Video game sales fall off a ledge in October
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."
Daniel Terdiman is a staff writer at CNET News covering games, Net culture, and everything in between. E-mail Daniel. 
These games companies and consoles in general need to diversify so you can get cheap games as well as the blockbusters.
Another big problem is the MS/Sony/Nintendo tax. All the console makers take a big cut of the game sales price which helps to push up the prices.
Super Solitaire (card game) for SNES, MSRP = $59.95.
Every other game is in the $50-$70 range. Let's count inflation.
Let's jump ahead a generation. N64 games. Start off around $60-70, heck the new "Player's Choice" line of million-sellers by Nintendo were the ultra low price of $40.
Consoles have always started around $200-300, games always around $60.
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The companies make a game for 360 and PS3 only, forgetting the older the format and Nintendo's console.
Then they whine about sales being down.
Every manager of every game store I talked to in the Las Vegas, NV, area has said companies that aren't supporting the Wii and PS2 are shooting themselves in the foot. It's regardless if sales have stalled. The economy is bad, nobody has $300 for a PS3 and Xbox isn't that hot unless eight-year-old Johnny and his seven-year-old sister Sue wants to play GTA and Call of Duty over and over again.
There are many games available for all three consoles including big hits like Madden, Rock Band, Guitar Hero, etc. etc. -- but they always sell better on the 360 and PS3 because Wiii owners simply don't buy games. Most of them aren't gamers. They bought their console as a lark. Their consoles sit gathering dust until there's a party. It's that simple.
Nintendo did a great job capturing the casual gamer market, but this is the price for owning that market -- casual gamers don't buy as many games -- simple. Nintendo are fine with this of course -- it's to be expected, and it's the reason Nintendo sells their console at a profit. They don't rely on game sales to stay profitable.
Game companies don't support the Wii because it doesn't seem that Wii owners really buy a lot of games.
Everyone has anecdotes that go every which way.
The statistics from NPD's data shows that what I said is correct. Nintendo execs are on record acknowledging that fact.
There wasn't one!!!! Also for Modern Warfare to have the first day numbers it had it's quite obvious everyone was holding onto their gaming cash for the game, or the prestige edition, or the Modern warfare 2 edition 360.
Don't worry November will be a month to remember and December will be ok as well. Of course one of the downsides of slashing prices on hardware is hardware numbers are going to take longer to hit those higher marks now....
If you want to compare years you really need to throw last year out the window. If you want to compare years you really need to use 2008 - Which I think still had higher numbers then this year which is bad (real bad), but everything is down because of the economy. The industry is still selling billions of games, and some companies (notably ones with limited releases) like Rockstar are simply not going to be effected by this economy since they won't release anything major into it. Sadly Rockstar is much bigger then what they put their Rockstar name on.
- by iConquered November 19, 2009 9:50 AM PST
- I have my own conspiracy theory. If you observe the overall sales data of video game consoles from the previous generation, you will notice a trend in the time to aggregate sales ratio, that indicates that consoles are selling faster now, than they previously were. The market is reaching its apex sooner than expected. Which means slow down is going to occur slower than expected. Let us look back and see.
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(18 Comments)PS2 138 million (2000-2009)
Xbox 22 million (2001-2006)
GC 22 million (2001-2007)
Then observe this generation
Wii 57 million (2006-2009)
Xbox 360 34 million (2005-2009)
PS3 27 million (2006-2009)
We are currently at 118 million units in under four years where as it took a decade for the previous generation to reach 182 million (I am including the total time for the PS2 to reach its current state). Keep in mind that it took the first 5-6 years of the previous generation, to accumulate just 44 million units in sales (between the cycle of the GC and the Xbox and their aggregate sales). That means that in roughly 1/3 of the time this generation has achieved 64% of the same market base as the previous generation. That is pretty damn fast. In three more years (where we will roughly be at the 6-7 year point) total sales for this generation will be around 190 million units. It is clear why sales don't seem as strong.