Wednesday, September 29, 2010

Why Does NPD Hate The Game Business: Calling Them on Their Bullshit Edition


NPD has a problem. Their value is based on accessing and protecting a data set while their access continues to shrink and the data points continue to grow. They like to tell us they are able to track physical game sales, but they do not have access to sales data from our biggest retailers. Until recently they never covered on line and when they did they found their previous reports were wrong. Now they chose to issue a report relating to the console DLC market when they have no access to sales data. I, along with any one who sat in a room with a publisher in the last year, have better information on the DLC market than they printed. Just in case their assessment of only 6% of the market actively downloading did not ring hollow to the publishers currently showing a solid return on DLC, they highlight:
"Internet connectivity is an important feature across multiple devices:
60% of e-reader owners cite it as their favorite feature"

Excuse me while I call them by their first name, boneheads, 100% of e-reader owners are buying 100% of their books via download and Amazon alone reported selling almost 50% more e books than hardcover.

Based on the report's citing of only 6% of consumers downloading content, the headline grabbed across the web is screaming "DLC is not working." An innocent reader may assume the number is the result of tracking - probably because NPD built its brand on accessing sales point data and tracking real sales - but it is really the result of a survey. Of whom? The consumer population. Does the overall percentage of the public matter, if our industry, and others, are profiting? The report indicates 75% of U.S. consumers aged 13 and older did not connect or download content in the previous three months. Who cares? 61% of Netflix subscribers download content, Apple distributed billions of apps, Kindle and Nook owners download millions of books - surpassing hardcover sales and in our little old corner of the world, consumers download millions of demos, millions of additional levels and millions of XBL/PSN only games. But they should not listen to me. Look at their own report indicating 50% of PC sales are DOWNLOADS. Enough sales are occurring in all of these areas to make each sector profitable. Measuring and reporting on the downloads as a function of population is akin to saying 100% of Chinese residents did not purchase an Xbox 360 game last year. They would be right, but we still have multi billion dollar console industry.

NPD's is acting like the bully in the school yard. They want the consoles to open up the stores to them. Nothing wrong with that. We want the same thing. If Microsoft and Sony released sales data publishers and financiers would be able to forecast sales and make commitment to build and expand the market. I can not tell you how many publisher meetings are dominated by anecdotal data and a bunch of fingers sticking up into the air trying to divine the winds of the download market. But I do not see publishers forcing the console companies' hand by publishing negative performance reports. Just like NPD's flawed report last spring, this report is read and misunderstood by financial analysts who value our companies based on future performance. If they read only 6% of consumers download, rather than the real percentage of console owners who are downloading and the number of dollars spent by those console owners, they could dramatically understate the value of our companies and our future. Thereby hindering access to capital and interest in the industry. If they do not believe me I am happy to allow them to sit in on any one of my meetings.

If you are not NPD, please click through to another page and your regular blogging will continue after this private note to NPD.

Fellas, wake up. You got our attention, but there is a difference between good attention and bad attention. Telling the word our market sucks is not a good way to encourage Microsoft and Sony to let you into their tents. Grow up, think, cooperate. We in the game industry are the hand that feeds you and you should not bite it. I paid thousands of dollars for your report. Not anymore, I am done and I am not alone.


2 comments:

Anonymous said...

It's really hard to follow along when I have no idea as to who or what NPD is - but I'm guessing who because of context.

A little background info goes a long way.

Anonymous said...

ever hear of google? http://www.google.com/search?sourceid=chrome&ie=UTF-8&q=NPD