Game sales slump: Blame the games

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.

2008 release calendar
During the months of January 2008 through April 2008, the number of major titles that hit store shelves was shocking. It made 2008 one of the greatest years in the history of gaming.

Last January, Sonic Riders: Zero Gravity, Burnout Paradise, and Turok hit store shelves. And according to NPD, total software sales were up 11 percent over the prior year.

February 2008 saw the release of Devil May Cry 4, Lost Odyssey, Dynasty Warriors 6, and many others. It was a huge month for the video game industry. Software sales were up 47 percent, year over year.

March 2008 was another big month. Silent Hill: Origins hit store shelves at the beginning of the month. It was followed by Army of Two, Super Smash Bros. Brawl, Condemned 2: Bloodshot, Tom Clancy's Rainbow Six Vegas 2, and many more. Software sales reportedly rose by 63 percent. Total video game revenue was up 57 percent. Three of the major releases that month--Super Smash Bros. Brawl, Tom Clancy's Rainbow Six Vegas 2, and Army of Two--topped more than 600,000 units sold. Nintendo sold 2.7 million units of Super Smash Bros. Brawl in March.

April 2008 saw the release of Okami for the Wii, and Gran Turismo 5 Prologue. But no release was as important as the two that ended the month: Mario Kart Wii and Grand Theft Auto IV. The Xbox 360 version of GTA IV sold a whopping 1.85 million units, while Mario Kart Wii came in second for the month with 1.12 million units sold. Software sales in April were up 68 percent, year over year.

Resident Evil 5 is one of the few major hits in 2009.

(Credit: Screenshot by Don Reisinger/CNET)

To say that the first four months of 2008 were huge is probably an understatement. They were headlined by major titles for every console. And they helped the video game industry grow at historic rates.

2009 release calendar
But 2009 is a different story. During the first four months of the year, only a handful of major titles were released. And although total industry sales were up in January and February 2009, they've declined by 17 percent in both March and April, when compared to the same periods in 2008. Through the first four months of the year, total industrywide sales are down approximately 3 percent compared with 2008.

We can blame it on the games.

Between January and April, only a handful of major titles have been released: Rock Band 2 (in Europe. Late last year in the U.S.), F.E.A.R. 2, Street Fighter IV, Killzone 2, Resident Evil 5, Pokemon Platinum, Halo Wars, and Guitar Hero: Metallica. Every other game released in that time couldn't attract substantial consumer attention. And none of the top games, according to NPD, hit more than 1 million units sold in a single month.

The drought
So why is 2009's library of games so weak? There are a number of possibilities. For one, the industry is cyclical, and depending on development cycles, developers might be working on blockbuster titles for another year. I should also acknowledge that the economy could be playing a part. In the past year, the video game industry has shed thousands of jobs.

But whatever the reason for the subpar slate of games, I simply can't look at this year's sales in a vacuum. The 2008 lineup of games was inordinately strong. Last year's sales figures prove that.

With better games, the video game industry would be doing better. But so far, 2009 just isn't the year for gaming.

Check out Don's Digital Home podcast, Twitter stream, and FriendFeed.

[RadarScope1]

It's not that early 2009 has a weak release schedule. It's that 2009 has a fairly average/normal release schedule. You can't ask for a spring like gaming had in 2008 every year. They just don't release a proper GTA sequel, a Smash Bros. and a Burnout every year. I'm predicting this "slide" will even out a bit over the next few months.

[firedrakeseqoa]

get you game date release right . riddick just came out (Dark Athena)

[plbyrd]

How about noting that if 2008 was a statistical anomaly, comparing to 2007 month-over-month?

[jean.luc.picard]

Perhaps you're being blind-sided by the movement to hand-held devices. Both the iPod touch and iPhone, for example, boast a huge roster of games in the Apple App Store from all kinds of developers. Games there appear consistently hot. If you look at the top fifty free and priced items in the App Store about 70% of them would be games. There is a huge move away from consoles going on here.

