected households in rural and urban markets is that as home internet download speeds increase, so too do household ownership levels. The same can be said of smart home devices, such as internet security cameras that require higher download speeds.

“Consumers with slower internet speeds have less incentive to purchase 4K TVs,” Eddie Hold, president of NPD Connected Intelligence, said in a statement.

Hold said consumers with slow ISP speeds present a challenge for manufacturers that need usage data and advertising revenue to help sustain manufacturing.

“The internet is essentially the lifeblood of all consumer electronics products,” he said. “Understanding where coverage gaps exist can help explain trends and identify future opportunities.”

NPD: U.S. Consumer Technology Sales Dropped 8% in 2022 and Will Fall 5% in 2023, But TV Sales to Grow

Following tremendous growth fueled by pandemic needs in 2020 and 2021, U.S. consumer technology industry sales revenue is expected to end 2022 down 8% year over year, according to The NPD Group.

The research firm’s latest Future of Technology forecast predicts sales will decline by an additional 5% year over year in 2023 and remain flat in 2024. Tech sales are expected to return to growth in 2025, rising by 2%, as consumers once again begin to replace devices purchased during the pandemic.

“The replacement cycle for many technology products is three to four years and, in some cases, more. That, in conjunction with challenging economic conditions, is slowing spending in the industry,” Paul Gagnon, VP and technology industry advisor for NPD, said in a statement. “Upgrade cycles for pandemic-driven purchases will ramp up in 2024, creating opportunity. In addition, manufacturers that introduce innovative products and technologies, which were somewhat lacking during the pandemic, will see success.”

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The NPD anticipates unit sales of TVs and home automation devices will remain positive throughout the forecast period. TV unit sales are expected to grow by low single-digits, year over year through 2025, as prices become more affordable at all sizes and the shift to larger sizes accelerates. Home automation product sales, which grew in 2022 even after strong demand during the pandemic, will continue to grow, with new models coming to market and with the expansion of products using the new Matter smart home standard.

“Even during challenging economic times, the consumer electronics industry tends to perform well. If consumers cut back spending on more-traditional entertainment activities, devices and services can be easy and available replacements,” Ben Arnold, executive director and consumer technology industry analyst for NPD, said in a statement. “Despite near-term economic headwinds, consumer electronics sales will remain above 2019 levels and industry average selling prices are expected to grow by the end of the forecast period in 2025 — a sign that tech remains a household spending priority.”

NPD: October Video Game Sales Saved by ‘Call of Duty: Modern Warfare II’

The video game industry avoided its 12th straight month of revenue declines after the latest October numbers came in at $4.71 billion in total consumer spending — equal to the previous-year period, according to The NPD Group.

The savior? Activision’s Call of Duty: Modern Warfare II. The latest release in the lucrative “Call of Duty” franchise helped up game software sales 2% to $3.7 billion, from $3.62 billion a year ago. Hardware sales dropped 10% to $424 million, from $468.8 million a year earlier, while accessory revenue declined 8% to $148 million, from $160.8 million.

The top-selling video game console was Sony’s PlayStation 5, while the PlayStation 5 DualSense Wireless Controller Midnight Black was the top-selling accessory.

Through 10 months of the year, total consumer video game spending was down 7% to $42.7 billion, from $45.9 billion. Console revenue dipped 2% to $3.8 billion, from $3.87 billion, while accessory revenue dropped 12% to $1.72 billion, from $1.95 billion. Game software sales dropped 8% to $37.19 billion, from $40.4 billion.

NPD: Q3 Video Game Spending Slipped 5% to $12.3 Billion

Consumer spending on video games, hardware and related accessories dipped 5% in the third quarter (ended Sept. 30), to $12.34 billion, from $12.98 billion in the previous-year period, according to new data from The NPD Group.

Non-mobile subscription content and hardware spending were among the quarter’s growth categories but were unable to offset declines experienced across other segments. Console and portable content contributed most to the overall drop in spending. Data from Sensor Tower shows U.S. consumer spending in mobile games during the third quarter fell 9% from Q3 2021.

“Mobile game spend in the U.S. continues to decline as consumers contend with both economic uncertainties and a new post-pandemic normal,” Dennis Yeh, gaming insights lead at Sensor Tower, said in a statement.

Yeh said games that require longer or continued playing sessions are being ditched in favor of games that typically require less active engagement, like social slots games.

“While there is still a decent chance this year’s U.S. mobile game revenue will surpass 2021 levels, worsening headwinds have firmly shifted the conversation away from the question of by how much,” Ye said.

Overall content spending in Q3 reached $10.64 billion, a 7% decrease from $11.44 billion in 2021. Hardware increased 16% and accessories declined 12%.

Among the best-selling and most played games across all platforms in the third quarter were Among Us, Angry Birds 2, Bingo Blitz, Call of Duty: Warzone, Candy Crush Saga, Candy Crush Soda Saga, Clash of Clans, Coin Master, FIFA 23, Fortnite, Grand Theft Auto V, Madden NFL 23, Mario Kart 8, Minecraft, NBA 2K23, Pokémon GO, Roblox, Splatoon 3, The Sims 4 and Xenoblade Chronicles 3.

