U.S. Casual Gaming – only $52 million?
A report from NPD came out today putting overall [US] PC game sales at $1.4 Billion. This is MUCH higher than their last estimate, issued just a few months ago, showing [US] PC game sales at only $953 million, off 14% from the year prior and about 50% from their peak around 1999.
But wait, the new report is different. For the first time, they include on-line and downloadable revenue, which is big and growing. They estimate game subscription revenue (i.e. MMOs) at $292 million. I can’t speak to that figure one way or the other.
But they also estimate 2005 sales at casual gaming sites (Pogo, Real, etc) at only $52 million in 2005. That seems VERY low to me. I had done a seat of the pants estimate of the biz at about $200 million a few months ago. That was based heavily on Real’s publicly reported stats, and some extrapolation from that to the whole industry.
Now I’ve just looked up in Real’s annual report, and in 2005, they did $56 million in game revenues (up 63% from the year prior). Real’s figure is worldwide, but they’re US based and focused, and the vast majority of their sales are in the US.
So we’ve got one portal at probably ~$45 million+ [US]. I just don’t see how they only got to $52 million for the whole business in the US. I’d like to see the full NPD report and methodology, but color me skeptical…
May 25th, 2006 at 12:07 pm
I agree, that sounds way too low.
Okay, let’s see… The $56m comes from RealArcade, GamePass (which would presumably be classified as subscription), GameHouse, Zylom, and Mr. Goodliving. I have no idea how much GamePass brings in. Gamehouse was $10m in 2003, and predominantly U.S. I’d imagine. Zylom is ~$8m and mostly in Europe, it’s safe to say. Mr. Goodliving was expected to add $3m to 2005 revenue at the time of the purchase.
Overall Real gets 77% of their revenue from the U.S. A highly conservative estimate, I think, would be $25m for casual games in the U.S. And that would give them 50% market share. I don’t think so.
May 25th, 2006 at 12:27 pm
A quick addendum for clarity:
RealArcade (minus GamePass) and Zylom get most or all of their revenue from actual game sales AFAICT. Gamehouse is a mix of sales, advertising, and mobile games. Mr. Goodliving is all mobile games.
May 25th, 2006 at 12:45 pm
Phil, I have to agree with you on this estimate. For so long the casual, and serious game industry has not been considered in estimates that it will take a fw years before the numbers start showing realistically.
May 25th, 2006 at 6:52 pm
Gamasutra shows the $52 million as being revenue from subscription services, which would mean that non-subscription sales were not broken out. It would be a good explanation.
http://www.gamasutra.com/php-bin/news_index.php?story=7832
May 25th, 2006 at 7:09 pm
I think this is the relevant Gamasutra link:
http://www.gamasutra.com/php-bin/news_index.php?story=9455
Yes, $52 million in casual subscription revenue is more sensible, but then, if that’s what NPD was estimating, they’ve missed the presumably bigger part of the industry – casual game downloads.
I went to NPD’s site looking for the press release these articles were based on, but couldn’t find it.
May 25th, 2006 at 7:33 pm
Yeah, $52m, 1.05m subscribers — sounds about right.
However, take a look at http://tinyurl.com/kpusf: “NPD analyst Anita Frazier said digital downloads appeared to have contributed about 3 percent of total PC market sales in 2005, which would amount to about $42 million.”
All I can figure is maybe that’s a measure of conventional retail games electronically distributed.
May 26th, 2006 at 1:31 pm
Phil, this is the npd press release:
http://www.npd.com/dynamic/releases/press_060525.html
It doesn’t contain more info though.
May 26th, 2006 at 4:09 pm
OK, now I see.
NPD’s wording is really sloppy, which is why I imagine some of the news sites got it wrong.
At the beginning of the linked article, they say, “online subscriptions to PC games and gaming web sites were estimated to account for $344 million” – clearly talking about subscriptions.
Then they break that down to $292 million for ‘game-specific subscriptions’ (i.e. MMORPGs), and $52 million for casual [subscriptions]. But the sentence they use to describe the latter is somewhat misleading
“According to the research, paid casual gaming sites, such as those allowing users unlimited play of a variety of games from services like Pogo.com or RealOne Arcade, reached sales of $52 million in 2005 with about 1.05 million paid subscribers”
And the CNN article just shortened that to $52 million in sales for casual sites, rather than $52 million in SUBSCRIPTION sales for those sites (with presumably a rather larger figure for the more traditional, digital download sales, which are NOT mentioned in the NPD press release).
It’s odd – NPD is finally paying attention to casual game sites (sorta), but they’re only looking at the smaller segment of that market (subscriptions), rather than the more meaty ‘download and sell for $19.99’ category.
Oh well…
May 30th, 2006 at 1:57 am
All of the analyst community is struggling to get a handle on what ‘online’ means, and it’s hard when the target keeps shifting. This was a step in the right direction for NPD, and hopefully they’ll improve next year with feedback.
June 6th, 2006 at 10:47 pm
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November 3rd, 2006 at 8:33 pm
There are many errors in their calculations (omitting advertising, not a good understanding of Real’s business model) and the sample size of the survey is small – so I would not use this number at all