Video Game Sales Way Down

If there was any doubt that the video game industry isn’t feeling recession pangs, let them be cast aside. According to a report from market research firm NPD group, U.S. video game sales dropped to $1.07 billion in October, 19 per cent lower than last year. This continues a downward trend in the industry.

“The continued economic turmoil, and in particular the troubling unemployment rate, is undoubtedly impacting industry sales,” said NPD analyst Anita Frazier told Digitalmediawire. “If consumers’ personal outlook continues to erode, they could very well be much more conservative with their holiday shopping this year.”

After news that EA cut 1,500 employees in California, then spending money on social networking game firm Playfish. This suggests publishers are looking elsewhere for a steady revenue stream. Another report by NPD, earlier this month, says consumers are turning to social networking, texting, and Twitter in order to satisfy their entertainment needs. These free services might very well be replacing time that would otherwise be spent with video games or even pay-to-play services.

“With a host of new, easy-to-use mobile devices and free mobile and Web entertainment applications now widely available — and as adult consumers get more comfortable with these newer technologies — we can expect to see further increases in these areas in the months to come,” said Russ Crupnick, senior entertainment industry analyst for NPD.

According to the report, 66 per cent of consumers reported in August that they planned to spend the same amount or more on entertainment products and services in the following 12 months, which is three points higher than last year’s result. Still, game software sales alone plummeted 18 per cent in October, with Uncharted 2 taking the number one spot at only 537,000 copies. These numbers are exclusive of Modern Warfare 2, which sold several times that on release day.

This chart shows the total video game sales over the course of two years, ending this past September. The likelihood that peaks seen in 2007 will return this holiday season is slim to none.