Games Industry Suffers From Recession, Finally

By  |  Thursday, July 16, 2009 at 5:34 pm

fightnight4After a few months of lagging sales, market researcher NPD Group is finally saying the recession caught up with the video games industry. All it took was for gaming to suffer its biggest year-over-year sales drop in 9 years.

Total industry sales in North America were down 31 percent in June, compared to the same month in 2008.  Hardware took the biggest hit, with a 38 percent drop in sales, and software fell 29 percent. Accessories fared the best, but still saw a 22 percent decline, according to GameDaily.

June is not the first recent month that the industry was in decline. Video game sales have fallen year-over-year for the last three months in a row. Still, NPD avoided chalking this up to the recession. After all, last year was particularly strong, with the fast-selling Wii Fit and blockbuster games such as Mario Kart Wii and Grand Theft Auto IV doing well in the spring. Plus, the three current generation consoles were fresher a year ago, and no company has cut prices since then.

But now, NPD analyst Anita Frazier is finally blaming the economy. “This is one of the first months where I think the impact of the economy is clearly reflected in the sales numbers,” she told GameDaily. Sales haven’t plummeted this drastically since September 2000, when there was a 41 percent industry decline.

Why pull the recession card now? To paraphrase Frazier, it’s a combination of weak line-ups, stagnant console price points and a lack of must-have games, combined with consumers’ unwillingness to spend more until things change. In other words, you can’t expect people to pay the same money for lacklustre products just because they’re video games. To put it one more way, the video game industry is not recession proof; it was just piggybacking on the strength of the Wii and a few blockbusters, so let’s please let that label die once and for all.

Frazier isn’t throwing all her optimism out the window. There’s a chance, she said, that a strong second-half could bring total 2009 game sales on par or slightly above last year’s numbers. Game makers aren’t fully cooperating, though, as Take-Two delayed the much-anticipated Bioshock 2 in hopes of reaping better sales during FY2010. Heavy Rain, a Playstation 3 exclusive that’s getting some attention, was also put off until next year.

To save 2009, the games industry needs Wii Fit Plus to spur more sales of the Wii Balance Board, it needs Call of Duty: Modern Warfare 2 and Halo 3: ODST to sell like true holiday blockbusters, and it needs people to splurge on high-cost peripherals such as the band kit for The Beatles: Rock Band.

Holiday price cuts for the three major consoles couldn’t hurt, either.

 
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6 Comments For This Post

  1. Fred Green Says:

    Good.The price of these game systems and games are just crazy.To buy one of these money pits now would just be crazy.Will you be playing these things when they come to reposes your home?Oh that’s right,your electric would be cut off before that happens.

  2. Burt Says:

    Things may not be as bad as it seems. These figures are retail sales and do not reflect the exploding area of direct downloads directly from Microsoft, Sony, and Nintendo. I haven’t bought a game from a ‘sticks and bricks’ store in months, but I downloaded one for $19.95 just last night…

  3. Matthew C. Says:

    As far as consoles being money pits…seriously? since the recession hit I’ve been picking and choosing my purchases very carefully. If I can’t get at least 50+ hours out of the game, I’m not touching it. I could easily funnel over 100+ hours over the course of a year into games like Fallout 3, CoD 4, or Halo 3. That works out to about 50 cents an hour if you assume a retail cost of $60. Name one other form of paid entertainment that has that potential value. On those 3 games alone I’m paying $180 for 300+ hours of entertainment. Games actually save me money ;) Having less of a social life seems like a fair trade for more money. Considering that I can and have blown $30-50 for 2-3 hours at a bar making small talk with people I will likely never see again.

    The release schedule in June was weak (the past 3 months have been week) none of the games released in June are really “blockbuster” material. Halo: ODST and MW2 are going to be sales behemoths and will likely shatter sales records. The ship is not sinking…

  4. Jacee Says:

    i am hoping that the global economy would recover from this economic recession. life has been very hard with these massive job cuts.

  5. Janet Reyes Says:

    Our country was also hit hard by the Economic Recession. At least we are seeing some signs of economic recovery now. I hope that we could recover soon from this recession.
    .z..

  6. Francesca Webb Says:

    Our home business was really affected by the Economic recession, we have to cut jobs just to cover up our losses. fortunately, we have already recovered. |

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