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Despite of gloomy situation with the world economy, sales of video games and video game consoles continue to set new heights, which is quite natural since games provide hours of entertainment at relatively affordable price-points. It is interesting to note that despite of rich multimedia capabilities of Microsoft Xbox 360 and Sony PlayStation 3, Nintendo Wii still outsells both combined, according to NPD.

In the recent months the market of video games in the U.S. retail has been growing pretty fast both on revenue and unit basis. Instead of going out, people tend to spend more time at home, which is why sales of video games as well as consoles is on the rise. While the trend does have an effect on purchases of non-portable game consoles, portable devices start to lose their popularity, based on sales figures released by NPD Group for October ’08, since people leave their homes less than previously.

New Heights, New Concerns

In October the video game industry again demonstrated remarkable growth, just like throughout the whole year 2008.

“The video games industry grew an impressive 18% year-over-year in the first month of the critical fourth quarter. With 10-months under its belt, the video games industry is still poised to top $22B in annual sales in 2008,” said Anita Frazier, an analyst with NPD Group.

In fact, there was a slight – 7% – year-on-year decline to $1.27 billion in sales of both hardware and software back in September 2008, but it should be noted that in September ’07 Microsoft released its highly-anticipated Halo 3 titles, which lifted the market considerably as people not only acquired new consoles, but also got a copy of the game.

October is a much better month for video game business: sales of video game consoles increased 5% revenue wise to $494.74 million and 26% in terms of unit sales, due to a price-cut from Microsoft and also discontinuance of Sony PlayStation 3 that cost $499. In fact, dollar sales of video games hardware declined a bit month-on-month, primarily as a result of PS3 sales drop. Sales of both video game accessories/hardware and software totaled $1.31 billion in the U.S. retail, according to NPD.

“The sales results are mixed this month, however. The console portion of the market made significant gains at 26% across hardware, software and accessories, while the portable side of the market stalled, declining 14%. Year-to-date the portable segment of the market is still up 7%,” said Ms. Frazier.

Unfortunately for companies who make accessories for video game consoles, their sales dropped 8% to $120.19 million.

“Accessory sales are down for the month but we should expect this category to pick up again with the anticipated increases in hardware sales for the holidays,” explained the analyst.

In short, while there are gains in general, there are some declines too that cannot be ignored even though the market is on the rise.

Wii Outsells Everything Else Combined

Thanks to increased supply of Wii game console by Nintendo, the device managed to outsell its competitors, including PlayStation 2, PlayStation 3 and Xbox 360, combined in terms of units.

“The greater supply of Wii hardware at retail is evident in the sales figures for the month with the Wii enjoying its best sales month outside of last November and December,” said the NPD analyst.


Please click the graph to enlarge

Rather surprisingly, sales of PlayStation 3 decreased compared to September, despite of slight unit sales boost. Nevertheless, the PS3 realized the greatest year-over-year monthly unit sales increase at 57%, according to NPD figures. Naturally, the era of PlayStation 2 comes to its end and it is hardly surprising to see its supplies tumble. Meanwhile, thanks to price-cut, Xbox 360 gained popularity.

“The price reduction on the Xbox 360 is paying dividends at retail as the platform realized a 7% unit sales increase over September. Keeping in mind that September was a 5-week month while October had four, the sales pace increased 33%,” said Ms. Frazier.

Nintendo sold-through around 491 thousand of Nintendo DS handheld video game devices, whereas Sony PlayStation Portable was sold in 193 thousand quantity.

Software Sales Up 35% in October

Sales of video games just prove that people start to spend more time playing rather than going out or traveling. In fact, based on the top 10 titles in October, 2008, the gamers crowd is pretty different, which means that video games now appeal to very wide audiences.

“The expanding variety of content available for consumers to play is clearly paying off for the industry. Looking at the top 10 games for the month, half are ‘M’ rated games while the other half are ‘E’ rated games and they span disparate genres. There is something for everyone on this list,” the analyst for NPD said.

Sales of Fable II title for Xbox 360 game console was the top-selling game, but titles like Wii Play still remained in the top 10.

“Console software sales realized the greatest percentage gain year-over-year of any category.  This month, Fable II captured the top spot selling 790K units across the standard and limited edition SKUs,” said Anita Frazier.

Tags: Microsoft, Nintendo, Sony, Playstation, Wii, Xbox

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Discussion started: 11/23/08 08:35:37 PM
Latest comment: 11/23/08 08:35:37 PM

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Dear Sirs or Madam,

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