PlayStation 5 led video game hardware in both unit and dollar sales in the third quarter of this year.

“Improved supply of new generation consoles provided a much-needed boost to consumer spending in the third quarter,” said Mat Piscatella, games analyst at The NPD Group.

Piscatella said the increase wasn’t enough to offset lower content spending from a light release slate and macro factors impacting the video game consumer such as inflation and gasoline prices.

“PlayStation 5 and Xbox Series hardware each achieved double-digit percentage gains in consumer spending during the quarter, while new premium releases such as FIFA 23, Madden NFL 23, NBA 2K23 and Splatoon 3, among others, saw strong sales and engagement,” Piscatella said. “The market is showing signs of positive momentum moving into the holiday quarter. If the supply of new generation consoles continues to improve, more positive changes in performance may be seen.”

NPD: Consumers Plan to Spend Less This Winter Holiday Retail Season, Including Online

Ongoing concerns about the economy and inflation will negatively impact consumer spending in the upcoming winter retail season, according to new data from The NPD Group.

In the research group’s 2022 Holiday Retail Outlook, reflecting online survey results from 3,599 adult respondents, consumers plan to spend less on holiday shopping than they did in 2021, impacting most key categories. More consumers have negative perceptions of the economy and personal finances, the lowest seen in recent years, according to NPD.

Specifically, consumers plan to spend an average of $760 on holiday shopping this year. That’s higher than $691 in 2020, but below 2021 spending of $785.

Regardless, there’s good news for consumer electronics and entertainment categories. Both rank among the top 10 coveted consumer categories, with entertainment No. 4 generating $178 in mean individual consumer spending, trailing No. 1 consumer electronics with $765 in consumer spending.

Similar to other consumer surveys, most respondents will begin their winter holiday shopping over the Thanksgiving weekend, with Black Friday (Nov. 25) is still the top time for finding the best deals, followed closely by pre-November dates such as Amazon’s just concluded Prime Day promotion.

Notably, NPD contends that online shopping will see its first major decline this holiday season. The research group found that 80% of respondents plan to engage in e-commerce, which is down from 85% in 2021, but equals pandemic-impacted 2020.

Despite rising prices on nearly all everyday expenses, the U.S. consumer continues to spend on general merchandise products, according to NPD. Through the first nine months of 2022, retail sales revenue was just 2% below the elevated 2021 levels and 17% above pre-pandemic 2019 results.

Year-to-date unit sales declined 8% compared with last year. However, consumers’ appetite for product appears to be normalizing with demand just 3% below 2019.

“Throughout 2022, we have witnessed the stretching of traditional retail shopping periods and a flattening of typical retail sales peaks,” Marshal Cohen, chief industry advisor for retail at The NPD Group, wrote in the report. “The consumer’s here-and-now shopping mindset adopted during the pandemic, combined with enduring and expanding price elevation, has resulted in a careful prioritization of spending with a clear focus on needs.”

NPD: July Video Game Sales Declined 9% From 2021

Sales of video games, hardware and accessories fell 9% in July to $3.83 billion, from $4.17 billion in the previous-year period, according to new data from The NPD Group. Software sales fell almost 10% to $3.66 billion, from $4.06 billion a year ago, while accessory spending dropped 22% to $148 million, from $189.7 million.

Hardware sales rebounded 12% with revenue of $411.3 million, from $362 million a year ago, driven by sales of the Sony PlayStation 5 console. Total video game software spending through July is off 10% at $26.8 billion, from $29.7 billion during the previous-year period. Accessory spending is off 15% at $1.2 billion, from $1.41 billion. Hardware spending is off 7% at $2.49 billion, from $2.67 billion.

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Top 10 Selling Video Games July 2022

Rank Rank Last Month Title Publisher
1 NEW MultiVersus Warner Bros. Interactive
2 1 Elden Ring Bandai Namco Entertainment
3 2 LEGO Star Wars: The Skywalker Saga Warner Bros. Interactive
4 NEW Xenoblade Chronicles 3* Nintendo
5 11 Call of Duty: Vanguard Activision Blizzard (Corp)
6 4 MLB: The Show 22^ Multiple Video Game Manufacturers
7 6 Mario Kart 8* Nintendo
8 NEW Digimon Survive Bandai Namco Entertainment
9 10 Minecraft Multiple Video Game Manufacturers
10 12 F1 22 Electronic Arts

* Digital sales not included
^ Xbox & Switch digital sales not included

NPD: 71% of TVs Purchased Through April Were Sold at a Discount

Higher inventories, coupled with growing price sensitivity as a result of weakening consumer confidence, have given rise to a surge of TVs being sold on promotion.

From January through April 2022, 71% of TVs purchased in the U.S. were sold on promotion, according to new data from The NPD Group. This far exceeds the 18% of units sold on promotion for the same time period last year, as well as pre-pandemic levels, 59% of units in 2019. In fact, the share of TVs being sold on promotion during this timeframe is above holiday (Q4) 2021, 2020, and 2019 levels, based on a recent NPD Price and Discount analysis.

