Despite Economic Chills, Gaming Market Steamy in November

Consumers may have turned away from some sectors of the retail industry as the global economic crisis deepened in November; however, the video game market continued its record-breaking year in the U.S., according to the latest sales report from The NPD Group, a retail sales tracking firm.

Consumers purchased US$1.21 billion worth of gaming consoles, a 10 percent increase over November of last year. Software sales jumped 11 percent from $1.31 billion one year ago to $1.45 billion over the same period. The trend was also reflected in accessory sales, which rose from $238.6 million to $255.4 million, a 7 percent boost.

"The video games industry continues to set a blistering sales pace overall, with total month revenues 10 percent higher than last November, even with seven less days of post-Thanksgiving shopping this year as compared to last," said Anita Frazier, an NPD analyst.

Overall, video game sales rose from $2.64 billion in November 2007 to $2.91 billion last November, a 10 percent jump. Thus far in 2008, video game sales reached $16.04 billion, a 22 percent increase over the $13.14 billion earned through the same time period in 2007.

"The gaming industry has definitely been more recession-resistant than many other consumer goods industries," Michael Cai, an analyst at Parks Associates , told the E-Commerce Times. He sees two main reasons for this: "One, as consumers cut down on travel and dining out, they stay home more and need to entertain at home. Two, games are a cheaper form of entertainment and the whole family can entertain together."

It Just Keeps Going

Console sales-wise, the Nintendo Wii came out on top again in November, with retailers moving 2.04 million units from store shelves. The Nintendo DS also topped the million-unit mark, selling 1.57 million portable gaming consoles.

One factor in the Wii's phenomenal November sales was its increased supply. While shortages have occurred, finding a store with the console in stock was no longer as hit-and-miss for as many shoppers.

"I think the increased supply for the Wii definitely played a big role here. Many families itching for a Wii can finally find them at Wal-Mart (NYSE: WMT) , Best Buy (NYSE: BBY) , and online at Amazon (Nasdaq: AMZN) . This is also the gifting season, and Wii is pretty high on the gifting list," Cai said. Statistics indicate that the Wii is the outright winner of the gaming console battle for this generation, Cai said.

"I've already declared Wii as the winner of this round based on my own forecast. They haven't even decreased the price yet, and don't see a need to, and yet they are still beating the [PlayStation 3] and [Xbox 360] by a wide margin," he pointed out.

Second and Third

The Xbox 360 took the No. 2 console sales spot with 836,000 units sold, less than half the number of Wii consoles sold.

"For 360, the key driver was the price cut. Being the first console to break $200 definitely helps," Cai said.

Microsoft (Nasdaq: MSFT) also took top prize with the No. 1 title in November. "Gears of War 2" was the title of choice for 1.56 million gamers, with "Call of Duty: World At War" for the Xbox 360 taking the No. 2 spot.

The Sony (NYSE: SNE) PlayStation 3 came in third with just 378,000 consoles sold. The prior-generation PlayStation 2 platform sold 206,000 units. The PlayStation Portable racked up sales of 421,000 for the portable gaming device.

"Sony's in a catch-22 situation. To boost sales, they should further reduce the price, but doing so really conflicts with their strategy focusing on profitability. It's not an easy place to be," Cai noted.