Video Game Sales Make Surprise Plunge in April

[Meier Link]

Sales of video game software and hardware plummeted in April, shocking industry observers who were expecting the numbers to be slightly positive or, worst case, down just slightly. That could mean a rough Friday for video game stocks.

On the whole, sales were off 26 percent to $766 million, with software sales (the most closely followed of the numbers) plunging 22 percent to $398.5 million, according to NPD Group, which tracks video game sales. Because April 2009 had relatively light sales (and thus, an easy comparable) industry insiders and investors were hoping to at least tow the line.

It was the industry’s fourth worst year-over-year decline—and it puts overall sales 11 percent behind last year’s sluggish pace.

“There are some bright spots if you peel through the data a bit,” says Ben Schachter of BroadPoint AmTech. “A lot of the weakness was from Nintendo-centric platforms, but the headline will definitely spook investors … Gamestop will be the most exposed.”

Michael Pachter of Wedbush Securities, who had expected the numbers to climb 2 percent, agrees that the retailer will be particularly vulnerable.

“I don’t think anybody but Gamestop will get hammered,” he says. “Activision and EA have already given low guidance. Take Two has ‘Red Dead Redemption’ coming out next week. Nintendo could be hammered, though. These are the worst [Nintendo] DS numbers in months.”


Hardware Even Worse
Hardware sales were even more discouraging than software, falling 37 percent from a year ago to just $249.3 million. The Nintendo Wii remained the top seller, but only moved 277,200 units.

Sony’s PS3 and Microsoft’s Xbox 360 were relatively neck and neck, selling 180,800 and 185,400 respectively. The handheld Nintendo DS system sold fewer than 441,000 units, despite the launch of a new version of the platform at the end of March.

When compared to the March numbers, Sony’s hardware sales were off 48 percent, Microsoft’s were down 45 percent, and the Wii tumbled 50 percent.

The overall decline is due to a pair of factors, according to NPD: April saw just a handful of new releases and the shift in Easter’s date meant fewer people were buying games as gifts.

“In April '09, consumers attributed $55 million of industry sales to Easter as a purchase occasion, which would account for about 21 percent of the decline from last year since Easter purchasing happened in March this year," says NPD analyst Anita Frazier.

The weak numbers could increase calls for both hardware and software price cuts this year. Many analysts are expecting Microsoft and Sony to lower the price of their machines before the end of the year, which could force Nintendo to react as well.

Don't, however, look for the companies to move up those cuts on the April figures alone.

"Before these guys cut prices, you'll see software bundles, which won't help third-party publishers," says Pachter. "I don't see a price cut [coming from Microsoft or Sony] until they launch their motion controllers later this year."

Last month’s big titles saw precipitous dropoffs. Sony's "God of War” dropped from over 1.1 million copies sold in March to just over 180,000. Nintendo's Pokemon SoulSilver Version sold over 1 million copies in March, but dropped to 243,000 last month.

Ubisoft had the month’s biggest game with "Splinter Cell Conviction"—selling over 486,000 copies. That’s a respectable number, but hardly a barn burner.

Copyright 2010 CNBC.com

Source: Video Game Sales Make Surprise Plunge in April - Plugged In - Yahoo! Games

Figured since we are a video game related site that posting news on the industry couldn't hurt anything.

I find things like this intersting.

For one people wonder why the DS sales are down and why people are shunning away from buy it. How many different variations of the DS have been released over the last 3 years? Maybe they should look into solidifying on system instead of revamping it 100 times and expecting people to buy them up everytime the release a new one.

I find hand held systems (excluding the PSP) to be very depressing when it comes to the mas prodduction of new models in a very short time span. Look at the non hand held systems. They are multi year systems, spanning minimum of 5. While hand helds are expected to be replaced in less then 2 years.

Also one thing I don't see in this report as a possible reason to why sales are down is maybe because games are being pushed out so fast people don't have time to complete the titles they have before another one is released. And with the few limited titles I have had the pleasure to play as of late. They seem to be over priced, rushed, poorly exicuted, poorly designed and very cookie cutterish.

Given this is not near as bad as the industry fall out in the 80s and I am not forcasting the same events to happen again. I am just stating that it reminds me of it.

Also a point to note is that it is the April results, a slow time of year for the industry. There are not any holidays around it. Kids are in school so the need for entertainment is not in as high of demand as it would be in say a month or so.

