U.S. video game industry sales plunged in October, dropping 19 percent from a year earlier, and 16.4 percent from September, according to data released Thursday by the NPD Group.
But with the tremendous, record-breaking, out-of-the-gate performance of Activision's Call of Duty: Modern Warfare 2 and the coming holiday season, NPD is bullish on the industry's fortunes for November.
Still, the $1.07 billion in total sales turned in by the industry in October were paltry, compared with $1.32 billion in October 2008 and $1.28 billion in September 2009. NPD analyst Anita Frazier tried to soften the blow a little bit in her monthly report, noting that while sales were down precipitously in October, it was still the third-best October sales report turned in by the video game industry.
"The continued economic turmoil, and in particular the troubling unemployment rate, is undoubtedly impacting industry sales," Frazier wrote in a statement. "Our latest Economy Tracker indicated that although consumers' general opinion about the economy is improving, their outlook on their own personal situation is worsening. If consumers' personal outlook continues to erode, they could very well be much more conservative with their holiday shopping this year."
That last sentence is no doubt one of the most chilling group of words imaginable to the honchos at companies like Microsoft, Sony, Nintendo, Electronic Arts, Activision, and many others involved in putting video game hardware and software in consumers' hands, especially as their most important sales months of the year are now at hand.
As always, regardless of the monthly results, the big console makers each had some things to celebrate in the NPD numbers.
For Nintendo, which has seen sales of its once-high-flying Wii dip and perceptions that the console's days of seeming infallible may be over, the numbers had some hope: in October, the Wii took back first place among the consoles--respectively the Wii, Microsoft's Xbox 360, and Sony's PlayStation 3. In October, Nintendo moved 506,900 Wiis, beating out the PS3 (320,600) and the Xbox (249,700).
Sony was coming off the first month the PS3 won since being launched in the fall of 2006, but while the console was beaten out by the Wii, there must certainly be some measure of gratification in having the PS3 come out ahead of Microsoft's console offering.
"In October, we saw continued momentum [for the] PS3, with nearly 70 percent growth, when compared to last October," Peter Dille, Sony Computer Entertainment of America's senior vice president of marketing, said in a statement. It was "the only console to see any growth year over year."
NPD itself touted Microsoft's chief bragging point for October: "Across all categories, the Xbox 360 platform contributed the greatest portion of total industry sales, representing 27 percent of total industry sales for the month," Frazier wrote.
Yet despite the record-smashing first-day sales posted this week by Call of Duty: Modern Warfare 2, the video game industry as a whole is facing a very painful reality: If sales don't improve quickly, there will be layoffs, slashed budgets, canceled games, and more.
Electronic Arts, for example, announced this week that it is planning to lay off 1,500 people as part of a major restructuring--the company's latest--and as a way to stave off growing losses.
And while the industry may have hoped that console sales--especially with prices for next-generation hardware now at their lowest levels ever--would help it rebound, Frazier did not offer much hope.
"Year to date, the hardware category has experienced the sharpest decline in the industry, with unit sales down 10 percent compared to the same time period last year," Frazier wrote. "Recent price cuts helped spur a one- to two-month increase in unit sales, and this month's Wii sales reflect that boost, but the other platforms have not sustained the sales momentum [after] price reduction."
The video game industry is poised to make a rebound, Wedbush Morgan Securities analyst Michael Pachter wrote in a note to clients on Thursday. The analyst also predicted that it will be Sony's PlayStation 3, and not the Nintendo Wii, that will lead console sales for the month, when NPD releases figures next week.
The PlayStation 3 Slim is helping spur console sales.
(Credit: Sony)"After six consecutive months of double-digit declines, we expect a return to double-digit sales growth (on video game software)," Pachter wrote to clients. "We forecast sales of $750 million, up 21 percent, compared to last year's $618 million."
It's a good sign that after months of decline, the video game industry is finally rebounding. That said, overall sales are still far behind 2008 figures.
PS3 victory?
