NEWS - Tuesday, August 11, 2009

Recession Finally Having Impact on Game Industry

 The long-held belief that video games were "recession proof" has finally been proven false, as the latest data from Electronic Entertainment Design and Research (EEDAR) indicates that recent software sales are down, the software-sales prediction is bleak, and hardware sales will likely end the month down by double-digits.

"EEDAR expects software sales for July 2009 to come in at $501 million, a 15% decrease over last year," said EEDAR analyst Jesse Divnich. In addition, he says the firm "expects hardware unit sales for the next-generation systems to decrease by 25% over last year for the month of July, with all platforms posting a year-over-year decline."

 Divnich said the decrease in sales -- along with the firm’s expectation that overall 2009 software growth will be "flat" rather than increased year-over-year -- is "not the result of the recession impacting the industry...; rather, [it] is purely the result of key titles being pushed out of the 2009 calendar year."

 However, the analyst did admit that the revenue that would have been spent on those delayed titles will "certainly not" be spent on other titles. In other entertainment sectors, such redistribution is the norm, as those consumers seek other concerts, movies, etc. to attend. Gamers’ pockets, then, are clearly not as open as the pockets of other consumers when it comes to discretionary spending this year.

 In addition, the delays to which Divnich was referring are only two in number, BioShock 2 and Splinter Cell Conviction. Perhaps most intriguing is that the hot-selling Nintendo Wii will also suffer from a hardware sale decline, even though it’s by far the least expensive and most-popular console of the current generation.

 Divnich did predict that Wii Sports Resort would sell more than 475,000 in its first week in the United States, but that the sales lift (and any accompanying hardware sales) would be due more to Nintendo’s large marketing campaign than any sincere consumer demand.

 As for how the down economy is affecting the game industry on the whole, EEDAR supplied the following sober information: there currently exist approximately 9 million fewer PS3 and Xbox 360 units in the market compared to the PS2/Xbox penetration over the same time period in North America. On a monthly basis, PS3/Xbox 360 hardware sales are a combined 35% lower than PS2/Xbox hardware sales during the same time period in the product lifecycle.

 Now, with the recession (ideally) hitting its waning days, the economy has simply caught up with the software scene as well. So much for the industry being recession-proof.



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