Nintendo DS and PlayStation lead video game industry collapse; What the toy industry can do

Terrific information, and food for thought. Thanks Richard.

As someone who's involved on both sides of the equation (I design both digital and boardgames), I agree that sales of traditional boxed retail games are dropping precipitously at the same time that board and card games are undergoing significant growth. That said, I'd argue that the NPD figures on which these statistics are based no longer show the whole picture of the videogame industry like they used to. There's been a huge surge in sales of second-hand video games, for instance, a business that more and more retailers are getting into and that aren't covered by NPD. Likewise, the direct sale model is booming, particularly on PC (led by Valve's Steam service) but also on the consoles and through other downloadable channels - again, these aren't included in the NPD numbers. Subscription games, including massively multiplayer titles like World of Warcraft, are also on the rise and not tracked by NPD. And then there's the casual game and microtransaction movement you've alluded to, whether it's via the app store or other channels. Overall, despite the precipitous decline in the boxed retail sales tracked by NPD, I'd argue that the overall consumer spend on video games is very healthy and potentially higher than ever - it's simply far more fragmented and harder to track on an industry-wide basis than it was previously. Physical toys and games can definitely benefit from this fragmentation but I attribute their recent growth more to other factors than to the decline in sales for boxed retail video games (although I'd agree that the datasets are related in some fashion). One factor has been the recession-related nesting instinct and staycation movement which has placed a greater emphasis on shared family activities (helped, no doubt, by Hasbro's heavy advertising of Family Game Night - a rising tide that has helped float a wide range of boats). Another is the growing realization that boardgames, in particular, don't have to be targeted solely at children and that there's a viable adult market for them. The third is the changing face of retail and the movement of boardgames out of "cave retail" outlets and into more accessible, upscale environments such as bookstores. I'd argue that the more important relationship between the two industries is that video games, with their flashy graphics and huge marketing spends, are doing an excellent job of opening up new markets to the notion adults engaging in play.

Great info Richard! I think we can largely attribute the decline to the "App Revolution" which has redefined both the platform as well as the price/value relationship of games...why pay $30 or more for a DS game when you can upload one to your iPhone/Pod/Pad for as little as $0.99...what I like to call "Impulse Gaming." It's only a few dollars...why not give it a try? Major game developers like EA and Capcom are bringing their franchise titles to the mobile landscape, and fetching some of the higher price points for apps ($9.99 for Street Fighter 4). While many of these are stripped-down versions, they still deliver a full gaming experience and great value...and help to drive sales of the console versions. This new platform is simply delivering high quality for a substantially lower price...big titles such as God Of War, Call Of Duty and Zelda will continue to drive "traditional" platforms, especially as they are released alongside hardware extensions and/or bundled, but developers must acknowledge the new face of gaming and take note of how apps are created and marketed (PopCap's "Plants VS. Zombies," anyone?)