June 19, 2019
Sales of video game hardware and titles dropped 11% to $641 million in May compared to sales of $720 million during the previous-year period, according to new data from The NPD Group.
The decline was spearheaded by 20% drop in consoles to $149 million from $186 million, and 13% drop in software sales to $262 million from $301 million last year.
It was the worst May for software sales in six years. Sales of accessories and game cards remained flat at $230 million.
Analysts contend the slowdown is largely due to consumers waiting for pending new edition – i.e. Microsoft’s Project Scarlett – consoles in 2020.
“Console makers will likely ensure that physical discs exist for at least one more console cycle, which could reverse negative comp trajectory,” Wedbush Securities media analyst Michael Pachter wrote in a recent note.
Indeed, Pachter doesn’t expect the next console cycle to eliminate physical discs altogether. He says consumers still value physical games for their portability, ease of gift giving and the ability to trade them in at retailers such as GameStop and Best Buy.
“Notwithstanding dire pronouncements about the imminent demise of physical media, our covered game publishers still sell over 50% of their console games in physical form,” Pachter wrote.