Over all impresion of this article is that it is simply a bad month for the industry. I think that the numbers will jump over the next month(s) and will probably see a trend after school picks back up and around this time next year.

[Jin]

Why is this surprising? From what I recall and with only a few exceptions, game and console sales have been declining (year over year) since 2008. For hardware sales, it makes sense. The more people that buy one, the smaller the hardware market is. Theoretically, Natal and Playstation Move should give this a bit of a jump start when they release. As for actual game sales, I think the economy is still working its anti-magic and dragging sales down. People just don't have as much disposable income to spend on gaming these days and with multiplayer games like Modern Warfare and Halo, it's easy enough to buy only a few games a year and continue to play them daily. Also, as mentioned in the article, the Easter effect makes the numbers somewhat misleading.

And let's be honest, when they say that DS sales are down, they mean that they've sold 400,000 units last month as opposed to 600,000. They're still doing fine.

[Merlin]

The last time I checked, most kids and college students are busy with preparing for finals or taking finals. This just in! People have other things to do besides play games. More at 11.

As far as gaming in general, it was cool back when games like FFVII started adding FMVs and whatnot, bringing games up to cinema-level production. It was no longer a bunch of geeks knocking out a game in a basement. The problem is that nowadays they took the whole concept way too far and just like the movie and music industry, turn out crap by the truck-fulls and wonder why people don't buy it. Perhaps because we are tired of paying $60 for shitty games, $30 for shitty Blu-Ray movies, $15-$20 for CDs with one good song on them? Hello?

Personally, I'm holding out for a few games... games that seem to take forever to come out. I won't even go into the whole "Advertising games we aren't releasing for another 4-5 years" (yes I'm talking about you Blizzard and Square Enix). By the time they come out I no longer give a shit about them. >_<

[Jin]

There were no finals in April last year?

[Zargabaath]

Also one thing I don't see in this report as a possible reason to why sales are down is maybe because games are being pushed out so fast people don't have time to complete the titles they have before another one is released. And with the few limited titles I have had the pleasure to play as of late. They seem to be over priced, rushed, poorly exicuted, poorly designed and very cookie cutterish.

Game wise the article does give some reason as to why sales weren't huge: no big releases for the month. The biggest release was Splinter Cell selling a bit under 500,000. For the first 3 months of this year the gaming market had some pretty big releases scattered throughout them.

Why is this surprising? From what I recall and with only a few exceptions, game and console sales have been declining (year over year) since 2008.

So far this at the end of April, the PS3 is up 41% from '09 and the Wii is 2.67% up from the same year. The Xbox 360 is down around 5% since this time last year. Also same time (end of April of '09) the sales for all three consoles were up from their '08 numbers. It may be a stretch to say that sales have been down since '08 since we are hardly in 2010. The Xbox 360 had around 500,000 less systems sold in '09 compared to '08. The Wii was a little under 2 million less, but had a total of 22 + million for '09 - still great. The PS3 had a little over 3 million more sales in '09 than in '08 and it is 1.1 million units ahead of '09's numbers.


An interesting note is since the slim model of the PS3 came out, worldwide the Xbox 360 has never toped the PS3 in weekly sales which translates into monthly and to-date sales.

[Furore]

Well, I did my part in April. Four full priced retail games, several second hand titles and a portable.

I <333 the video game industry greatly moreso than any other.

[Jin]

Zargabaath: Are you talking world wide sales or US sales? the NPD only covers US sales, which is what the article is referring to.

And I should have been more specific. I wasn't referring to total sales. I was referring to year over year monthly comparisons (hardware and software) of revenue. April 2008 compared to April 2009 compared to April 2010, for example. As well, rather than from 2008, I should have said since about March 2009.

March to August 2009 were down compared to the same months in 2008 (again, this includes hardware AND software). September saw a brief increase (1.27B to 1.28B), but October and November were once again down (though the PS3 gained in sales year over year due to the new SKU/price point). December saw a good increase of about 0.20B. January and February 2010 saw further declines against the previous year and although March 2010 was aw an increase from March 2009, it was still lower than March 2008. April of course, as this article points out, was a train wreck.

That makes 12 out of the 14 months since March 2009 (or 12 out of 16 if you go by my previous statement that lumped all of 2009 together) that saw year over year declines. This April fiasco really isn't that surprising given this.

All data and figures were taken from the NPD Group.