Video game sales slide continues
June gloom hit the video game industry hard, knocking sales of games and consoles down 6% last month from a year ago as anxious consumers kept a lid on spending.
The game industry rang up $1.1 billion in retail sales in June, down from $1.17 billion a year earlier. The decline marks the ninth monthly sales drop in the last 12 months, according to figures released Thursday by the NPD Group Inc., a market research firm.
Buyers were more likely to pick up a console than a game last month, lifting sales of devices such as Microsoft Corp.’s Xbox 360, Sony Corp.’s PlayStation 3 and Nintendo Co.’s Wii by 5% in dollar terms to $401.7 million as consumers took advantage of price cuts that have occurred over the past year. On a unit basis, buyers snapped up 85% more PS3s than a year ago, 88% more Xbox 360s and 17% more Wiis.
But sales of games to play on those devices dropped a stomach-churning 15% last month to $531.3 million, from $627 million in June 2009.
“The data shows pretty clearly that the economy is still a headwind on video game sales,” said Colin Sebastian, director of equity research at Lazard Capital Markets. “In particular, the casual side of the business is still weak. People who were buying Wii’s and Guitar Hero games two years ago must be watching TV or 3-D movies.”
There are a few silver linings, Sebastian said, noting that, “Online games is still a growth market.”
NPD’s figures don’t include money spent online for games. While the amount is still a fraction of the overall industry, it’s a growing piece of the economic picture for all game publishers, who cash in by selling add-ons for their disc-based games, or by selling virtual items for games on Facebook.
Others sell downloadable games in online marketplaces such as Apple Inc.’s iTunes, Sony’s PlayStation Network or Microsoft’s Xbox Live. Such transactions could very well reach into the billions of dollars a year, but is not accounted for in NPD’s numbers.
There are other reasons to be optimistic, Sebastian said.
“There are some compelling product innovations coming this fall, including the new motion controllers from Microsoft and Sony, which could convince consumers to step back into stores,” he said. “Another high point is that the hard-core gamer market is holding steady, which bodes well for upcoming titles such as Halo Reach, StarCraft II and Call of Duty: Black Ops.”
