Video Game Sales Slide 16 Percent in August

Numbers from the NPD Group show the video game industry is still struggling, as sales fell 16 percent compared with August of last year.

Video game sales continued their economic slide in August, falling 16 percent, to $908.7 million, and extending the industry’s sales decline to the sixth straight month, according to market research company The NPD Group.

The Nintendo Wii posted the best sales of the three major console makers, with 277,400 units sold. Sony’s PlayStation 3 and Microsoft’s Xbox 360 posted increases, following highly publicized price cuts. NPD reported that software sales slipped 15 percent and sales of video game accessories experienced a 2 percent gain.

The PlayStation 3 posted sales of 210,000 consoles, up 13 percent and the first gain in 10 months, according to NPD. Microsoft saw sales rise by 10 percent in August, though hardware sales overall dropped 25 percent to $297.6 million. Sony’s console now retails for $299, while the Xbox 360 retails for $300.

“The price cuts implemented on the PS3 and 360 hardware already made an impact on unit sales, despite having been executed fairly late in the month,” NPD Group industry analyst Anita Frazier told news service Bloomberg. “It will be interesting to see the full impact of the new price points on September sales.”

While still in decline, the industry experienced a less precipitous drop in sales than in July, when sales fell 24 percent, to $848.8 million, compared with the same month last year. In addition, the upcoming holiday shopping season, coupled with highly anticipated titles such as Electronic Arts’ "The Beatles: Rock Band," is likely to boost what some analysts once considered a recession-proof industry.

"Certainly the worst is behind us,” Electronic Entertainment Design and Research analyst Jesse Divnich told Reuters. “The month of September does have a game for every demographic, and that does create a perfect storm for sales, and we expect that momentum to continue for the holiday season."

In�another report, the NPD Group found children12 years of age and younger account for 24 percent of video game industry unit sales, while households with children in this age group make up 45 percent of total industry dollar sales. According to the report, 57 percent of children ages 2-12 play video games, and 62 percent of them use a computer. The report concluded that while it is a big market for games, this consumer segment is far from penetrated, representing an area for future industry expansion.

“According to the U.S. Census Bureau, there are 53.4 million of them ages 12 and under in the U.S., accounting for 17 percent of the population. Yet for many industries, games included, they account for a much larger portion of total sales,” said Frazier. “For the 12 months ending June 2009, this group of consumers comprised 24 percent of games industry unit sales. Tweens in particular are a highly involved group of consumers, as 75 percent of this age group play video games and 81 percent are on the computer for non-homework related activities.”

By: Nathan Eddy
2009-09-12