May marked the third-straight month that video game software sales dropped, a sign that the economic downturn continues to weigh on the gaming sector. NPD Group released its video game sales data yesterday afternoon, reflecting sales that fell to $448.9 million during May. These monthly results are 17% lower than the same period last year. The drop in software sales was somewhat expected, as the Street called for a drop between 15% and 20%. Hardware sales dropped 30% during May, totaling $302.5 million. But the comparisons are difficult as major hits were released during spring 2008, including Grand Theft Auto IV, Mario Kart, and Super Smash Bros. Brawl. There were no such major hits released this year.
The Nintendo (OTC: NTDOY) Wii saw its sales drop 15% from April, with 289,500 units sold during May. This slump continues Nintendo's three-month sales slide, which has seen Wii sales fall 62% during the period. Microsoft's (NASDAQ: MSFT) Xbox 360's sales were flat during May at 175,000 units. Sony (NYSE: SNE) saw sales of its PlayStation 3 console increase slightly. During May, Sony sold 131,000 units, up from 127,000 in April.
MarketWatch quotes Nintendo's executive vice president of sales and marketing, Cammie Dunaway, as saying: "As always, software sells hardware. In 2008, we started the year with a number of powerhouse games. By contrast, this year is really just beginning now." This year's top-selling games in May included UFC 2009 Undisputed for the Xbox 360, which sold nearly 680,000 units. Electronic Arts' (NASDAQ: ERTS) EA Sports Active Bundle sold 345,800 units during May.
Frankly, I am not surprised that video game sales have slumped as video games are not a necessity. Moreover, at $60 a pop, video games can be seen as an expensive "luxury" style item during an economic downturn. Parents would rather spend the money on groceries than on a game to keep little Jimmy satissfied.
Will this trend turn around as the economy stages a bit of a comeback? Most likely, but the turn around in the gaming sector could take a while. If I were to hazard a guess, I would watch for the video game sector to lag an economic recovery by roughly two months.
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Reader Comments (Page 1 of 1)
6-12-2009 @ 11:42AM
numerwan said...
Its not the recession that is causing game sales to drop... Its lack of "buyable" games that causes game sales to drop... And UFC is not a good example of a popular game... Plus its summer, and not many companies release top selling games for the summer because kids are away at camp, outside, and just not sitting in front of the tube...
Plus, like most things, systems get stale and loose their appeal until a new iteration comes out, a price drop, or restyling of the console... But overall, its the lack of buzz-worthy games...