August was supposed to be the month video game sales turned around. Instead, they extended their slide for the sixth consecutive month.
Earlier this year, during the bleak holiday period, industry observers had hoped that the power of Electronic Arts’ juggernaut franchise “Madden” would be a driving force that finally turned around slowing sales of video games.
Instead, consumers bought 15 percent fewer games in August than they did the previous year. The drop is slightly higher than analysts were expecting. Sales fell to $470 million, according to NPD Group.
Year to date, game sales are 14 percent behind 2008’s pace – and sales overall are $1.5 billion lower than they were at this time last year. Hardware sales, not surprisingly, fell as well – dropping 25 percent from the 2008 numbers.
Sony, however, saw a significant increase from the July sales, on the heels of its Aug. 19 announcement that it was cutting the retail price of the PlayStation 3.
Sales of Microsoft’s Xbox 360 were higher both month-over-month and year-over-year as well. The Wii, though, did not fare as well.
Though it sold more hardware units than it did last month and led overall hardware sales, August 2009 sales were nearly 40 percent behind last year’s pace.
The poor performance is bound to increase pressure on the company to reduce prices.
Game sales in August showed a slight bump from the July figures, but the increase is not as big as many were expecting, given the introduction of two major franchise installments.
In addition to “Madden 2010,” Nintendo’s “Wii Sports Resort” – introduced in late July – was expected to be a big seller. “Madden,” while it was the month’s top selling game, is showing some weakness at retail this year.
The 2010 installment of the game sold more than 315,000 fewer copies than the 2009 version – a worrying sign for EA, which has been hit by a series of disappointments over the past year.
While hardware price cuts will continue to drive foot traffic in September, this month also brings some of the year’s most anticipated games.
“The Beatles: Rock Band” is expected to sell 2 million copies within its first month.
And on Sept. 22, Microsoft will launch the latest installment in its flagship “Halo” franchise: “Halo 3: ODST”.
The bump could be short-lived, though.
Colin Sebastian, an analyst with Lazard Capital Markets, says he expects October sales to fall back into negative territory, given a tough comparison to 2008.
Analysts and investors have been predicting for some time that 2009 will be, at best, a break-even year for the video game industry, due to the economy and an unprecedented series of delays for high-profile games.
More and more, though, the feeling is that the industry is in crisis – and the outlook is slowly moving toward 2009 being a year that posts the first year-over-year loss since 2004.