[Kwasiowusu]

@ jean.luc.picard :" If you look at the top fifty free and priced items in the App Store about 70% of them would be games. There is a huge move away from consoles going on here"

Total unadulterated crap!
Read this:

Jeremy Liew, of Lightspeed Venture Partners, wrote a blog post yesterday asserting that Apple?s revenues for those 1 billion downloads are no more than $20 million to $45 million, barely moving the topline needle.
A recent O?Reilly survey, he notes, found the mean price of paid apps at $2.65. Liew asserts that the weighted average is probably lower than that; but he uses $2.65 anyway.
At 25 million paid, that?s gross revenue of $66 million. At 60 million, $160 million.
Apple?s take of the gross is 30%. Ergo, $20 million to $48 million
http://seekingalpha.com/article/137749-the-app-store-a-billion-downloads-but-not-much-revenue

Wii Fit alone has sold approx 6 million units in the last year alone in the US, making a total of $540 million, at $90 a pop. That alone totally smokes the entire revenues that Aple has made from every single download from the Appstore, multiplied by 15.
It's not even close.

[Dr_Zinj]

The slowdown in release of more games is not at all surprising. It was bound to happen even without the recession as the gaming population is reaching full saturation level.

There are only so many games people can play in their spare time. And while many stand-alone titles can be played, and then tossed aside for the next game; more of the MMRPG platforms like WoW, Everquest, etc. are maintaining fairly level numbers of players. Although there may be slightly fewer people playing as they cut discretionary activities such as recreational game accounts to offset drops or freezes in income, or even to readjust to complete loss of their job and income.

[Kwasiowusu]

From the article:
" Wii sales were off 43 percent, PS3 sales slumped by 42 percent, and Xbox 360 sales were down 47 percent, compared to 2008."

Well these are the figures:
2009 2008
360 : 175K 188K -7%
PS3 : 127K 187K -32%
Wii : 340K 714K -52%

Wii sales were down 52% from 2008, while 360 sales fell by only 7%. Not sure where you are getting your 360 falling by 47% from.

" And none of the top games, according to NPD, hit more than 1 million units sold in a single month."

RE5 sold 1.5 million in a single month in March, albeit on the 360 and PS3. Even on the 360 alone, RE5 sales were within spitting distance of a million.

"So why is 2009's library of games so weak?"

2009 line up is not weak. In fact for the later part of this year, the line up is better than last year. We could be getting :
- Halo 3 ODST
- Lost Planet 2
- Mass Effect 2
- Modern Warfare 2
- Splinter Cell: Conviction
- Assassin's Creed 2
- BioShock 2
- Huxley
- Marvel vs Capcom 2
- GTA DLC pack 2
And that is just for the 360 alone, and that doesn't even include unannounced games we could be getting at E3, like Forza 3, Alan Wake, Crackdown 2 etc.
You also fail to mention the fat that there is a deep recession going on right, that GDP growth fell by a massive 6.1% in the first quarter alone, and that unemployment is now at a very high 8.3%. When people don't have jobs, games are not a priority in life. They gotta feed their families and pay their rent first.
Plus games sales are down everywhere. In Japan hardware sales have been in a freefall.
Home console sales in Japan are down 36%so far this year.
In the UK games sales just registered their ;lowest weekly level in 2 years:
http://www.mcvuk.com/news/34320/UK-market-at-lowest-weekly-value-since-2007

Everything in contest.

[dd13reis]

The comparison on the sales figures are with March 2009, not 2008. That's why the percentages are different.

RE5 did hit 1 million, but I was saying on one console. Good point, though, it was a great game.

I don't contend that 2009 might not be a good year for gaming, but I think that there isn't much of a comparison to 2008. Wouldn't you agree that 2008 was incredible?

-Don

[Kwasiowusu]

Yes, I would agree that 2008 was incredible, year, and had record video game sales. No question about that.
It's going to be hard to match that this year, mainly because Wii sales will not be able to match last year's levels. But then last year, every Wii that Nintendo managed to ship to the shops, was instantly sold out, and that is not the case any more.
Plus the recession is going to affect consumers purchases or everything, including games, which appeared to be resistant to the recession in the first 2 months of the year.

[dd13reis]

@Kwaslowusu

You highlight some really great points. As you mention, the Wii will be available this year in stores, so it will be interesting to see what happens there. And the recession could finally impact the industry, but how much? It's anyone's guess at this point.

The video game industry is really fun to watch. But for the two of us -- let's just hope for better and better games!

