Gaming Slump Continues

Video game consoles and hardware were up 5% in June, but sales of game titles dropped 15%, dragging the overall category down 6% from a year ago.
Without any compelling new games to pry open wallets, consumers spent less on video games in June, while lower prices spurred higher sales of consoles. Video-game sales at U.S. retail stores last month fell by 6% to $1.1 billion from $1.17 billion a year ago, according to the latest figures released Thursday by the NPD Group. The drop marked the ninth monthly decline in the last 12 months for the industry.

"Unfortunately, the industry realized a decline versus the same time period last year, driven by decreases in sales of portable hardware and console and portable software," NPD analyst Anita Frazier said.

However, the industry had a bright spot last month in sales of video-game consoles, such as Microsoft's Xbox 360, Sony's PlayStation 3 and Nintendo's Wii. Price cuts over the last year helped drive unit sales of the Xbox 360 and PS3 up by 88% and 85%, respectively, while Wii unit sales rose by 17%. In dollar terms, video-game hardware, which included portable consoles, rose by 5% last month to $401.7 million.

While console sales were in the black, sales of the games that run on the hardware fell by 15% year to year to $531.3 million. There were no major releases in June to drive sales, as the top-selling game of the month was once again "Red Dead Redemption," which sold nearly 1 million units in its second month at retail.

Looking ahead, the industry could see a significant sales boost later in the year with the release of hard-core gaming titles, such as "Halo Reach," "Star Craft II" and "Call of Duty: BlackOps." In addition, Microsoft and Sony plan to release motion controllers for their respective consoles in the fall, which are also expected to spurred sales.

NPD believes total sales for the year at U.S. retailers could fall between $18 billion and $21 billion. But the upcoming titles and the new hardware from Microsoft and Sony could place annual sales at the high end of the forecast.

The NPD monthly report is based only on U.S. store sales and does not take into account online sales.

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