But it's Pachter's next topic that might easily attract the most attention. According to the analyst, he estimates that September's NPD figures will show a "sell-through of 390,000 Wii hardware units (down 45 percent from last year), 350,000 Xbox 360 units (up 1 percent from last year), and 410,000 PS3 consoles (up 76 percent year-over-year), as the price cuts for all three consoles spurred demand."
Although Pachter said he thinks console sales will be "relatively flat for the balance of the year," he did say that the price cuts could "benefit the PS3 the most in coming months." Not only does Pachter believe Sony's console will outsell the Xbox 360, but he contends that it's possible that the PlayStation 3 will lead Xbox 360 sales for the rest of the year.
Another Xbox 360 price cut?
Pachter isn't convinced that the price cuts are over. He wrote to clients that "Microsoft has the ability to lower price yet again," but he cautioned that a more likely scenario would see the company offer a "more feature-packed Xbox 360 in early 2010 (likely with a 250GB hard drive) at the same $299 price point." It could cut the price of its console if "it begins to lose significant market share to Sony."
As interesting as they might be, Pachter's comments are purely speculation at this point. Look for the official sales figures to drop next week, when NPD makes them available.
Check out Don's Facebook profile, Twitter stream, and FriendFeed.
Don Reisinger is a technology columnist who has written about everything from HDTVs to computers to Flowbee Haircut Systems. Don is a member of the CNET Blog Network, and posts at The Digital Home. He is not an employee of CNET. Disclosure.
As market research firm NPD Group prepares to release sales data data for the U.S. game market next Thursday, other analysts have predicted a return to double-digit growth after six months of decline.
According to Edge Online, Wedbush Morgan Securities analyst Michael Pachter and Electronic Entertainment Design and Research's Jesse Divnich expect monthly software sales of $750 million (up 21 percent year over year) and $715 million (up 16 percent), respectively. And while these are still just estimates, it shows that consumers are still willing to spend on high-quality new games.
EEDAR's top 10 forecast:
Halo 3: ODST (360, Microsoft) - 1,800,000
Wii Sports Resort (Wii, Nintendo) - 500,000
The Beatles: Rock Band (Wii, EA) - 350,000
The Beatles: Rock Band (360, EA) - 325,000
Marvel: Ultimate Alliance 2 (360, Activision) - 300,000
Madden NFL 10 (360, EA) - 275,000
Batman: Arkham Asylum (360, Eidos) - 250,000
Batman: Arkham Asylum (PS3, Eidos) - 250,000
Guitar Hero 5 (360, Activision) - 250,000
Guitar Hero 5 (Wii, Activision) - 200,000
One interesting note on the top 10 list is that it contains only seven titles, which shows the importance of supporting multiple consoles.
In a stark reversal of the trend on display just a few short months ago--when general retail sales were plummeting even as the video games industry was still showing growth--cautious optimism in retail is now being offset by many losing months in video games.
In July, according to industry analyst the NPD Group, video game sales fell for the fifth straight month, and the year-over-year numbers are striking: In July, the video games business posted sales of $848.9 million, down 29 percent from $1.1 billion a year earlier. Year-to-date sales, reported NPD, were at $8.16 billion, down 14 percent from the same time period a year ago.
And things are only getting worse. While the industry's June numbers were down a full 31 percent from a year earlier, they still topped nine figures, coming in at $1.17 billion in June. But that means that in July, sales were down 27.4 percent from just a month earlier.
It wasn't that long ago that many people were making the argument that video games--because of their relatively low cost and many hours of entertainment value--were seen as close to recession-proof. But now, it would be hard for anyone to make that case.
Indeed, NPD analyst Anita Frazier wrote in a report Thursday that, "In order for the industry to come in flat or slightly up for the total year, the back five months of the year have to come in 11 percent (or more) higher than the last five months of last year."