“After facing unexpected inventory challenges and high consumer demand, retailers are now finding themselves with an inventory surplus and are discounting TVs as well as products in other categories to move inventory out the door,” Paul Gagnon, VP, industry advisor for NPD, said in a statement.

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This sharp uptick in TVs being sold on promotion is not necessarily reflective of what is being seen in the consumer technology industry at large. While consumer tech promotional activity has begun to rebound from the lows seen in 2021, it remains below pre-pandemic levels reported in 2019. Through April 2022, 24% of total CE units sold were on promotion. This is up two-points from the same time period in 2021, but three-points lower than reported in 2019.

“Over the last two years consumers shifted their CE spend as they bought products when they needed them, whether it was ahead of typical upgrade cycles or at a higher price outside of promotional periods, as they had technology needs that had to be met due to pandemic lifestyle changes,” Gagnon said. “However, with a return to experiences and building inflation, a shift has begun back toward frugality. As a result, we expect the 2022 holiday season to look a lot more like pre-pandemic times, with higher rates of promotion to entice consumer spending in TVs and beyond.”

NPD: Ownership of Smart Speakers Grew 50% Since 2020 in the U.S.

In the past two years, adoption of connected devices in the U.S. saw steady growth with ownership of smart speakers up 50% and home automation products more than doubling, according to new data from The NPD Group.

In a new report, which examines changing mobile, TV streaming, and smart speaker technologies through a lens of interconnectivity, Port Washington, N.Y.-based NPD food that smart speaker owners are 35% more likely than the total market to own home automation devices, 26% more likely to own a streaming media player, and 21% more likely to own a connected smart-TV.

Smart-speaker owners also use device voice commands at a higher rate than other device owners — with 91% of smart-speaker owners noting they use the device’s voice commands, while only 72% of smartphone owners use voice control capabilities. This underlines the emergence of other smart devices, not just smartphones, as more ubiquitous and useful within the home ecosystem.

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“While two years ago the goal of ecosystem brands was to convert consumers who hadn’t yet adopted the technology, that has shifted to growing the existing base, which can be done by focusing on synergy among brands rather than strictly competing,” Eddie Hold, president of the Connected Intelligence practice at NPD, said in a statement. “As we look to newer categories like smart appliances, it will continue to become more important and mutually beneficial for brands to make products versatile enough to be embraced by owners of different ecosystems rather than trying to have a product in every category.”

Data for the report was collected between February and March 2022. Beyond the adoption of devices and the preference for varying brands’ ecosystems, the report also examines the demographics of those using these technologies.

NPD: Streaming Video Consumers Becoming More Price Sensitive

With a slew of subscription streaming video services available on the market, new data from The NPD Group finds that the cost of streaming has begun to impact consumer choice on SVOD platforms.

The Port Washington, N.Y.-based research firm found that the cost of streaming had risen to the No. 2 reason (from No. 4) for canceling a SVOD service. The data is based on online consumer surveys fielded from April 5 to 21 of more than 5,000 U.S. respondents, aged 18+ from diverse regions and demographical backgrounds.

Based on the study, consumers are also increasingly signing up for services based on promotional or discounted offers.

“In the last several months consumers have had to navigate rising prices in many facets of their lives and SVOD services are part of that mix with companies like Netflix and Amazon raising their subscription rates,” John Buffone, executive director, industry analyst at NPD, said in a statement.

Buffone said that while cost considerations in SVOD services are still dramatically lower than in cable and satellite TV, it is important for providers to recognize that price sensitivity is growing so they can adjust their offerings to retain their subscriber base.

Indeed, as of April 2022, promotional offers and discounted fees were more heavily influencing not only if consumers signed up for a SVOD service, but also their preferred method of sign-up (e.g., direct from the provider). In the survey period, the No. 1 reason cited for SVOD users signing up for a service was because of a free trial offering. At the same time, promotion/discount offers became the top reason driving preferred sign-up method, moving up four spots from October 2021 (among viewers extremely or very likely to subscribe to a SVOD service in the next six months).

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But while price and promotions/discounts play increasingly important roles, content remains critical to the consumer consideration set. Knowing that a specific TV show or movie was on a service drove one-third of SVOD users to sign-up, an increase versus six months ago, driven by younger viewers (up six percentage points).

“Consumers are creating a value equation to determine what services they ‘need’ versus those they cancel, especially as they return to experiential activities,” said Buffone. “For some consumers ad supported tiers can be a way to cut costs without losing access to content. As we look to the future — including potential AVOD offerings from Netflix and Disney — understanding the differing consumer value propositions will be key in determining tier structure and pricing strategies.”

When pricing tiers are available, survey results indicate that a customer who pays a premium for an ad-free experience is engaging with the service more frequently, with 28% reporting using the service every day or most days vs. 20% of the ad-supported subscribers reporting the same. Consumers who pay a premium for ad-free viewing also place significantly more value in content availability, exclusivity, search, discovery, and user interface, indicating they are a more engaged consumer.