Video game sales plunged again in June, dropping 10% from the same period a year ago, as consumers greeted some new releases with a yawn and as sales continued to erode for Nintendo Co.’s once-popular Wii console.
Sales of games and the consoles required to play them totaled $1.03 billion last month, compared with $1.15 billion in June 2010, according to the NPD Group, a market research firm. The decline followed a 14% slide in the previous month to a four-year low for the video game industry.
The lower numbers do not necessarily spell doom for the entire sector. An increasing portion of the industry’s sales now come from digital channels such as Apple Inc.’s iTunes, Facebook Inc. or Microsoft Corp.’s Xbox Live online marketplace. Such sales are not captured by the monthly NPD sales reports.
John Riccitiello, chief executive of game publisher Electronic Arts Inc., estimated that digital distribution, which currently accounts for 25% of the industry’s sales, could reach 50% of overall game revenue within five years.
Still, traditional games sold at retail outlets as discs continue to be a vital component of the $40-billion global game industry. And monthly fluctuations such as the drops seen in May and June aren’t an indication of how the year will play out. That’s particularly true for video games, where the bulk of the industry’s sales occur in the months leading up to Christmas.
June’s result partly reflected weak sales of titles that launched last month, including Activision Blizzard Inc.’s Transformers: Dark of the Moon, THQ Inc.’s Red Faction: Armageddon, and Ubisoft Entertainment’s Child of Eden –- none of which made the list of top 10 selling titles for the month.
Sales of Nintendo’s Wii console also continued to slide, according to Michael Pachter, an analyst with Wedbush Morgan Securities. And its new handheld 3DS console is facing tough competition from Apple Inc.’s iPhones and iPads.
“The DS is losing share because of smartphones,” Pachter said. “Seventy percent of DS users are pre-teens. Within that population, 50% are perfectly happy with an iPhone or iPod Touch. So Nintendo has lost access to about half of that market.”
-- Alex Pham
Video game image from Red Faction: Armageddon. Credit: THQ