May NPD Results: A Closer Look

At the gaming industries big convention, E3, a lot of the buzz was software driven. The chatter and talk was about the games on the horizon.  Who’s building what, how well it plays, how fast, and how fun.   Looking to last month, the industry didn’t generate the same kind of excitement in the retail stores during May.

According to the latest batch of retail data released Thursday by tracking firm NPD, sales fell off 23%, to $863.4m on the month.  It was the third month of declining sales activity and the first month the industry turned out a revenue result below $1b in total since August of 2007.

Normally at we publish a review of the NPD findings right away. This month, we took a few extra days to give it a closer look.

May is a historically weak month for games and to a certain extent, some weakness was expected.  NPD and a number of industry analysts had largely predicted a down result.   They note that year over year comparisons in the industry often don’t match because of differing product supply levels and the variable scheduling of when hotly anticipated new software releases hit the market.   One year could be boosted by a just released blockbuster (like last year) while another coasts on solid (but not comparable) sales of older catalog hits. 

In May, those cyclical elements and the quality of one year’s slate versus another were surely in play, but we think there may be clues in the data that show the results are a little more complicated.

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E3 2009: Controller-Free Gaming? Microsoft Motion Control: Project Natal

3d gesturesIt’s hard to call the Beatles an opening act.  But if the Paul McCartney and Ringo Starr assisted demonstration of the Beatles Rock Band game was the warm up, than Microsoft’s demonstration of new motion control technology was the headlining main event at the company’s E3 Press Briefing. 

Monday morning, Microsoft showcased what it’s calling Project Natal.  The subject of years of rumors, and longstanding speculation, it’s a technology that takes the unfulfilled dream of Sony’s Eye Toy and makes it real.   It’s cameras and computer interaction in ways we’ve only seen in movies.  It’s nothing short (in potential) of spectacular.  (see video embedded below for demonstration)

To quote Steven Spielberg who was on hand to help with the reveal, “This is a pivotal moment that will carry with it a wave of change, the ripples of which will reach far beyond video games”  

To put it to imagery, picture the gaming interface of Nintendo’s Wii, without the need of a controller.  Picture a user interface that recognizes and responds to a person’s movement and environment.  It’s a computer with sight (and ears).

Want to fight Sugar Ray Leonard or Muhammed Ali in a boxing game? Test your mettle against an Ultimate Fighter without the bruising and bone breaks? Make a fist and swing your hands through the air. Click to Read More

E3: Beatles Rock Band Details Out, and GH5 Band List too

DJ Heroes, country tracks, sequels and spinoffs, the fall and winter of 2009 are sure to be a busy season for music-based video games (not to mention a big test of the genre’s staying power in the face of significant brand dilution).  On September 1st, there’s Rock Band 5 (see Artist list below), then there’s DJ Hero, Scratch: The Ultimate DJ, Lego Rock Band and more.  There’s something for different ages, and for fans of different genres, for everyone, maybe.  But far and away, on many lists at least, the most anticipated curiosity to grab the limelight and grace the marquee will be the Beatles: Rock Band.

First announced in November, the game was (in a way) years in the making, decades even, if you truly count the permission challenges necessary to get the Beatles song catalog authorized and approved for digital remastering and release. iTunes didn’t get it nor did Amazon Mp3. The first Beatles tracks to legally cross the digital divide will be in a game that EA, MTV Games and Harmonix managed to tie up.

Little by little details have been trickling out.  The producer’s behind it. Teasers about the concept. Images of instruments and a release date. Today, just before the official kick off of the gaming industries monster trade show, E3, Microsoft pumped up the buzz with the biggest data dump yet.

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Blockbuster Adds Detail to Mail Order Game Rental Plan

In February, Blockbuster announced plans to roll out a pilot program for mail-order video game rentals sometime in the second quarter.   It was confirmed that this would be an add-on to the company’s “Total Access” movie rental program, not a standalone offering, but otherwise details were sparse. Today, Blockbuster provided an update. The company said in a statement that a pilot of the game rental service will begin June 30th in Cleveland. 

Subscribers opting-in to participate will be able to add Wii, PS2, PS3 and Xbox 360 games to their online rental queue for an incremental monthly fee.   The fee, which hasn’t been disclosed, will only be charged for billing cycles in which the customer actually rents games.

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38 Studios Swallows Up THQ’s Big Huge Games

38 studios bhgAs a pro baseball player, Curt Schilling made his mark as a starting pitcher.  Though there were a few transitional years early in his career spent as a reliever, over twenty years, the majority of time he entered a game, it was from the beginning.  Schilling started 436 out of 569 games. In his second career as a gaming entrepreneur, he doesn’t appear to have any qualms about coming in off the bench.

With financial troubles (see sidebar below) pushing THQ to cut more staff and studios, Schilling’s upstart game company 38 Studios was more than happy to acquire THQ’s online role playing studio, Big Huge Games.

Big Huge Games (BHG) was founded in 2000 by a veteran group of PC game developers.  The Maryland based studio’s early works were published by Microsoft Game Studios.

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April NPD Data Out: Gaming’s Monthly Report Card

You can chalk up April as a poor month in game sales (sort of).  Matching up to prior predictions, NPD reports the US video game industry returned a second month of double digit sales decline in year over year comparisons.  Revenues fell off 17% year over year.  The year over year growth rates don’t quite tell the whole story, however.

As was partly the case in March too, without the breakout success of hits issued during the same period last year (Mario Kart and Grand Theft Auto IV), the growth numbers were doomed to be weaker. 

Explains NPD’s Anita Frazier, “while April sales might appear soft on the surface, it’s important to remember that April is being compared against a month (2008) that realized nearly 50% growth over April 2007.  This year’s performance still represents the second best performance for the industry in the month of April.”   This year beat out the previously second best April, April 2007, by 26% percent.

Setting aside the year over year growth rate, overall, the month’s performance was reasonably sound.   NPD tabulated total sales of $1.03b.

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Creditors Attack Midway’s Board and Redstone in New Litigation

midway debt clamp metueBankruptcies are rarely a lender’s friend. They’re a worst case scenario that often means a best outcome of pennies returned on the dollars of investment.  Midway Games ongoing bankruptcy process has been a demonstration in point.  Triggered by debt covenants and a sketchy transaction, the proceedings have been riddled with confrontational debate.   The rancor’s even spilled over into a counter suit.

Monday, creditors filed suit against the company’s board members, former majority owner, Sumner Redstone, and the buyer of Redstone’s shares, Mark Thomas. The creditors are charging Redstone with fraudulent transfer, and accusing him and others of breaching their fiduciary duties.

Everything stems from Redstone’s firesale giveaway of his Midway holdings in November.  Parting with 87% of the company for merely $100k gave Redstone and his affiliated holdings more than $700m in tax losses which created a massive tax write off.  That write off, Redstone’s gain, creditors argue, helped shore up the finances at Redstone’s National Amusements but put Midway into a tailspin.  

“The transaction caused Midway irretrievably to lose the ability to take advantage of its valuable accumulated net operating losses and other tax assets,” creditors say.

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