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U.S. Video Game Sales Down 10% in May
kukyfrope writes "After a strong 15.5% increase in U.S. video game sales in April 2006, May has gone the other way, posting sales numbers 10% below those of May 2005. Xbox 360 game sales and console sales alone slumped 37% and 25% respectively, but despite these declines, annual year-to-date game sales are only down 5%. Even so, analysts are not surprised, citing the transition from current-gen to next-gen systems as a dip in the market. 'We expect U.S. video game software dollar sales to decline 4% in 2006. We think that the transition is only partially complete, and believe that several bumps in the road [still] lie ahead,' said Wedbush Morgan Securities analyst Michael Pachter."
I'm am still playing the game i bought in April.
;)
I will do better next month i promise
Live Arcade is a different story, I'll probably buy a dozen of those.
By comparison, I bought around 10 to 15 Gamecube games a year over the past few years. It's hard to imagine with cheapies like me around, how Sony and MS will make alot of money on AAA titles. I'm waiting until Oblivion goes down to 30 bucks, after shipping, new, on ebay.
I think we should expect to see more numbers like this in the near future, especially in entertainment sectors. Things are getting tight in peoples' budgets due to various reasons, but especially because of high energy prices. One of the first places people look to save money is in their entertainment budget (whether they think of it consciously as that or not) by cutting down on eating out, movies, music and GAMES. After that they will start to cut into other more direct quality of life areas of their budgets.
Isn't month-by-month analysis self-defeating? I mean really, some months there just aren't many new games worth buying.
I'd be very surprised if there WEREN'T monthly fluctuations.
Are the "missing" gamers too busy playing World of Warcraft to go to the store and purchase something else? Is there a correlation between ever increasing WoW subscription rates and declining retail game sales? ;-)
Isn't month-by-month analysis self-defeating? I mean really, some months there just aren't many new games worth buying.
I'd be very surprised if there WEREN'T monthly fluctuations.
Like the stock market, there will be fluctuations, but there should be an upward trend. If there isn't, you start to look at the reasons why. But even within each fluctuation, there are reasons for everything - the only question is whether or not they matter in the long-term. Usually, they don't - unless they keep coming up again and again and turn into a trend. But it is worthwhile to find out what those reasons are so you can identify trends earlier.
I do think that, when you look at the Xbox 360, which supposedly had so much pent-up demand due to shortages, and then it only sold 290-some thousand units in April when the shortage was alleviated, and then actually dropped in May, you can start to look at things and say "hmmm, that's odd." Is that a trend? Maybe, maybe not, but if it's not a trend downward, then it's not a trend upward either. Either way I think you can start to worry if you're MS.
The question is, what big hit came out in May of last year, or what came out in April of this year? Major hits don't come out every month, nor do they come out on the same months each year, and they have a huge effect on monthly sales. Simply seeing month over month numbers without this information doesn't tell you much about how the industry as a whole is doing.
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I love how the NPD doesn't define how long a 'transitional year' is. When 2005 year sales fell, NPD also blamed it on the 'transition'.
So how long is that transition, NPD? Out of the 5 year console cycle, is it one year, two year, THREE years?
In business as in the military, you have to have what is called a contigency plan. What if the decline in sales is not a transition but an actual slowdown of the video game market? NPD is not serving its customers proper information when they keep insisting it is the 'transition'.
Keep in mind that Japan's market has been slowing down significantly for the last few years. Only with the phenomenon of the DS has Japan's slump reversed. Europe's market is soon going to be surpassing America's if NPD's 'transitional period' keeps going on for several more years.
Fact: The next-gen handhelds are already released and both the DS and PSP are selling flatly.
FACT: One next-gen console, the Xbox 360, is out, in stock everywhere, and cannot outsell the PS2 in America. With the lack of significant Xbox 360 software for all of this summer, Xbox 360 may actually fall in sales just as it did this month from last month. At this same time, the Xbox (having a price reduction) was outselling the Xbox 360 by this month. At this rate, the Xbox 360 will perform, at best, on the same level as the Xbox but most likely will sell less.
FACT: The sales numbers they using for the percentage increase (and percentage decrese) is total sales dollars, not sales units. Of course, sales went up in April with the expensive $400 Xbox 360 was in stock. All the prices are going up for next generation. The DS costs more than a Gamecube. The PSP costs like $200 with $50 games. The Xbox 360 is $400 with $60 games. The PS3 is going to be a whopping $600. The only system that will be the same (or less?) price wise is the Gamecube -> Wii at $200.
Of COURSE sales numbers will go up if prices go up. But are the number of gaming customers up? Are the number of software units sold going up? The answer is no. They are dropping down. And if the Xbox 360 and the new handhelds are any indication, it is not because of the 'transition'. It is because the market is...
1) Scared by the higher prices and/or waiting for them to drop (PS2 sales went up due to a price decrease. GBA is still outselling both the DS and PSP.)
2) The number of active gamers is decreasing due to getting bored (as opposed to growing leaps and bounds as has happened).
Compare the sales numbers of the US to Japan and Europe and you'll find that US is no longer as 'big' as it used to be. 2004 was the game industry's biggest year. Since then, its been in free fall.