That would seem to be a near impossible task, given the recent trend. But Frazier did throw the industry a bone: "While year-to-date results are weak, there are some big titles set to be released over the next several months, including Madden (10, from Electronic Arts) this month, which should help spur sales. The worst...should be behind us, and looking beyond August, we have The Beatles: Rock Band, Halo 3: ODST, and of course, Call of Duty: Modern Warfare 2 to look forward to."
Not to mention Guitar Hero 5.
One thing was also made clear in NPD's July report: sales weaknesses in the industry are being seen across the board. However, hardware led the charge, with a drop in sales of 37 percent ($280.94 million in July, 2009, as opposed to $447.71 million a year earlier). Software and accessories were down 26 percent and 12 percent, respectively.
Microsoft was quick to jump on what may have been the only bright spot in NPD's report: that its Xbox 360 was the only console to deliver growth over a year earlier. In its own report, trumpeting NPD's numbers, Microsoft pointed out that the Xbox has turned in 17 percent growth for the year over the same period in 2008.
And while Nintendo's Wii still leads the pack among the big three consoles (the Xbox, Sony's PlayStation 3, and the Wii), its lead has shrunk considerably. In July, consumers bought 252,200 Wiis, versus 202,900 Xboxes and 121,800 PS3s.
All in all, it's hard to be optimistic about the industry's prospects, though, as Frazier pointed out, there are a slew of big titles coming down the pike that could drive big sales. Still, the same is true every year, and as a result, there are few who could argue at this point that the video game business is facing what may be its biggest crisis in years.
Video game industry sales in the U.S. dropped 23 percent to $863 million in May compared with $1.12 billion a year ago, according to a new report.
This marked the first time since August 2007 that monthly sales dipped below $1 billion, NPD Group said Thursday in its report.
The drop was felt across the board as gamers coughed up less cash for hardware, software, and accessories. Sales for hardware fell 30 percent year over year to $302.5 million. Software revenue was down 17 percent to $449 million, while sales of gaming accessories tumbled 25 percent to $112 million.
"The video games industry continues to struggle with difficult comparisons to last year," NPD analyst Anita Frazier said in a statement.
NPD blamed most of the decline on the lack of blockbuster games rather than the weak economy. The report noted that last year's sales were boosted by the launch of popular software titles such as Grand Theft Auto IV. Nintendo's Wii Fit also was a hot commodity in 2008.
"While there were some very strong new releases this month," Frazier said, "this month's top 10 games sold 2.6 million units combined, whereas last year the top 10 sold 3.7 million units. Again this illustrates how tough the comparisons are to last year."
Nintendo's Wii was the best-selling system in May at 289,500 units, though sales plummeted from last year. Microsoft's Xbox 360 found 175,000 new customers, a gain of 22 percent from a year ago. Sony brought up the rear, selling only 131,000 PlayStation 3 and 117,000 PlayStation 2 consoles.
Despite the sluggish sales, NPD has a positive outlook for the rest of the summer.
"Looking ahead to June, there are some promising games coming out this month between Sims 3 (PC), Prototype, Red Faction, Virtual Tennis, Ghostbusters, Transformers and Tiger Woods just to name a few," noted Frazier. "June comparisons are still likely to be tough, but the wide variety of new content could help reinvigorate things somewhat."
The May report followed NPD's analysis for April, which showed that video game sales had dipped 17 percent year over year.
People who prefer playing a home video game to going out to the movies are in good company, according to a recent survey.
Almost 64 percent of Americans have played a video game in the past six months versus only 53 percent who have gone out to see a movie, according to a report from market research firm NPD Group.
The March report, part of NPD's "Entertainment Trends in America" study, also noted that consumers now splurge one-third of their entertainment dollar on video games. The average gamer spent a bit more than $38 per month, with 31 percent of all those surveyed having bought a game over the past 12 months.
One factor for the surge in gaming is the number of new outlets, such as social networks and online gaming sites, said the report. Around 10 percent of people surveyed have played video games on a social network, while five percent have paid to download games online.