Thanks for your comments. They were great.

-Don

[d3vildog69]

Dont forget Army of Two: 40th day is supposed to come this fall!!

[vikinzer]

I agree with you on your evaluation, but there are several other major factors that I think make this an overall trend as opposed to a blip based on a somewhat average lineup of games. As mentioned earlier by Dr_Zinj the fact that WoW and other MMORPGs are so big right now has an impact. I am an avid WoW player, and as a result I don't really feel the need to purchase console games. WoW has a MUCH larger hours played to money invested ratio than more traditional video games. If I pick up a nice shiny new $50-60 game I will probably complete it in a few weeks of solid gameplay. That's just sort of the nature of the beast. There are exceptions to that rule, but as you mention Devil May Cry 4 and Silent Hill Origins in this article I will use them as examples. Each only has maybe a week of solid play to complete the game. If you play more casually it might take 3 weeks to finish the game. Now that isn't OMG WOWZ I got every ending imaginable, and all the super secret wacky stuff, but lets be honest most time spent towards those goals is doing the same thing over and over and over again. If I out the money for WoW I will get in WAY more play in that first month for my 50 bucks than on the other games, and then the later months are only 15 bucks, again with a solid play return. Knowing I will be given new content over the course of any given expansion for no additional fee. (Ulduar anyone?)

Once you invest in a game like that suddenly you don't have as much time to invest in other games, so why buy them in the first place? The truly hard core gamer who wants cred to feel like a whole human being might out that time and cash, but for those of us who play games for the actual entertainment value provided by the game, and don't care about silly status attainment don't have much of a value proposition in purchasing new console titles.

[d3vildog69]

Poor Games means we stick to the old stuff. Halo, CoD4, Older RPG's. Things that will get us by until a good title is released. Original Storylines are a staple for the game industry, we have good graphics, textures. Work on voice actors, and storylines, PLEASE.

Do you know how long it has been since we got an Epic title? Too Long. Stop rebooting, stop with sequels.

[screamapillar]

Here here!

I'll still fall back to diable 2 or Oblivion over buying some game that is the same as the previous game but with a claim to better graphics - only to find when you go in the game that it matters not. Seriously, a good game is immersive and you don't actually notice the graphics as much as the devs think. Sure they matter, but a good story will kill a game with good graphics anyday.

[roachbrain]

You're so right. I miss the days of great titles with an awesome story. Examples: FFVII, Parasite eve, MGS (Shadow Moses) - wasn't a movie -, Nuclear dawn, Brave fencer Musashi, Nightmare creatures, Soul Reaver, Xenogears, Sky's of Arcadia, Ico, Wing commander 4 (shut up I loved this game), and so many more original and fun to play titles that were less about graphics and more on game play.

[screamapillar]

The problem here is endemic to all industries - the obsession with 'growth' even when you have anomolous growth in one year (say 2008) they expect it to keep going up or else it means you've failed. No, you made a profit, be happy. You don't need to keep topping the previous year to succeed.

The economies all over the world were artificially inflated by debt and grew to unsustainable levels - but everyone cries bloody murder when the economies attempt to readjust to a more sustainable level. Yes, deflation is required when there has been too much inflation - at the very least, the rate of inflation needs to decrease to allow for more sustainable scenarios.

Instead, we are all so obsessed with growth we throw supply/demand equations out the window and just assume the world is doomed if it isn't up up up.

[Fletch02]

You're right, obviously the economic downturn could not possibly have an effect on gaming. Everyone knows gamers would rather spend their money on the latest games then paying off their credit card bills.

Seriously though, the starting line up for 2009 honestly looks quite compatible to 2008. Maybe Resident Evil 5 and Street Fight IV weren't quite as hotly anticipated as GTA4 or Smash Bros. Brawl, but you'd be crazy to consider them anything less then A-list titles.

Furthermore, we're not even halfway though the year yet, so it might be rushing things to consider 2009 a wash. I'm not even sure why you think 2008 was such a great year, seeing as I only really played two of the games on your list, which were both sequels I wasn't 100% satisfied with.

So please, stop trying to sound like an expert on gaming. I get that you like it, but you always make yourself sound foolish whenever you try to make broad declarative statements.