July 16, 2010

Video Game Industry Saw Decline 6% In June

Market researcher NPD Group reported this week that U.S. retail sales of hardware, software and accessories for the video game industry dropped 6 percent from last year.

NPD said that sales of game software dropped 15 percent to $531.3 million.  Analysts were expecting a smaller decline.

Hardware sales climbed 5 percent to $401.7 million.  NPD Analyst Anita Frazier told The Associated Press (AP) that Microsoft Corp.'s Xbox 360 and Sony Corp.'s PlayStation 3 saw unit sales improve compared to last year. 

Nintendo's handheld DS was the month's best-selling game system, even though the Xbox 360 outsold Nintendo's Wii.

Jesse Divnich, an analyst with Electronic Entertainment Design and Research, told AP that June was unusual in that software sales fell while hardware sales increased. 

He said that last month's results could have been because people replaced older consoles with new ones.  The Xbox got a boost from a new model put out by Microsoft last month that is smaller, sleeker and has a bigger hard drive.

Take-Two Interactive Software Inc.'s "Red Dead Redemption" for the Xbox 360 was May's best-selling title.  NPD said the game is now the best-selling game of 2010.  Nintendo's "Super Mario Galaxy 2" for the Wii was in second place.  Disney Interactive Studios "Toy Story 3" video game also made it in the top 10.

"There has been a downward trend (both in quality and sales), for movie based games," Divnich said. "The presence of 'Toy Story 3' shows that as long as you focus on quality, there is certainly a consumer base for these types of games."

Top industry sales for the year through the end of June were down 9 percent to $6.66 billion compared with the same six-month period last year.

However, Frazier said the industry could still pull in $20 billion for the full year.

She told Reuters that the industry might receive a boost this year after a strong slate of games are released, and when Sony and Microsoft release their new motion controllers.


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