October a Mixed Bag for Video Game Sales

Never underestimate the power of war and basketball.

Source: Bethesda Softworks

Buoyed by strong performances by “NBA 2K11” and “Fallout: New Vegas,” the software side of the video game industry managed to push out of its slump in October.

Last month was the first time since May that retail software sales saw an increase over 2009, ticking up 6 percent. The good fortune did not extend to the rest of the industry, however, which was down 4 percent overall, chiefly due to abysmal sales of game consoles.

Video game hardware sales were off 26 percent overall last month. That drop was largely expected, as Sony and Nintendo both saw a bump last year at this time due to price cuts.

Take-Two Interactive had the month’s top-selling game;“NBA 2K11” withstood competition from a number of highly anticipated titles and benefited from Electronic Arts’ cancellation of its competing product. Bethesda Softworks’ post-apocalyptic role-playing game “Fallout: New Vegas” took the number two spot overall—selling some 680,000 copies for the Xbox 360 alone.

That’s bad news for EA, whose “Medal of Honor” only managed third place. The publisher had bet heavily on the reboot of what was once its biggest franchise. Critics weren’t impressed with the game, though, and players seemed to bypass it, continuting to play September’s “Halo: Reach” and waiting for the early November release of “Call of Duty: Black Ops.”

Sony apparently saw pickup for its PlayStation Move motion controller. Sales of video game accessories, the category in which the peripheral is included, were up 18 percent last month.

That might seem a solid victory for Sony, but it’s hard to say for certain. The company is refusing to give any updated hard numbers on Move—and research firm NPD did note that the device was outsold once again by a card for Xbox Live credits, used to buy downloadable content on the Microsoft system.

While there was little good news for console makers, the Xbox 360 did have some reason to celebrate. It was the only game system to see sales improvements over last year. The Nintendo DS topped hardware sales in October, but was still down considerably from last year.

Year to date, the industry remains 8 percent off of last year’s pace. Software sales, which are generally looked to as the best barometer of the industry’s health, are down 7 percent as well. Hardware sales are off 15 percent.

And things aren’t expected to get much better before the end of the year.

“We don’t expect the down trend in sales we’ve seen all year to reverse for the balance of the year,” says Michael Pachter, managing director of Wedbush Securities. “The end of the year must depend upon a solid release schedule to drive year over-year growth. The games coming out are outstanding, but in comparison to last year, they are not significantly better.”

That’s likely to keep investors on the sidelines. But retail sales today make up just 60 percent of the video game industry. There’s also used games, game rentals, subscriptions, digital full game downloads, social network games, downloadable content and mobile game apps.

For the first six months of 2010, those additional categories boasted sales of between $2.6 and $2.9 billion, estimates NPD. Retail software sales, meanwhile, stand at $3.7 billion.