Inside the business of children's digital media

NPD study: Are we making room for a gaming boom?


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Earlier this month, Disney reported that its Interactive division saw a 26% jump in full-year revenues, largely due to sales of its new toy-integrated Infinity game. And it looks like that kind of demand for new physical games, along with digital and downloadable content, is driving the largest videogame industry growth in two years according to The NPD Group, which today reported that US$3.4 billion was spent on gaming content in the US during the third quarter of this year, a 17% increase over 2012.

According to the report Q3 2013 Games Market Dynamics: U.S., on top of the US$1.30 billion spent in the US by consumers on new physical video and PC game software from July to September, the total consumer spend on other physical forms of content (used and rental) reached US$436 million, and content in digital format (full game and add-on content downloads, subscriptions, mobile games and social network games) generated US$1.72 billion.

This is a stark contrast from the 19% sales decline the industry experienced over the summer. The double-digit growth in content spending stems from a 20% increase in spending for new physical games coupled with a 35% growth in digital full games and downloadable content. These two acquisition types combined to create a total of close to US$1.98 billion in consumer content spending compared to the US$1.59 billion generated last year.

NPD analyst Liam Callahan says this rise is not typical for the third-quarter and is more usual in fourth quarter findings.

“The launch of Grand Theft Auto V occurred in this quarter and helped increase new physical software sales.  That rise, coupled with the growth we have been already seeing in the areas of digital spending, caused an overall increase in content spending,” he says. “It is a very positive sign. As we move into the holiday months, we have seen the past three months all have increases in software sales year-over-year. And now we’re entering the holidays with the Xbox One and PS4, which are expected to help improve the health of hardware sales as well as support software sales.”

Christmas has already come early for Disney. The August debut of Disney Infinity has helped the House of Mouse’s Interactive division reach full-year revenues of US$1.1 billion, according to the company’s most recent financial report. Disney Interactive’s third quarter revenues were up more than 100% from US$191 million in 2012 to US$396 million. During the three months before Infinity, Disney Interactive saw a 7% dip in revenues to US$183 million, and was up overall only by 2% for the first nine months of the fiscal year. Helping drive down revenues was a lack of console gaming releases during the period.

With the rise of Infinity and its direct competitor Skylanders, NPD has begun categorizing these sales as Interactive Gaming Toys within its accessories category. And the firm is paying more attention than ever.

“Disney infinity was a factor in this overall sales boost in the sense that the sales from their interactive toys helped offset some of the declines we were seeing elsewhere in the accessory category,” says Callahan.

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