Video game industry takes another big hit in August

The video game industry is having trouble reversing its poor showing over the past few months.

Industrywide revenue in August slipped 16 percent year over year, market researcher NPD Group reported Thursday. And total year-to-date sales were down 14 percent.

PS3 Slim....the next console leader?

(Credit: Sony)

Neither software nor hardware could stop the industry's slide. Hardware sales came in at $297.6 million for the month--down 25 percent compared with August 2008. Video game sales brought in $470.32 million--a 15 percent hit, year over year.

Hardware
Nintendo once again dominated both the handheld and console markets in August. The industry's leader sold 277,400 Wii units in August. Consumers purchased 552,900 Nintendo DS units.

Microsoft's Xbox 360 barely held onto second place in console sales, pushing 215,400 units into homes.

Buoyed by the cheaper PlayStation 3, Sony's console trailed the Xbox 360 with 210,000 units sold. Its PlayStation Portable handheld was another popular item with 140,300 units sold. Ironically, Sony's PlayStation 2 continues to sell well. According to NPD, Sony sold 105,900 PS2 units--not bad for a product that isn't even considered "current gen."

Software
Unlike many previous months, Nintendo Wii games didn't dominate the top-10 list of best-selling titles. The company's console had only three of its titles make the list. Even so, that's the most games for any single console in August.

And this time around, a Wii game didn't take the top spot. Instead, Madden NFL 10 for the Xbox 360 reigned supreme with 928,000 units sold. Nintendo's Wii Sports Resort captured the second spot with 754,000 units sold. Madden NFL 10 for the PS3 captured third place, selling 665,000 units.

After the top three, sales dropped off considerably. Batman: Arkham Asylum for the Xbox 360 and PlayStation 3 sold 303,000 units and 290,000 units, respectively. Still finding a way into the top 10, Wii Fit and Mario Kart Wii enjoyed strong sales. Nintendo sold 128,000 Wii Fit units and 120,000 Mario Kart Wii games.

Looking ahead
NPD analyst Anita Frazier was quick to point out in her analysis of August's NPD figures that the industry saw "its sixth consecutive month-over-month decline, and while improved over the last several months, it's still a notable decline." Worst of all, the industry is so far behind 2008 figures that September through December sales would need to "be up 14 percent in aggregate for 2009 to come in flat in comparison to 2008 sales," Frazier said.

Frazier did note that Microsoft's and Sony's decisions to cut the prices on their hardware made an "impact on units sales."

Going forward, there might be a light at the end of this long, dark tunnel. Frazier pointed out that "all hardware systems with the exception of the PS2 realized an increase in unit sales over NPD July 2009." Ironically, the console that has trailed notably behind the competition--the PlayStation 3--enjoyed the "the greatest increase month-over-month with unit sales boosted by 72 percent over July levels." The PlayStation 3 was also the only console to capture year-over-year increases in software sales.

Frazier was suspect of Nintendo's need to drop the price of the Nintendo Wii. Even though Nintendo's competitors have lowered the price on their consoles, Frazier thought it was "interesting to note that the Wii is still selling at levels comparable to what the PS2 was doing at about this point in its lifecycle." In other words, maybe Nintendo can maintain the Wii's $250 price tag.

There is a general shortage of optimism in the industry right now. The one bright spot: sales generally jump during the holiday-shopping season, but to what degree those sales will increase remains to be seen.

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[ZetaZeta_]

"Industrywide revenue in August slipped 16 percent year over year, market researcher NPD Group reported Thursday. And total year-to-date sales were down 14 percent."

Where can I find the figures for year-to-date or monthly sales from 2006, 2007, 2008, etc.?
I've seen comments before stating 2008 was an awkward year with a lot of summer hits, as opposed to the regular trend of people simpler buying fewer games during the summer. I would be interested to see figures from more than just 1 year, but Google is failing me.

I mean, I'd expect to see an overall drop in revenue, as evidence here obviously, because of the whole economic downturn thing, but when blockbusters are released or when a console or major feature is launched will obviously skew data on at least a monthly figure.

