Money Matters, Simplified.
Video game sales slump 31 percent
by Jaspreet Virk - July 17, 2009 - comments
Sale of game software slumped to $625.8 million, a 29 percent decline, and hardware sales fell 38 percent to $383 million last month
New York, July 17: Reeling under the current economic slowdown, the U.S. video game industry has posted the fourth consecutive monthly drop and the biggest sales decline in nine years.
The sales of video games and consoles fell 31 percent to $1.2 billion in June, NPD Group Inc. said on Thursday.
Sale of game software slumped to $625.8 million, a 29 percent decline, and hardware sales fell 38 percent to $383 million last month.
"This level of decline is certainly going to cause some pain and reflection in the industry," said, NPD analyst Anita Frazier.
Drop in sales widespread
All platforms witnessed a decline as compared to last year. The sales of Sony’s PlayStation 3 declined 59 percent to 164,700 units and of Nintendo’s Wii console plunged 46 percent to 361,700 players.
Microsoft Corp.'s Xbox 360 was the only video game player that has reported year-over-year sales increase.
The top-selling game last month was Electronic Arts Inc.’s “Fight Night Round 4”. It sold a total of 471,000 copies for Xbox 360 and PlayStation 3.
Decline due to high prices
Frazier stated that it is the weak economy that is adversely affecting the game industry. "This is one of the first months where I think the impact of the economy is clearly reflected in the sales numbers," Frazier said in a statement.
Wedbush Morgan analyst Michael Pachter added, "The consumer is just not buying hardware at these prices... clearly the consumer is just waiting for price cuts."
Analysts expect market to recover
The industry analysts had believed that recession would leave the game industry unscathed, as during such times people prefer staying at home rather than spending money on outdoor activities and vacations.
But they are optimistic that the industry will pull out of its current tail spin.
"You have weak hardware sales and you have weak software, so it's prudent to be concerned about the rest of the year," said Colin Sebastian, an analyst with Lazard Capital Markets. "But there's still a chance for the industry to show growth for the entire year."
A lot depends on price cuts, Sebastian said. "Sony certainly needs to cut the price of the PS3, and it's widely anticipated at this point that they will do so.”