Video Games Market Set To Shrink As Consumers Go Live

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The Australian video games market is tipped to shrink this year with vendors like Sony, Microsoft and Nintendo set to discount their gaming consoles even further than what they did in 2009 in an effort to drive sales.

Later today Microsoft is tipped to announce that subscriptions to its Xbox Live service grew 50 per cent in 2009 with both Sony, which is currently trying to establish an online network, and Nintendo set to go head to head with Microsoft in an effort to dent its Live success.
Currently Australian users of the service pay $72 for an Xbox Live annual fee. 
According to new GFK data, gaming hardware sales in Australia declined 0.09 per cent in 2009 while revenue fell 2 per cent. Overall the combined console and video games market grew 4 per cent to $2.05 billion.
In the past, annual sales growth has been 45 per cent for the past two years, with Sony getting a late lift with the launch of its new PS3 gaming console. 
GFK Entertainment Business Manager Andrew Milgate said recently that the “previous exceptional growth” recorded by vendors was going to be hard to replicate in 2010 due to the falling retail price of both hardware and video games.
Gaming hardware sales fell to 2.247 million units in 2009 despite the economic downturn stimulus handed out by the Federal Government.
Third-party manufacturers of gaming accessories such as Logitech and Powerwave have been the big winner in 2009 with the category reporting a 31 per cent increase in sales. Popular among consumers was drum and guitar kits as well as driving accessories.
Evidence has also emerged that consumers are shunning local retailers to buy games and accessories online, with Ron Curry of the Interactive Games and Entertainment Association claiming that there was “anecdotal evidence” indicating that a lot of money was being spent on download content which is not accounted for by GFK.
The year’s $19.66 billion tally included sales of video game software, portable and console hardware, and accessories, helped by a December sales performance that “broke all industry records,” according to Michael Gallagher, president and CEO of the Entertainment Software Association.
A big winner in the last quarter was Nintendo with its Wii gaming console. Despite a decision not to slash costs, the Wii was the most popular gaming console during the peak Xmas New Year buying period.  Also popular was the Nintendo DSi, with consumers shunning the recently released Sony PSP handheld consoles that forces consumers to buy content online.
In the US, where gaming sales drive the overall investment by software and console manufacturers, retailers were helped by the best sales month ever for the Wii console, according to Nintendo, with 3.8 million units of the recently discounted console sold. The company’s DS Lite and DSi handhelds combined to sell more than 3.3 million units during December, the second biggest month for the company’s handheld business, Nintendo added.
Aside from portable hardware, which experienced a 6 per cent increase in revenue in 2009, all video game categories experienced declines for the year, with the largest decline coming from console hardware (-13 per cent). Console software and portable software both experienced declines of 10 per cent, while video game accessories experienced a 1 per cent decline.
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