Video Game Sales Down 8 Percent in 2009

The NPD Group reports that despite a strong December finish, full-year video game sales came in 8 percent below last year's record-setting revenues.

U.S. retail sales of video games, which includes portable and console hardware, software and accessories, generated revenues of close to $19.66 billion, an 8 percent decline over the $21.4 billion generated in 2008, according to market research company The NPD Group.

Retail sales in the PC game software industry also experienced declines, with revenues down 23 percent, generating $538 million in 2009. The total console, portable and PC game software industry generated $10.5 billion, an 11 percent decline versus the $11.7 billion generated in 2008.

Aside from portable hardware, which experienced a 6 percent increase in revenue in 2009, all video game categories experienced declines, with the largest decline coming from console hardware, which saw a 13 percent drop. Console software and portable software both experienced declines of 10 percent, while video game accessories experienced a 1 percent decline.

"Clearly, 2009 was a tough year for consumers and the national economy. However, the bigger picture is one that underscores the industry's strength; 2009 and 2008 were the highest grossing years in our industry's history," said Michael D. Gallagher, president and CEO of the Entertainment Software Association, the U.S. association representing computer and video game publishers. "That said, our industry's structure is solid, and I anticipate a strong 2010 with a pipeline full of highly anticipated titles."

For the month of December, the video game industry experienced its biggest sales month ever, besting last December by 4 percent.

For the year, the only category to see an increase over 2008 was portable hardware, which was up due to a 7 percent increase in average retail price. Nintendo's portable DS platform, across all categories, contributed 17 percent of total industry dollars in 2009, up 3 points from 2008.

"Unit sales were down only 6 percent from last year. Average retail prices were down in all categories except for portable hardware and accessories, which led to the greater dollar sales decline," said NPD analyst Anita Frazier.

Frazier noted that December marks just the fourth month of the year where the industry saw an increase over last year. "January and February were both up, and since the decline that began in March, only September experienced growth," she said. "The big sales this month, particularly on the hardware front, are a positive move for the industry headed into what will hopefully be a recovery year in 2010."

On the console front, the Nintendo Wii and DS were big winners, moving 3.8 million and 3.3 million units, respectively. The PlayStation 3 followed with 1.36 million units sold, in turn followed by Microsoft's Xbox 360 console, which moved 1.31 million units. Sony's stalwart PlayStation 2 moved 333,000 units, a decade after its original release, and the company's portable console, the PSP, moved 654,000 units. The top three game titles for December all belonged to Nintendo, where "New Super Mario Bros." for Wii, "Wii Fit Plus" and "Wii Sports Resort" each sold more than 1.5 million copies.

"When we started the last decade, video game industry sales, including PC games, totaled $7.98 billion in 2000," said Frazier. "In 10 years, the industry has changed dramatically in many ways, but most importantly it has grown over those years by more than 250 percent at retail alone. Considering there are many new sources of revenue, including subscriptions and digital distribution, industry growth is even more impressive."