[gertruded]

Video game companies have been captured by Wall Street. What that means is that originality and inventiveness has collapsed and replaced with "maximizing shareholder value" and 'monitizing ", and "meeting expectations".

That change precedes the collapse of this industry just like it has with other tech businesses. Outsource, replace skilled workers with lower value imported workers, contract workers, increased executive salaries, sequels rather than new games, etc.

What else is new.

Oh, they will start to complain about "pirating" and "theft" and demand more DRM (government protection), and sue their customers, etc.

[shootfirst]

That sounds about right. They also complain about what it takes to make a quality game now. Quality games aren't ones with top end graphics, they are games that are fun and addictive to play. I can't tell you how much I hate games that focus more on movies than the actual game, I'm there to play not to watch cinematic after cinematic. There are great cinematics that encourage you to play, but too many disinterest me. Stop trying to make games with flash and make them great to play. I got hooked on the NES and part of the reason is because it was about the gameplay and I would play the same game over and over because it was fun. Now they try to force feed games that suck,but are pretty.

[karpenterskids]

Both you and shootfirst hit the nail on the head with your comments.


It's smart, level-headed people like yourselves that should be running congress right now.
Seriously...

[d--keller]

You reference the PS3 price drop, but there wasn't much time for those to have a real effect. Plus who's gonna buy a 299 fat PS3 when a 120G Slim for 299 is available in a week.

These numbers will be worth looking at in September when the PS3 and 360 price cuts have a month to do their thing.

The PS2 sales are not a surprise. It's been selling well all year. Next gen has not started yet for casual gamers. There is a new Motor Storm coming out for PS2 and the Wii is still the top selling console. HD gaming is 1-2 years out for most people.

[quadj]

Steve Jobs mentioned that they are positioning the iPod Touch as a gaming device. Based on that, it would be interesting to start including sales of the Touch with these numbers. Maybe some of the gaming dollars are going the way of the Touch and the App Store? I don't know if Apple breaks its numbers out in a way that could accommodate this comparison, but I think it would be interesting to see if there is any coorelation between the two. (Remember, it took a while before everyone started counting songs purchased from iTunes as part of their analysis.)

[mrjiman]

I agree with quadj - these numbers are not accounting for all the games bought on the app store via iTunes. Apple shared yesterday that there are now 50 Million iphone or touches out there most of which are buying apps/games from the app store. It's going to take the bean counters some time to account for that entire segment of the market that will I think one day eclipse the traditional gaming market.

[mdub311]

Congrats Don! You actually wrote a balanced piece of journalism! Keep it up!

[tundraboy]

Video games have run their course. It's the same titles just updated to the umpteenth time. Really, what new thing does Madden NFL X have to offer? Though some tech enthusiasts deny it, technologies do plateau (example, pocket calculators) and video games, other than graphics, stagnated about hmm 5 years ago. That's the end for growth in that industry. Anybody who would want to buy a game console or video game has already bought one. Most purchases are now replacement purchases.--Meaning growth will be hovering around zero in the medium to long term.

[ewsachse]

OK drama queen. People have been predicting the doom of video games for decades. Even the collapse of the 80's did not kill off the gaming sector.

If you are bored with the current set of games, then find something else to do.

[d--keller]

Well if all you play are sports titles, then maybe you have a point. Maybe, but I'm guessing your old Genesis cartridge of Madden '92 isn't as much fun as the current iteration. I'm guessing you haven't played a game in the last 10 years though.

Play LittleBigPlanet and tell me there's nothing new or innovative about that. Shoot, play some Wii sports and tell me that tennis is the same as 2005. You should think for 2 seconds before you say the first ridiculous thing that comes to mind.

[kaboomlab]

kaboomlab

[doogie9999]

At least in Canada, I'm guessing that the increase in price for a new release video game from $60 to $70 over the last year can't be helping.

It's definitely keeping me from buying as many games. Also, I hate feeling like I'm getting gouged so that doesn't help either.

[karpenterskids]

I know. :/

As a PC user, I remember when all the games I used to buy were $30. Tops.


