NPD: Publishers have overcome the "fear and trepidation" on digital data

Last summer, we spoke with The NPD Group about its plans to begin tracking digital game sales. While the firm does incorporate the impact of a growing digital market into its total spend reports, the industry, the press and the public have yet to see real digital data transparency. That, however, should be changing in the near future, NPD games group president David McQuillan told GamesIndustry International last week at the DICE Summit.

"We actually did deliver our first database to the participants in December. I can't share the particulars of who is in [the group] but from my standpoint it's huge progress for us, because we're delivering SKU level information. The same way you see the information on the physical side of the market today, we're delivering that on the digital side of things. So people will see full-game downloads and DLC at the most granular level possible," he said.

NPD is working in partnership with the researchers at EEDAR to flesh out all aspects of its digital reporting, but don't expect much detail on the mobile games market at the outset.

"When we sat down with the participants, which was a year ago at DICE, we said to them, 'This isn't so much about NPD's market coverage, it's about what you guys need.' We asked them where they want to get started... and the recommendation we had was console, PC, and global. We did talk with them about where we would expand next beyond that and I thought they might go down the path of saying mobile or social, and pretty much across the board the answer was we want to get started in the US [with console and PC] but then go global," McQuillan said.

NPD noted that one of the participating publishers said the level of data NPD now has access to on the digital side is roughly equivalent to the level the company had when it first started tracking point-of-sale games data at retail years ago.

"We're not sitting still with the group of participants that we have. We're having conversations with everybody, big or small. We want to have as robust coverage as possible"

David McQuillan

While the media is eager to start seeing digital sales reports, NPD analyst Anita Frazier said that the company must first concern itself with satisfying its clients.

"Ultimately it's our goal to have the same kind of coverage and visibility for the external parties that we have today on the physical side. To get there, though, we have to serve the clients first. And just to hear their excitement about the applicability and the benefits that they can apply this data to make their businesses healthier and the industry healthier it's so exciting because it's exactly what we knew needed to happen but there was an emotional barrier - similar to what happened when we first started covering retail. There was a barrier there too. Retailers were initially hesitant to give out their sales data but it's just a matter of time for people to get comfortable with it. They saw the data and the world did not end!" she remarked.

Indeed, the anxiety surrounding digital data appears to be fading, McQuillan added. And that's made NPD's work much easier in recent months.

"It's not so much the fear or trepidation now. That's what we faced a year ago. We worked out the individual agreements with the companies," McQuillan said. "There was one guy at a publisher who said, 'I can't wait to see everyone else's data but do they really need to see mine?' As he said it, he laughed, so there's this process of overcoming the hurdle to realize there's more benefit than loss in being able to do things everyday on the business side. The feedback we got was they can now benchmark, they can forecast better, they can look at how other people are pricing for DLC, when are they dropping it, how much are they putting into the market - kind of all the who, what, when, where, whys that they can already do on the physical side of the market today. You always want to have as much information as possible, so if you can benchmark against a competitive title, it's just by default going to give you better analysis."

He continued, "So the fear and trepidation is something I feel like to a large degree we've overcome and now it's more about getting the clients the opportunity to really mine the data and understand it and get comfortable with it and understand how we want to code and categorize things, all of that, and that's the reason why we did what we did in getting the service started, which is 'let's work on this together' rather than us just doing it based on what we think is best. Let's do it in partnership. And they said, if you can categorize the data this way it'll be easier to use, will require less manipulation in order to get it to the level that we want it, so it'll be a learning process that we'll go through over the next couple of months. We're not sitting still with the group of participants that we have. We're having conversations with everybody, big or small. We want to have as robust coverage as possible."

Interestingly, when it comes to data transparency, the video games industry is one of the most secretive. McQuillan feels that's slowly changing, especially as more and more people from other packaged goods industries enter the games business.

"For those guys, the granularity they got on all the channels through which they sell, it's like breathing, it's like air. They just take it for granted. So when a lot of them came over to the entertainment side, they said 'where's the data?' So we're starting to see that in games as well - you get people coming over from traditional packaged goods and we're seeing that now within games. Everything that's happening now I believe is momentum. The industry is growing overall, retail is on the rebound, and I think it's always going to have an important place."

On that note, especially given the rise of digital and NPD's tracking efforts, we pushed McQuillan on just how relevant retail game sales will be going forward. He didn't hesitate: "To me, I don't see retail going anywhere, anytime soon... There's kind of a perception that the growth in digital is coming at the expense of physical. There was a decline in physical last year but a lot of that had to do with the fact that it was the end of the console cycle and there wasn't a ton of new content out there. People were buying digitally but you can't translate that as substitution necessarily."

"The majority of people we've asked [in our consumer surveys] have said, 'No I'm not spending less on physical because of digital activity.' Anecdotally, my boys are 17, and so they are in that digital, instant gratification generation, and I asked them if they've been downloading instead of retail and they said no. I think a lot of it has to do with the physical trade-in because they can take it back and it fuels the next purchase."

So when will digital data finally be in the hands of the public? McQuillan unfortunately wouldn't commit to a firm date, but NPD is working towards an ultimate goal of weekly reporting.

"We're going to move in the direction that the industry wants. And what the industry has said that's loud and clear is that they want coverage that's on a global basis, and it's physical and digital (including full games and DLC), and especially on the digital side they want it to be weekly. Will we go from zero to a hundred? Probably not. It's going to be a gradual build, but we're so excited about the progress we've made over the last year," he remarked.

"When we were sitting here at DICE last year, there was no visibility and now there is. Granted, it's not out in the public domain yet but we got over a huge hump. A lot of times the hardest thing is just getting started and then the momentum is just kind of contagious. There's a good deal of movement at the publishers in terms of people who were working at one company and now are at another, so if they're used to having it at one of the participating publishers and then they go somewhere else where it's not available it'll just fuel the momentum."