"Video games account for one third of the average monthly consumer spending in the U.S. for core entertainment content, including music, video, games," said Anita Frazier, video games industry analyst for NPD. "While a portion of that share stems from the premium price of console games, we're also seeing an overall increase in the number of people participating in gaming year-over-year."
The results of the NPD study were based on an online survey that received responses from more than 11,000 U.S. consumers. Despite gaming's popularity, another NPD study found that video game sales have slumped this year in comparison to 2008, a year in which game sales soared.
Correction at 8:30 a.m. PDT: The release dates for Fallout 3 and for The Chronicles of Riddick: Assault on Dark Athena were incorrect. They have been removed from the list of 2009 and 2008 releases, respectively.
The video game industry is going through some tough times. When NPD Group released video game sales data for April last week, the results were disheartening.
According to NPD, total industry revenue was down 17 percent, year over year. Software sales for the month were down 30 percent, compared to April 2008. Wii sales were off 43 percent, PS3 sales slumped by 42 percent, and Xbox 360 sales were down 47 percent, compared to March 2009.
So what happened? Is the video game industry finally being affected by the recession? It's possible that it has some impact. But I don't think there's any better reason for the decline than the games themselves.
If the games aren't compelling, consumers won't be buying.
... Read moreDon Reisinger is a technology columnist who has written about everything from HDTVs to computers to Flowbee Haircut Systems. Don is a member of the CNET Blog Network, and posts at The Digital Home. He is not an employee of CNET. Disclosure.
For the second straight month, video game industry sales tumbled nearly 17 percent year over year, a downward trend for a market segment that had previously seemed resistant to the economic pressures of the recession.
In April, according to industry analyst NPD Group, the industry posted revenue of $1.03 billion, down 16.9 percent from the $1.24 billion it recorded in April 2008. Sales for the month were also down 30 percent from $1.43 billion in March.
NPD analyst Anita Frazier cautioned in a report that it's hard to reach the conclusion that the industry has begun to soften, noting that "it's important to remember that April (2009) is being compared against a month--April 2008--that realized nearly 50 percent growth over April 2007."
Frazier also noted that the industry's performance last month was its second-best April on record, and that unit sales across the board were down just 5 percent, with the rest of the revenue decline coming as a result of reduced "average selling prices."
Still, there's little doubt that the trend line is heading down, both broadly and rapidly. March's numbers were already down 2.7 percent from February's $1.47 billion, and in April, each of the three major video game consoles--Microsoft's Xbox 360, Nintendo's Wii, and Sony's PlayStation 3--saw sizable sales drops. Xbox sales were off 47 percent, while the Wii and PS3 were down 43.4 percent and 41.7 percent, respectively.
The only bright spot, on the hardware side of things at least, was the newest generation of Nintendo's DS handheld gaming device, the DSi, which launched during the month. In April, Nintendo sold 1.04 million handhelds, up 84.7 percent for the month.
Perhaps most interesting in those numbers is the steep decline in sales of the Wii, which has been dominating console sales for some time. The Wii did still lead the pack in April, but there have been rumblings about its strength softening in recent months, despite the console now being easy to buy. Earlier in the year, and especially during the holiday season, it was nearly impossible to find a Wii for sale at retail. These days, they are readily available at many stores.
But Frazier, again trying to soften the blow of the April numbers, noted that the Wii's 52.4 percent year-over-year sales drop (Nintendo moved 714,000 Wiis in April 2008) was partly attributable to the fact that a year ago the console's fortunes had been driven by the launch of two "huge new titles: Super Smash Bros. Brawl and Mario Kart."
On June 22, Geek Gestalt will kick off Road Trip 2009. After driving more than 12,000 miles in the Pacific Northwest, the Southwest, and the Southeast over the last three years, I'll be looking for the best in technology, science, military, nature, aviation and more in Colorado, Utah, Idaho, Wyoming, Montana, and South and North Dakota. If you have a suggestion for someplace to visit, drop me a line. And in the meantime, join the Road Trip 2009 Facebook page and follow my Twitter feed.
