After the video game industry received an encouraging boost last month from the release of the highly anticipated "The Beatles: Rock Band" title and a slight improvement in hardware and software sales, research firm The NPD Group reported that sales dipped once again in October.
The firm said hardware sales fell 23 percent and software sales dropped 18 percent. Overall industry sales dropped 19 percent to $1.07 billion, a troubling sign as the industry moves into the important holiday shopping season.
In the ongoing console wars, Nintendo's motion-sensitive Wii console jumped back to the No. 1 spot in console sales, with 507,000 units sold in the United States. Sony, whose PlayStation 3 (PS3) console took the top spot in September, dropped back to second place with 321,00 units sold. Microsoft's Xbox 360 console placed third in sales with 250,000 units sold. NPD reported sales of video game accessories dropped 2 percent. "The continued economic turmoil, and in particular the troubling unemployment rate, is undoubtedly impacting industry sales," NPD analyst Anita Frazier said in a statement.
One recent bright spot in the industry was the release of Activision's "Call of Duty: Modern Warfare 2." Released Nov. 10, the title saw sell-through sales of $310 million in North America and the United Kingdom in the first 24 hours, according to internal Activision estimates.
Wedbush Morgan analyst Michael Pachter told Reuters that despite the release of interesting games, the uncertain economy is curbing consumer interest. "It's clear that the consumer's not back yet," said Pachter. "The games were good, but hardware was surprisingly low."
Since February, video game sales continued an economic slide until August, when sales fell 16 percent, to $908.7 million. In September sales picked up, albeit slightly; total sales of software and consoles rose 1 percent to $1.28 billion.
As the holiday shopping season fast approaches, the industry is hoping to lure customers with sharp discounts on consoles. Sony recently cut the price of the PS3 to $299 and last week announced a new PS3 system with a 250GB hard drive that will hit store shelves on Nov. 3. The PS3 250GB system has the same design and features as the 120GB system, but with a 250GB built-in hard drive and a cost of $349.99. Microsoft and Nintendo also recently cut prices on their console systems, with the Xbox 360 reducing in price to $299 and the Wii getting a $50 price cut, putting the console at $199.
Nintendo of America President Reggie Fils-Aime told Reuters that although sales of the Wii and handheld DS player (which led hardware sales last month) were down in October, he is confident the two products will make a strong showing over the next two months. "Our projections for November and December continue to be very strong," he said. "We have seen some holiday seasonal pickup, which means consumers are out and buying."