Can we stop with NPD already?

When you’re into gaming and the industry to the unhealthy degree that I am, you like to know numbers. Numbers give a very simplistic, top down viewpoint on how well a game and by extension, the people involved in getting it to you are doing. If it’s a game I like by a company I want to see succeed, knowing it sold well brings a small grin to my face because it means that company gets to make more games and hopefully, more like the ones I enjoy. Unfortunately there has never been a wholly accurate way to track this data and new distribution methods are making the true picture even murkier. That doesn’t stop the click-happy press from trying though and the primary vehicle they use to do so is the monthly sales report from NPD Group, a research firm that’s supposed to specialise in this stuff. Like the myriad of analysts they love to quote with no accountability, every month a new NPD report comes out, gets regurgitated in the press with a bunch of uninformed predictions attached and the fans go nuts. The problem is, NPD’s report has actually gotten less and less useful over time but it’s still treated as a barometer for the health of the games industry and it needs to stop.

The NPD monthly report began a number of years ago, back when the only way to buy video games was in a physical form from a brick and mortar store. Even then it wasn’t great but it was certainly more accurate than now. As the industry has evolved and adopted more platforms and distribution methods, the report has failed to keep pace and their accuracy and usefulness have waned. Media outlets and game companies pay NPD a lot of money for it though and they have continued to push it in order to keep those subscription dollars rolling in.

This wouldn’t necessarily be bad as any data is better than none but the press never puts the increasing blurriness of NPD’s data into context and it’s still taken by many gamers (and the analysts looking to get quoted) as the true gospel. Right now, NPD numbers month over month are going down at a rather alarming pace, causing many to think the AAA games industry is in free fall. While it’s certainly not healthy and game sales are indeed down, using NPD data alone as a source of industry health is wrong and frankly, the kind of bad journalism that’s stinking up the enthusiast press. The big story this month is how Darksiders II apparently posted very disappointing sales numbers despite being the #1 title on NPD’s list, causing many to go into a panic since this was one of the games that was supposed to secure ailing THQ’s short-term future as they attempt to restructure and save their business. The problem is, the current state of NPD’s report itself makes most of this panic unwarranted, at least for now.

To get an idea of just how messed up NPD’s data is, here’s a few points of note:

  • They only collect data about game sales in the United States. Some different charts are kept on a few other countries but they’re from other companies and are never included.
  • They only count sales from brick and mortar retail stores and don’t even count all of those. Most independent retailers are not counted and Wal-Mart (the biggest retailer in the world and I believe second in game sales only to GameStop) was just added recently.
  • They don’t count digital distribution sales in any credible way. Most digital distributors (including Steam which is to that market what GameStop is to brick and mortar) don’t release sales numbers to anyone but the publishers they partner with. NPD very recently started providing guesses of these numbers but they have no idea what the true ones are. Given that almost all PC games are sold digitally now (with many other platforms entering that space as well), this is a critical and glaring omission. This is why there have never been NPD numbers for Xbox Live Arcade or PlayStation Network downloadable games and why they don’t cover the mobile market.
  • The only numbers released to the public are the console hardware sales and a top 10 list of games which isn’t broken out by platform. NPD used to put out more detailed stats and then distilled them down further. While AAA titles generally live or die by their first month sales, catalogue sales are also important but will never be in the top 10 if they aren’t Call of Duty, Nintendo or Blizzard games. THQ was actually profitable last quarter despite having no new releases at all because their catalogue sales were very strong. Some titles can indeed have long legs but the report doesn’t tell that.
  • Their sales numbers don’t take into account release dates. If a game comes out with only 5 days remaining in a month, it’s obviously not going to sell as many units in that reporting period than if it came out with 25 days remaining in the month. Some press discuss this but many don’t, nor do NPD themselves, electing not even to put release dates in their charts. These are critical for proper context of sales in a given month. Which flows nicely into my next point…
  • Their numbers are always released without context. They currently say overall sales are down year-over-year and while that true, some of this can be attributed to fewer games releases from big publishers as they are devoting resources to next-gen projects and taking fewer risks with what’s left in this generation. They also fail to mention how sales of most luxury categories are down across the board because the world is still in a massive recession that’s worsening in many places. That one or two outliers like Apple and Samsung buck the trend does not invalidate it. This isn’t entirely NPD’s fault. It’s the job of those reporting the numbers to provide context and most are not.

The point is that this particular NPD report (which is the only one from them I can speak to) is hurling towards irrelevance. It’s numbers have never been wholly accurate but as the industry evolves and shares less data with them, they become even fuzzier. NPD is very careful to not point this out and the enthusiast press is doing the same because the doom and gloom stories they write with them drive traffic and controversy. There’s a reason the more credible sites like Giant Bomb don’t really talk about them, despite the most ravenous fans being there. Continuing to use this report (and the analyst quotes it spawns) as any kind of true barometer of the industry’s health is poor journalism, nothing more.

On the subject of Darksiders II, it’s premature to sound THQ’s death bell over these numbers but it is important to note that just because NPD’s report is not wholly useful doesn’t mean the game is doing great and we just don’t know. Publishers love to send out press releases when titles sell even as well as expected and that hasn’t happened yet. Ultimately, the best place to tell how well this and indeed every title has performed will be in the publisher’s earnings call. They may not reveal exact sales numbers but we will know if it met, beat or fell short of expectations. Until the companies for whom these sales truly count have their say, anything NPD says really doesn’t matter any more.

This is a two pronged problem, both in the NPD report itself and once again, the enthusiast press which falls asleep on their responsibility to provide context in order to aid sensationalism. There’s a reason you don’t see stories in the mainstream press talking about the next video game crash every time one of these declining reports come out. It’s partly because NPD numbers aren’t a huge deal outside enthusiast circles but also likely because their report doesn’t pass the smell test. When it’s easy for a total non-journalist like me to realise their data is a joke, what excuse does the actual press have? The publishers are not the best place to get accurate sales data either but whether they’re in the red or in the black is a better barometer for the industry’s health than anything NPD says. If you want to know how things are doing, read an analysis of publisher earnings. Don’t listen to NPD, don’t listen to the stories about NPD and especially don’t listen to the likes of Dent, Pachter, Broussard, Sebastian and all the other analysts who use them as a basis to get their names noticed and know no more or better than NPD themselves.

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