The video game industry just keeps on seeing its sales numbers decline, in spite of a huge month for Activision's Call of Duty: Modern Warfare 2, and the crucial holiday month of November was no different than the last nine months of 2009. For the month, according to industry analyst The NPD Group, sales across the entire video game business were $2.7 billion, down 7.6 percent from $2.92 billion a year earlier.
Yet, NPD added, industry-wide sales were so high in 2008 that even despite this November's significant drop, the month was still the second-best November on record. "I think we all have to realize the incredible year that was 2008," wrote NPD analyst Anita Frazier, in a research report.
Winning the month, yet again, at least in console sales, was Nintendo's Wii, with 1.26 million units sold. That's significantly more than the 1.1 million units that Wedbush Morgan analyst Michael Pachter predicted late last month, in the wake of Black Friday, that Nintendo would sell. Microsoft saw its Xbox 360 take a solid second place with 819,500 units sold, and Sony's PlayStation 3 brought up the rear with 710,400 consoles moved.
Despite a big year-over-year jump in PS3 sales, those numbers had to be disappointing for Sony. The PS3 had finished ahead of the Xbox in October and September, mainly as a result of the pent-up demand for the machine in the wake of its mid-August price cut to $299.
For the Wii, first place is nothing new, and it's clear that consumers had a bigger hunger for that console than its competitors' offerings. But while 1.26 million units sold is impressive, it's quite a bit lower than the 2.04 million Wiis that sold last November, even given the fact that Nintendo lowered the price of the Wii from $249 to $199 in September.
"Nintendo products top Amazon.com's most wished for and most gifted lists for video games, and Wii remains at or near the top of the most-searched for video game terms on Yahoo," Nintendo said in a statement. "As families and friends gather for the holidays, Nintendo games offer the best shared experiences."
Microsoft saw sales of the Xbox drop 2 percent, from 836,000 last year to 819,500 this year. But Xbox spokesperson David Dennis said overall, last month was the best November in the Xbox 360's history, in terms of dollars spent across the board.
Though it did finish in third place, the PS3's sales were through the roof compared to last year, almost certainly due to the price cut. Sony's sales of 710,400 PS3s was up 87.9 percent from last November's poor showing of just 378,000 units.
Indeed, Sony touted that big jump, though without mentioning the recent price decrease of the PS3. "In November, PS3 was the only hardware console to see any growth when compared to last November," the company wrote in a press release, "experiencing an (87.9) percent lift and a 122 percent increase from the previous month."
On the software side, it was pretty clear that the Xbox--with four of the top 10 best-selling games on that platform, compared to two for the PS3 and four for the Wii--was November's big winner. That was no more clear than in sales of the biggest game title of the year, Call of Duty: Modern Warfare 2, which broke the single-day record for sales for any entertainment product when it launched November 10, and was expected to make up a fifth of all games sales in November. The Xbox dominated sales of the game, with 4.2 million units sold, while just 1.87 million were sold for the PS3.
Dennis said the reason for that was clear: "It's Xbox Live," Dennis said. "People's friends are on Xbox Live, and you buy the version of the game where your friends are."
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."
Call of Duty: Modern Warfare 2 is said to have broken the single-day sales record for an entertainment property. According to Activision, the game earned $310 million in North America and England alone in its first 24 hours.
(Credit: Activision)So much for the supposedly unbreakable first-day sales record set last year by Grand Theft Auto IV.
On Thursday, Activision said that its brand-new Call of Duty 2: Modern Warfare, which hit store shelves on Tuesday, had "shattered" the previous record for opening-day sales by an entertainment property, earning $310 million in North America and the U.K. alone. That equates to 4.7 million copies of the new game sold in those regions, and, if true, would eclipse the previous first-day sales record of $310 million globally, which GTA IV set in May of 2008.
Given that GTA IV had nearly doubled the previous record of $170 million, set by Halo 3, I wondered at the time whether its new mark was unassailable. Clearly, the new Call of Duty has answered that question, and loudly.
Now, we have to ask once again whether there could be another challenger for the crown. It would be foolish, it seems, to conclude that there won't be, given the dominance of franchises like Guitar Hero, Rock Band, Grand Theft Auto itself, and, of course, Call of Duty.
A bigger question could be: Why do we care? That's especially true given how frequently these mega-records are broken. Still, it's hard not to get worked up about what it means for a single video game title to bring in hundreds of millions of dollars in a single 24-hour period, particularly while we're still mired in a fairly deep recession.
There are all kinds of arguments to be made about why video games do well in tough economic times, and I've trotted a number of them out in this space. But most games don't come anywhere near selling $310 million worth of product in their entire lifetime, let alone on their first day, so Activision--and its Infinity Ward studio, which actually developed the new Call of Duty--seem entitled to a little bit of attention.
But at the rate these records are falling, I'm going to have to start thinking twice every time a new game sends me one of these announcements about breaking records. Sooner or later, it's not going to be all that noteworthy, no matter how much money is earned in a single day. Until then, though, watch this space for word on which game will be next in line for the throne.
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