Price Cuts, Lack of Blockbusters Dampen Gaming Revenue

Figures from consumer and retail market research firm NPD Group show April game industry sales declined year over year in all categories — hardware, software, games and game accessories.

Nintendo continues to dominate the market, with Wii sales totaling about double that of every other contending console. Sales of the portable Nintendo DS system totaled more than the sales of all its rivals put together.

This marks the second straight month sales have declined in the industry, which was once regarded as exceptionally resistant to the effects of the recession. What will it need to help it recover?

The Overall Figures

The NPD Group’s figures show the worst-hit category was video games software. Sales for April totaled US$510.74 million, down 23 percent from the $660.1 million chalked up in April 2008.

Video game accessory sales in April totaled $129.45 million, down 15 percent from the $151.51 million logged in April 2008.

Finally, video games hardware sales totaled $391.63 million, down a comparatively light 8 percent from the April 2008 figure of $426.94 million.

Overall sales for the video game industry fell 17 percent, from April 2008’s $1.24 billion to $1.03 billion in April 2009.

Nintendo Ichi Ban!

The market continued to be dominated by Nintendo.

Just over 1 million Nintendo DS units were sold, according to The NPD Group’s figures.

The Nintendo Wii took second place, with 340,000 units sold.

Its closest competitor was Microsoft’s Xbox 360, selling 175,000 units.

Looking Back in Sorrow

Though NPD’s figures might appear gloomy, that may be because April 2009 is being compared with the record showing of April 2008, a month that was helped along by the release of the major hit title “Grand Theft Auto 4.”

“April 2008 realized nearly 50 percent growth over April 2007,” NPD analyst Anita Frasier told the E-Commerce Times. “This year’s performance still represents the second-best performance for the industry in the month of April.”

Breaking down the results, Frazier pointed out that unit sales were down only 5 percent in April 2009, while the rest of the decline in dollar sales came from price cuts.

Microsoft and Sony cut prices on their gaming consoles last year in a bid to boost sales during the holiday season and battle the Nintendo Wii.

Needed: New Ideas

The heady days may be gone when game consoles — those in this generation of systems, at least — could be sold at a premium. The PlayStation 2, the champion of the last generation of consoles, is now listed at a “budget-friendly” $99, Frazier said.

Other factors are also forcing down prices of game hardware, software and accessories. “There’s a healthy gray market growing up around used video games, ” Laura DiDio, principal at research firm ITIC, told the E-Commerce Times.

The industry needs new ideas, DiDio contends.

“There’s no killer game right now,” she said. “Whether you’re an adult or a kid, your real fascination with them only lasts so long, and then you’ll start searching for your next fix.”

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