Video Game Industry Slumps Despite Surge in Hardware Sales

Despite strong sales of Microsoft's Xbox 360 console, the video game industry swooned again in July, according to a report from The NPD Group.

The video game industry inched lower in July, down 1 percent, to $846.5 million, compared with $850.6 million in July 2009, despite a 12 percent increase in hardware sales. Year-to-date (YTD) overall sales are down 8 percent, at $7.5 billion, compared with $8.2 billion for the same period last year. Software sales fell 8 percent, to $281.1 million, compared with $313.8 million in July 2009, and sales of video game accessories slipped slightly to $129.3 million from $131.5 million in July 2009, a 2 percent decline.

"While video game retail sales show a very slight decline versus last July, we have to consider the success of Starcraft II this month, which helped the PC games category to realize a 103 percent increase in dollars over last July," said NPD Group analyst Anita Frazier. "PC games and video game industry sales combined for an increase of 4 percent in revenues as compared to July 2009."

Strong sales of Microsoft's Xbox 360 console led the sharp rise in hardware sales, with 443,5000 units moved in July, followed by Nintendo's portable DS console, which sold 398,400 units in July. The company's motion-controlled Wii console followed in third, with nearly 254,000 units sold. Sony took the last two spots with its PlayStation 3 console and PSP portable console, which sold 214,500 units and 84,000 units, respectively.

"The PS3 and the Xbox 360 platforms both saw significant increases over July 2009," Frazier said. "In fact, Xbox 360 was the top-selling hardware platform for the month, driven by sales of the new slim format SKU. It's the first time since September 2007 [Halo 3 launch] that the 360 was the top-selling hardware platform."

Electronic Arts (EA) claimed the top two spots in software sales thanks to its cross-platform NCAA Football 11 title, which saw 368,000 units moved for Xbox and nearly 299,000 units for the PS3. Sales of Microsoft's Crackdown 2 powered the title into third place, with 208,800 units sold, while Nintendo claimed fourth, eighth and nine place finishes for its first-party titles.

"The top selling video game for the month, combining platforms, was NCAA Football 11, at 692,000 units," NPD's Frazier said. "Achieving even better results this month was Starcraft II [PC], which sold 721,000 units at retail in July. Lego Harry Potter was the second best-selling game for the month, with 401,000 units across all platforms. It bested its intro month sales in June of 355,000, although it must be noted that it was released late in June. In just over a month at retail, it has already sold enough to put it just outside of the top 20 games year-to-date."