Video game makers slam sales data

electronic_arts_ea_headquarters.top.jpgElectronic Arts has become increasingly critical of how video game sales are tracked. By Ken Sweet, contributing writer


NEW YORK (CNNMoney) -- The video game industry has decided to shoot the messenger.

Video game publishers such as Electronic Arts (ERTS, Fortune 500) and Activision (ATVI) say retail sales tracker NPD Group's monthly reports are misleading and potentially irrelevant.

The problem, say game publishers, is that NPD doesn't track software sold through digital outlets such as Microsoft's (MSFT, Fortune 500) Xbox Live, Sony's (SNE) PlayStation Network, or Apple's (AAPL, Fortune 500) iTunes.

"Using NPD data for video game sales is like measuring music sales and ignoring something called iTunes," said EA corporate communications executive Tiffany Steckler. "We see NPD's data as a misrepresentation of the entire industry."

NPD collects sales information for multiple industries, and the information is closely watched by industry officials, investors and the media.

Because of this, NPD and the video game industry have a love-hate relationship -- using the data in commercials when sales go well, and dismissing the data when it doesn't.

NPD analyst Anitz Frazier noted that NPD releases a quarterly report that addresses the digital side of industry.

"This is in addition to what we are best known for and that is our monthly reporting of new physical sales occuring at retail," Frazier said in an e-mail.

On Friday, NPD reported that video game software sales fell 8% in February. But that doesn't account for digital distribution, which the industry says is quickly becoming part of a new standard on which to measure sales.

It's been a big growth business for video game publishers. Electronic Arts reported digital revenues were up 39% year-over-year. It is forecasting that figure to climb to $750 million for its year ending March 31.

Nearly half of Activision's revenue comes from monthly subscriptions to games such as "World of Warcraft." When the company launches the next installment of its mega-franchise "Call of Duty," analysts expect that game to move to a subscription model as well.

"The growth part of the business is non-retail sales," said Arvind Bhatia, interactive entertainment analyst with Sterne Agee.

Online gaming is growing by leaps and bounds. Three-year-old privately-held Zynga, which publishes FarmVille and MafiaWars through Facebook, is said to have a market valuation of more than $8 billion.

But not everyone agrees with the video game publishers.

Wedbush Morgan analyst Michael Pachter said it's a "gross overstatement" to call NPD's data irrelevant, saying the industry is still heavily dependent on selling physical games and, so far, many publishers have missed the chance to capitalize on social media games as Zynga has done.

"EA saying physical game sales don't matter is like Best Buy saying television sales don't matter," Pachter said.

A significant percentage of that "digital-only" revenue still requires consumers to purchase a physical game, Pachter said. Even online-only games such as FarmVille are reliant on retail channels for at least part of their business. To top of page

Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Index Last Change % Change
Dow 16,461.32 -153.49 -0.92%
Nasdaq 4,382.85 -36.63 -0.83%
S&P 500 1,927.11 -14.17 -0.73%
Treasuries 2.26 0.03 1.35%
Data as of 9:28am ET
Company Price Change % Change
Regions Financial Co... 9.26 0.00 0.00%
Xerox Corp 12.21 -0.99 -7.50%
Oracle Corp 37.64 -0.71 -1.85%
KeyCorp 12.58 -0.05 -0.40%
Applied Materials In... 20.49 -0.29 -1.40%
Data as of Oct 22

Sections

Las Vegas might have first class shopping, dining and nightlife. But for serious gambling, head to Macau. More

Regulators are about to reveal the results of an extensive health check of Europe's top 130 banks, indicating which may need a cash infusion. More

Uber canceled its free rides with hot girls promotion in Lyon, France before it ever launched. More

Startups focusing on "ag tech," or agricultural technology, are gaining the attention of farmers and investors More

Dressing up in crazy costumes, traveling the world, posing for photos -- and getting paid to do it. Here are journal entries from a day in the life of professional "cosplay" character, Linda Le. More

Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.