Video Game Sales in July: Better, but Still Struggling

Video game sales weren’t quite as bad as some analysts were expecting in July, but the industry once again failed to match its performance of last year.

StarCraft 2
Courtesy of Activision
StarCraft 2

Software sales fell 8 percent last month to $403.3 million, according to the NPD Group. Hardware sales, as expected, proved the bright spot and were higher for the second month in a row, surging 12 percent, but it wasn’t enough to save the overall industry from another month of negative year-over-year growth. On the whole, the games industry was 1 percent lower than last year.

Analysts had expected the drop to be between 7.5 percent and 15 percent.

There is a bright side to the discouraging numbers. July’s sales totals—which focus on console systems—did not include the PC-exclusive “Starcraft II” from Activision-Blizzard. Activision previously announced that 1.5 million copies of the game sold within the first 48 hours.

"'Starcraft II' helped the PC games category to realize a 103 percent increase in dollars over last July,” says NPD analyst Anita Frazier. “PC Games and video game industry sales combined for an increase of 4 percent in revenues as compared to July 2009.”

July has the easiest dollar comparison of the year, but 2009 did have one strong title—Nintendo’s “Wii Sports Resort,” which included a new peripheral that made the Wii controller more accurate. July 2010 lacked any significant releases.

Electronic Arts's “NCAA Football 11” led sales last month, with over 666,000 units sold on the Xbox 360 and PlayStation 3. Microsoft’s “Crackdown 2” was the second best overall seller, moving just shy of 209,000 units.

Rounding out the top five was Nintendo’s “Super Mario Galaxy 2” with 193,000 copies and Warner Bros. Interactive’s “Lego Harry Potter Years 1-4,” which sold just shy of 142,000 copies.

Among hardware, the Xbox 360 was the clear winner in July, selling over 443,000 units, as Microsoft continued its rollout of a redesigned Xbox 360 (and clearance sale of older models.) Nintendo sold nearly 254,000 Wiis and Sony moved 214,500 PS3s.

Year to date, video game software sales—the most closely watched number of the monthly reports—are down 8 percent.

Most analysts are expecting flat to negative growth overall in 2010. And publishers, they say, may only have themselves to blame. The rise in games with deep, engaging multiplayer components could be preventing people from buying new games.

“Multiplayer online game play is as strong as ever, with an estimated 15 million people spending an average of 10 hours a week playing games such as ‘Call of Duty: Modern Warfare 2,’ ‘Halo 3’, ‘Battlefield Bad Company 2’ and ‘Red Dead Redemption’,” says Michael Pachter of Wedbush Securities. “While downloadable content (DLC) sales have been strong … revenues from DLC are insufficient to offset the declines in packaged goods sales.”

The summer months are typically weak ones for the gaming industry, but things generally start to pick up in August. The annual release of EA’s latest “Madden” game marks the beginning of the fall gaming season.

September will see the launch of “Halo: Reach”—the last game franchise creator Bungie Studios will make for the series—as well as PlayStation Move, Sony’s entry in the motion control market.