Video Games Get Strafed by the Economy
The video game industry was seemingly immune to the economic downturn, rising ever higher while other businesses were feeling the ground bottoming out underneath them so quickly they could hear the wind whistling past. In January alone, sales jumped 10%, and games often retail for as much as $70 or more.
However, since March, video games have been seeing a steady decline – and in July, they got the chance to feel what it was like to have the ground go out from under them.
Video game sales dropped off by a whopping 29% from last year’s sales, and hardware sales fared even worse, plunging 38%. The Wii sales for Nintendo did particularly poorly, and game retailers and publishers like GameStop Corp, Electronic Arts Inc. and Activision Blizzard Inc. are all expected to show equally dim numbers in their earnings.
The video game industry had previously hoped to boast double-digit revenue growth this year while other industries flagged, but now they’re hoping simply to break even or slightly better.
One of the problems, analysts say, is consumers being unwilling to buy pricey new games and consoles when those same items will inevitably drop in price as time goes by. Digitally downloaded games are also a culprit, since many new games cost nothing and are offered in a huge variety of choices, like the applications for the iPhone.
Though all of this looks pretty grim, the video game industry is still faring better than others in the current recession, perhaps in part because Americans are needing new sources of entertainment as jobs drop off. Video games provide hours of distraction, and at a time when no one wants to face the harsh reality, that’s a service that’s in demand.
Posted at 07:48 am by Peter Koeppel