Video Game Industry Sees First Decline In More Than Two Years

Sales of games -- excluding PC games -- consoles, and accessories fell 7% in September to $1.27 billion from $1.35 billion in September 2007.
The video-game industry in September saw its first sales decline since March 2006, primarily because of the lack of a blockbuster game on the scale of last year's "Halo 3," a market researcher said Friday.

Sales of games, excluding PC games, consoles, and accessories fell 7% in the month to $1.27 billion from $1.35 billion in September 2007, NPD Group reported.

"This is the first true monthly decline the industry has experienced since March of 2006," NPD analyst Anita Frazier said in an e-mailed statement. "It's important to keep in mind, however, that this month's 7% decline is against a month (September 2007) that itself was up 75% from the prior September."

The big jump last year was driven by Microsoft's "Halo 3," which broke records in becoming one of the top-selling video games of all time. The title, exclusive to Microsoft's Xbox 360 console, posted sales of $170 million the day it was released and more than $300 million in the first week. It also broke records for online play with more than 2.7 million gamers logging in the first week.

Even without a "Halo 3," industry sales so far are 26% ahead of the same period last year and are on track to reach $22 billion or more. "Overall, the health of the video-games industry remains quite strong despite the rocky economic conditions," Frazier said.

Whereas 35% of last year's game sales came from "Halo 3," this year's revenues are spread a bit more broadly with seven titles achieving sales of 250,000 units, compared with three in 2007, NPD said. Among the most successful games this year is "Rock Band 2," which achieved sales of more than 360,000 units just on the Xbox. Sales are expected to remain robust, given the release later this year of versions for Sony's PlayStation 3 and PlayStation 2 and Nintendo's Wii.

While PC games are not included in the NPD numbers, Frazier pointed out two titles worth noting. "Spore" achieved sales of 406,000 units, and "Warhammer Online: Age Of Reckoning" reached sales of 274,000 units. The numbers placed both games in the top 10 list of combined console, portable, and PC games sales for the month.

Revenue from consoles was flat in September, because of lower prices, NPD said. The average retail price of hardware across all platforms was down 8% from a year ago. Price cuts, however, spurred unit sales. In dropping Xbox 360 prices, Microsoft saw a 78% increase in unit sales from the previous month.

"This increase, despite the acceleration of economic turmoil during the month of September, is a solid indicator of the health of the industry heading into the holiday season," Frazier said.

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