No, ESA, It’s Actually the Industry That’s Hurting the Industry

As David Lynch said, keep your eye on the donut, not the hole.

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Active Play Video Game Evening Reception
Kris Connor / Getty Images

Michael Gallagher poses for photos during the Active Play Video Game Demonstration at Smithsonian American Art Museum & National Portrait Gallery on April 30, 2012 in Washington, DC.

Joystiq is reporting that Entertainment Software Association president Michael Gallagher took aim at retail game sales tracker NPD last night, calling NPD’s monthly reporting a “disservice to the truth.” NPD compiles all sorts of monthly data about what it refers to as “new physical” video game sales, a fraction of which it releases publicly on a monthly basis, broken into categories like total sales, hardware, software, accessories and a list of ranked software bestsellers.

But one thing it doesn’t include in those reports is digital sales, from online subscriptions and full digital downloads to downloadable add-on content, in-game purchases and more. Instead, NPD releases somewhat vague quarterly reports on the digital side of the industry and somewhat schizoid overall industry reports at year’s end that everyone — even NPD — agrees aren’t entirely representative.

“The digital side of the industry is not being adequately reported, understood or covered,” added Gallagher. “I think we’ve seen the consequences of that over the last two years.” He’s referring to, well, it’s not clear, but presumably his belief that the industry’s downward performance slope has something to do with NPD painting a gloomy ongoing picture of late.

The trouble with Gallagher bad-mouthing what NPD does, aside from being self-serving — Gallagher is the industry’s appointed cheerleader – is that it fixes the burden solely on a company that depends on the openness of that industry to do its job. As we’ve seen time and again, industry players talk when they’re doing well and clam up when they’re not. The games industry, like any other, wants to control the message, which usually means jettisoning transparency and accuracy if the data can’t be spun positively.

Before digital sales came along, NPD scraped much of its information from the retailers themselves, say GameStop, Walmart, Target, Best Buy and so forth, circumventing tight-lipped publishers and looking at actual sales activity (granted, some of that based on retailer estimates). But with direct digital sales, purchases occur behind each publisher’s walled garden. Accessing that information requires, well, access, and publishers weren’t giving it until relatively recently, and even then, as I understand it, it’s been a very tricky thing.

Assuming we think it’s important that sales figures be public and periodic in estimating a company’s performance, the real recipient of Gallagher’s ire should be the industry itself for failing to divulge sales information (or spinning what it does). But also the media, for consistently reporting NPD’s monthly figures too often devoid of contextual information about digital sales. We can blame the messenger, but NPD burying these reports would only further obscure the landscape. NPD’s been careful to contextualize what it releases as only partially representative. If the world views the games industry as “flat” because that’s what’s happened on the retail side while digital’s been growing, it’s really the media’s fault, not NPD’s.

Gallagher’s right about this much: the digital side of the industry isn’t being adequately reported on, understood or covered. And forget about what Microsoft, Sony and Nintendo aren’t telling us — who’s periodically (and accurately) aggregating what’s happening on smartphones, tablets and other newer, nontraditional platforms?

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