The video games industry, the onetime darling of the consumer electronics industry is facing a bleak Christmas with both software and console sales crashing running into the peak buying period.
Last month according to research Company NPD equipment and software sales fell 7.6% in November as the struggling industry limped into what vendors though would be a “good” period.
The industry continued to slump despite recent price cuts on all the major consoles and the launch of a blockbuster game, Activision Blizzard Inc’s “Call of Duty: Modern Warfare 2.”
Hardware sales fell 13.4%, while software sales dropped 3.1%. The results were worse than some analysts had expected.
“This should not be viewed as a healthy start to the holiday season,” EEDAR analyst Jesse Divnich said in a research note.
In the USA where sales have “crashed” and the industry is most affected November sales include the Black Friday post-Thanksgiving weekend, the traditional kickoff to the annual holiday shopping period.
Overall sales are down 12.1% for the year.
NPD analyst Anita Frazier noted that last year’s huge sales tally has provided a difficult comparison for 2009.”Breaking even seems more out of reach. In order to break even to last year, December sales would have to be up 36% over December 2008.”
In The USA Nintendo Co Ltd’s Wii was again the top-selling home console in the month with 1.26 million units, followed by Microsoft Corp’s Xbox 360 with 820,000 and Sony Corp’s PlayStation 3 with 710,000.
But PS3 was the only one of the three to show year-over-year growth, with sales rising nearly 90%. Wii sales were down more than 35% from last year, while Xbox sales were off 2%.
Nintendo of America President Reggie Fils-Aime said the Wii and its games still have a strong appeal to cost-conscious shoppers.
“What we’re seeing is the consumer is willing to spend as long as the value equation is there, as long as the software is there for the entire family.”
Microsoft spokesman David Dennis said sales of the Xbox are up 5% so far this year and the company is happy with where the console is in its life cycle.
“November is typically an indicator of what December will look like,” he said. “We certainly feel great about where we’re at.”
For its part, Sony Computer Entertainment America said PS3 sales are exceeding its expectations, and said some retailers are expected to see tight supply this month.