Long touted as one of the most recession-proof markets, the video game industry is finally beginning to feel the full effects of a worldwide economic recession. Research firm NPD Group announced video game software and hardware sales in the United States plunged $1.17 billion, or 31 percent, in June. Hardware sales fell 38 percent, to $382.6 million, while software sales dropped 29 percent to $625.8 million. Video game accessory sales also declined, by 22 percent, NPD Group said.
The latest report continues the trend of continuous month-to-month drops in sales compared to last year. Year to date, sales have declined 12 percent. “This is one of the first months where I think the impact of the economy is clearly reflected in the sales numbers,” said NPD analyst Anita Frazier in a statement. “The size of the decline could also point to consumers deferring limited discretionary spending until a big event (must-have new title, hardware price cut) compels them to spend.”
Wedbush Morgan analyst Michael Pachter told Reuters the reason for the continued drop might be consumers are looking to spend their money on less expensive forms of entertainment in an economic climate where everyone is watching their finances more closely. “The consumer is just not buying hardware at these prices. Clearly the consumer is just waiting for price cuts,” he said.
Reuters reported Nintendo’s motion-sensitive, demographic-defying Wii console led sales in June, moving 362,000 units and holding onto its spot as the best-selling console for the 21st consecutive month. However, the news service noted sales were down 45 percent when compared with June 2008. Nintendo of America’s vice president of corporate affairs Denise Kaigler told Reuters the company had higher expectations for the second half; Nintendo’s line of handheld consoles, the DS, sold 767,00 units. “Last year the focus was on the first half when you look at the strong launches,” she said. “This year our strong titles are coming out in the second half of the year.”
Handheld console competitor Sony, with its PlayStation Portable (PSP) device, sold far fewer units than Nintendo, with just 164,000 sold in June, NPD reported. The top-selling game for the month was Activision Blizzard’s “Prototype,” which is available on Sony’s PlayStation 3 (which moved 164,700 units in June) and Microsoft’s Xbox 360 (which sold 240,600 units) console platforms. The title sold 600,000 copies.
“Even with the industry down 12 percent year-to-date, with a strong back-half performance, full year sales could still be flat to slightly up to 2008’s record-breaking performance.” NPD’s Frazier told USA Today. “Certainly there is plenty of opportunity in the industry, but the rate of change in many areas of the industry presents a lot of challenge as well.”