Games Are a Struggle for Hasbro, Zynga, Nintendo and Microsoft; What Does it Mean?

Richardglobalheader
Zynga
Game sales, across all categories, appear to be struggling
Consider the video game industry; it continued its decline with NPD announcing that June retail sales were down by 29 percent for game hardware, software and accessories.  That is the seventh consecutive month of decline.  Xbox sales were off by approximately a third while sales of Wii were down 50%.

11875-nintendo_logo_superThe gaming industry has been in decline for a while so those figures were not a particularly big surprise.  What was a surprise and a mystery to many was the decline of online gaming sites.  Consider Zynga, the creator of popular sites:   FarmVille and CityVille.  Paying visitors are down and those who follow the company's stock aren’t sure why.   A Boston Herald article, “Game maker Zynga stock tanks after weak 2Q report,” puts it this way:  “It’s not clear if this means people are growing tired of Zynga’s games, of Facebook games in general, or if they are just not paying as much for virtual cows and poker chips as they used to. Zynga offers its games for free and makes money when players buy those virtual goods to enhance game play. “

ImagesCAOYXPO2Board games sales, at least at Hasbro, continue to struggle as well.  According to Bloomberg News in an article entitled, “Soft game sales weigh on Hasbro's 2Q earnings,” Hasbro’s game business was off 8% for the quarter.

So, what’s going on?  Here is what I think.  The good news is that more and more people are playing games.  Board, video, on line and mobile games now make up a spectrum of ways to play.  The bad news is that the expanding gaming population, while bigger than ever, is simply not large enough to support all the gaming platforms available.  All platforms have their core users but each new generation of players and platforms seems to create a migration that deflates sales in one category while exploding in another.

Right now, it appears that the most likely reason for these declines is that mobile gaming is the hot platform and consumers (particularly younger consumers with good eyes) are taking their time and


dollars to a system that is always with them.  That is costing Microsoft, Zynga, Nintendo and Hasbro.

Those of us on the business side of games see these different platforms as somehow divorced from each other; each in its own silo.  Those who play games don’t see things that way.  They just want to play great games no matter how they are delivered.

 

4 thoughts

  1. 2 words: Too Expensive. Parents looking at older consoles and a useless stack of games that cost them $50 bucks a pop are not going to be inspired to go through that again w/a new incompatible console that is marginally better. There are tons of free games online-all the tv sites and toy product sites have them. How are they pricing the mobile apps? Cheaper? Board games are hard to store and are not as exciting to our over stimulated kids-so why bother when your whole game budget is buying the new hot game for the family to share for a few months at a time? Parents are over worked and do not have time to play the board games w/their kids. Mobile apps do not require a special easy to lose console(parents keep close track of their phones!) w/expensive teensy easy to lose games(DS). So there you go!

  2. I believe there’s another factor: the amount of time gamers are spending on a single game might have increased recently, taking away from the time those gamers would be playing other games. Minecraft, for example, is a phenomenon, the most absorbing game in a decade, and the time gamers spend on it is money out of the pockets of their competitors. I speak from personal experience as my sons and their friends have abandoned almost all other games except Minecraft for months now.

  3. SPECIFIC TO THE BOARD GAME SEGMENT ONE CANT IGNORE THE LACK OF INNOVATION COMING FROMT HE MARKET LEADERS OVER THE LAST SEVEREAL YEARS AS THE PRIMARY CAUSE FOR THE DECLINE. HOW MANY VARIETIES OF ELEFUN AND OPERATION CAN THE MARKET DIGEST…..MAKERS THAT INNOVATE IN THIS AREA WILL SUCCEED WITH FRESH QUALITY GAME PLAY!!!

  4. If you look at the NPD gaming numbers, yes, there are a number of declines, and declines for a number of months in a row now. This is to be expected with a number of aging consoles. It happens in cycles, just like it did about six years ago. Aging consoles result in slow software sales, the two are closely connected. However, the bright spot in NPD gaming numbers is digital downloads, that’s gaming apps for mobile devices as well as online gaming centers from the likes of XBox online for example. As gaming interests continue to shift towards mobile, without new innovation in the console market, the sales will continue todecline in all sectors except digital downloads.

Leave a Reply