March revenues for the video game industry dropped 17 percent from a year ago, the NPD Group reported Thursday, the first time in the current recession that the business has seen sales fall.
For the month, the analyst firm reported that the industry turned in total sales of $1.43 billion, down 17 percent from $1.72 billion a year earlier. Hardware sales were down 18 percent, while software was down 17 percent.
But while the numbers look poor, NPD analyst Anita Frazier said she attributed some of the drop to the vagaries of the calendar.
"While it might be tempting to jump to the conclusion that the sky is starting to fall on the video games industry given this month's results, it's important to remember that two very big things are different this year than last," Frazier wrote in a note accompanying NPD's report. "First, Easter fell in March last year whereas it fell in April this year, and last March included the release of Super Small Bros.: Brawl, which went on to become the fourth best-selling game in 2008."
Perhaps, but one game's fortunes are unlikely to be enough to turn around an entire industry, especially given that hardware sales dropped about the same as overall revenues.
Overall sales were also down 2.7 percent from February's $1.47 billion, and each of the six hardware platforms NPD tracks--Sony's PlayStation 3, PS2 and PSP, Microsoft's Xbox 360 and Nintendo's Wii and DS--had lower sales in March than in February. The PS3 and Wii led the drops, with 21.0 percent and 20.2 percent lower sales, respectively.
By comparison, the Xbox saw its sales fall between February and March, but less than the PS3 and Wii, and Frazier reported that Microsoft's console was the only one with good year-over-year news.
"While it's not unusual for March hardware sales to be lower than February," Frazier wrote, "I thought we'd see higher unit sales on most platforms. The Xbox 360 was the only platform to achieve a year-over-year sales increase."
Frazier also said Nintendo's numbers were noteworthy, given the effect of Super Smash Bros.: Brawl on the company's March 2008 sales.
"Wii and NDS hardware sales remained brisk, taking the top two spots for (March 2009) in hardware unit sales," she wrote. 'It's important to keep in mind that the (game's) effect from last year impacted hardware sales as well, so while the year-over-year comps are down for the Wii, the sales are still impressive."
Still, the Wii--the darling of the video game industry media since its surprise success became almost institutionalized--has seen some negative press recently.
In March, for the first time, the PS3 outsold the Wii in Japan, and many observers wondered if that milestone indicated that Nintendo's console's dominance had finally come to an end.
The video games industry continued to defy general economic realities in February, posting a 10 percent year-over-year sales increase and a 10.5 percent boost over January.
For the month of February, the industry recorded sales of $1.47 billion, up from $1.34 billion a year earlier, according to numbers released Thursday by industry analyst NPD Group. And the February numbers also outpaced January's $1.33 billion. In February, software accounted for $733.5 million in sales, while hardware and accessories came in at $532.7 million and $207.1 million, respectively.
According to NPD, Microsoft's Xbox 360 had its second best non-holiday-season sales month since its launch, with 391,000 units sold. But once again, it was Nintendo that had the best overall performance. It sold 753,000 Wii consoles, as well as 588,000 DS handheld systems. Those numbers were up 10.8 percent and 15.1 percent, respectively, over January.
Sony's PlayStation 3 and PlayStation 2 didn't have quite as successful a February. The PS3 moved 276,000 units, while just 131,000 PS2s were sold. However, those figures did represent a 35.8 percent and a 29.4 percent jump over January. In February, Sony's PSP sold 199,000 units.
Nintendo also dominated the software sales side of things. Six of the top 10 best-selling titles in February were for either the Wii or the DS, including the repeat No. 1 performer, Nintendo's "Wii Fit.
NPD analyst Anita Frazier said March looks good for the industry as well, despite the recession, because of titles such as Halo Wars, Grand Theft Auto: Chinatown Wars, Resident Evil 5, and more.
"The sheer quantity of great content coming to market early in the year should keep industry sales humming throughout 2009," Frazier said in a statement.