Now I make up for the price increases by selecting only the top 3-5 games per year. It's all I can afford. :/

[nowimcool]

I second this, it sounds silly but I do thorough research before putting money down on a $70 game, and I still get burned every so often!

Another thing is I think this whole DLC thing that's come up is BS. I've only really seen Rockstar (GTA expansions) and Bethseda (Fallout 3 expansions) do DLC properly - everyone else has been charging too much for too little.

[shycelticwitch]

Perhaps... just maybe... more Americans are getting up off their cheese-puff stained sofas and finding things to do that are actually intellectually and physically stimulating? I mean, c'mon... even killing, destroying, maiming, cybersex and all other types of destructive activities get boring after a while. Maybe people are looking for something a little more challenging for the mind instead of the libido?

[Lerianis3]

It's only you who are saying that these things are not stimulating for the mind, idiot. Personally, I find that these games are VERY challenging for the mind in most cases.

[shycelticwitch]

I am not surprised... small minds are easily entertained.

[PhaseDMA]

The video game industry is doing just fine. And frankly high sales doesn't mean anything. Just ask Ensemble Studios who got shut down right after they released a blockbuster.

[drbyte]

I get crap from friends for not having a 360 or ps3. I make god enough money to have them, but a $300 game system that will need another $50 controller and $60 a pop for new games is not 'fun' to me. Now you have to have broadband internet and a $1000 TV to play the games properly. I can wait just like I did for the ps2. $150 is what I'll pay for a ps3, and I'll wait till that day comes and be fine with my great ps2 games.

After awhile the threshold will have to be met. Next gen gaming is a pricey hobby, no matter what system you buy.

[PhaseDMA]

$1000 TV? I have a friend that is a hard core gamer, and he prefers a small TV. He doesn't even seem to care if it is HD or not.

Frankly I think all you need is a HD TV, and those can easily be bought brand new for less then half of your $1000 number. Frankly I having played on a 50 inch TV I didn't like it. My $500 (and being 15 months old much cheaper now) 32 inch TV does the job just fine.

More so if you make good enough money to buy a current gen game console you should already have the TV.

[forever4now]

If game consoles started to include browsers that support O3D, things could get REALLY interesting.

Check out Large Animal's Infinite Journey O3D game:
http://www.youtube.com/watch?v=NAgug5D6Kdg

You can play Infinite Journey here:
http://blog.largeanimal.com/demo/

Disney/ABC is also doing some interesting things with O3D:
http://www.youtube.com/watch?v=k0tzZiTXEB8

Everyone's been so fixated on the price of the consoles, but when are we going to place the same scrutiny on $60 game prices? Check out the prices for new PS2 games. There's a reason that console is hanging around.

[Lerianis3]

Yep..... they need to DECREASE the prices for the games on the new consoles. New games are just TOO EXPENSIVE for the XBox360 and Playstation 3.

[inachu1]

Only if they would offer what consumers want.......

Like playing World of Warcraft on the PS3.

Still dreaming.

[Inconnux]

$60 is too much for a game. I rarely if ever buy a game at that price. I wait until I can buy it at a reasonable price.

But it costs too much to develop games now??? Graphics don't make a game good... good gameplay does.

[brian.lee]

The gaming industry has gone Hollywood and by that I mean releasing crap and expecting people to pay top dollar for it but adding tons of extra explosions with no story line to back it up. Games were better when they were just available on PC... developers could focusing on producing a good product with out trying to appeal to every age group and they weren't tied down by ESRB ratings.

Look at all the comic book titles that hollywood has destroyed by trying to make a quick but... and all the crapy games that follow movie releases. They're all terrible.

[bvdon]

Software prices are too high, especially for this economy. IMO.

[play7]

Hello.Mushi Mushi..............the world eco is bad at this time? Maybe thats why sells are down? :/ Common Sence maybe?!

Not only are next-gen games ridiculously expensive, the DLC is adding a new wrinkle to the market. Do I buy Fallout 3 when it comes out, and purchase the DLC as I go, or is it better to just wait for the GOTY edition and get the game and all the DLC for $60. And don't get me started on these pre-order "exclusives" -- if ever there was a scam to keep GameStop relevant ...