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The last two months of 2008 were rather good for video game consoles in the U.S. retail, reports market research firm NPD. In November-December timeframe Nintendo Wii was naturally the most popular system, while despite of price-cuts Microsoft Corp.’s Xbox 360 barely managed to show sales figures similar to those a year before meanwhile Sony Corp.’s PlayStation 3 clearly became a victim of economic slump in the country.

Sales of Video Game Hardware and Software Set New Records

Revenues obtained in November and December for video game console hardware were up 10% in November ($1.21 billion) and 2% in December ($1.88 billion), year-over-year, despite of price-cuts and introduction of more affordable Microsoft Xbox 360 and Sony PlayStation 3 models.

Software sales in the last two months of the year 2008 were also up 11% in November ($1.45 billion) and 15% in December ($2.75 billion) annually, meanwhile revenues for video game accessories grew 7% in November ($255.4 million) and 8% in December ($662 million) year-over-year, figures from NPD reveal.

In total, video game revenue in the U.S. retail topped $2.91 billion in November, an annual increase of 10%, and 5.29 million in December, up 9% year-over-year.

“[December 2008] marks the first time that industry revenue has topped $5.29 billion in any single month. In 1997, annual revenues were $5.1 billion, and now a single month has realized that level of sales,” said Anita Frazier, an analyst with NPD.

All-in-all, sales of video games software and hardware in the retail in the USA in 2008 increased 19% year-on-year and reached unprecedented $21.33 billion. Sales of video game consoles raised 11% Y-o-Y and totaled $7.81 billion; software revenues were up 26% annually and equaled $10.96 billion; sales of accessories of video games were 14% larger compared to 2007 and topped $2.57 billion.

Unit Sales Set New Records, PS3 and X360 Show Signs of Slowdown

It was clear throughout the whole year 2008 that more and more people acquire video game consoles as video gaming is becoming more appealing to various groups. Even though in the last two months of 2008 the unit growth slowed down a bit, it was still remarkable.

Unit sales of video game consoles were up 27.5% year-over-year in November and only 4.8% higher than a year before in December, which may be an indicator the market has reached its limits. In total, there were 19 million 750 thousand non-portable video game consoles sold in the U.S. retail in 2008, up 12.7% than a year before.

“38 months into this generation of hardware, the three new systems have sold a combined 38.2 million units, whereas at the same point last generation, in December 2003, the three systems had sold 36.9 million units,” revealed the NPD analyst.

The biggest winner of 2008 was naturally Nintendo Wii, which gradually increased its popularity every month in 2008 and there were 10.171 million such consoles sold through in the U.S., according to NPD.

The PlayStation 3 from Sony Computer Entertainment Inc. also posted impressive unit sales increase year-over-year in 2008, but with 3.544 million devices sold, the system is still well behind its rival. Moreover, in the last couple of months the PS3 even could not show year-over-year sales increase, which clearly means that customers are cutting their spending these days.

Microsoft Xbox 360 demonstrates rather mixed results. The platform did not get massive exclusive titles in 2008, which is why there is no surprise that sales remained on the same level and equaled 4.735 million units. However, Microsoft reduced pricing of the Xbox 360 in Q3, which is the reason why the platform was very successful in Q4 2008.

Even though low hardware prices are important in current market environment, NPD believes that quality of content is even more vital for success of the new-generation game consoles.

“All three of the newer generation console systems have something to brag about.  The expanded supply of Wii systems at retail was clearly evident in the sales figures. […] The 360 realized a nice unit sales bump […] and the PS3 [year-on-year] unit sales growth is impressive. It is clear there can be more multiple victors this generation and while price is certainly a strong factor, particularly as the current economic situation continues to prevail, the most important factor that will drive success in 2009 will be the line-up of compelling games that will keep consumers involved in the industry,” said Mr. Frazier.

Nintendo sold-through around 1.57 million and 3.04 million Nintendo DS handheld video game devices in November and December, respectively, whereas Sony PlayStation Portable was sold in 421 thousand and 1.02 million quantities in the same timeframes.

“The NDS captures the top-spot for hardware sales this month, marking the first time that any hardware system has sold in excess of 3 million units in any single month,” noted Ms. Frazier.

Nintendo Wii Dominates Software Charts

Sales of video games have definitely hit the record in 2008 and in December ’08 in particular.

“Software sales for 2008 reached nearly $11 billion, which is more than total industry revenues were in 2005,” the analyst pointed out.

The top 10 console video games for the year is dominated by Wii and X360 game platforms, only one title for the PS3 managed to sneak into the top 10.

“The variety of content on the top 10 list shows just how viable non-traditional content has become.  Not only can these games succeed, they can end up on the top 10 list for the year,” Ms. Frazier noted.

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

Discussion

Comments currently: 2
Discussion started: 02/11/09 03:00:05 PM
Latest comment: 02/12/09 05:19:36 PM

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1. 
PS3 is a victim of being the highest priced console for over 2 years now. Nothing has changed in that reagrd and nothing will until we actually see the console beat it's main competitor in the US year over year. Even then there is pretty much zero chance of it beating the 360 before the next generation begins.
0 0 [Posted by: Lane  | Date: 02/11/09 03:00:05 PM]
Reply

2. 
The success of the Wii must be attributed to its penetration of new markets previously not seen as users of video games. It's quite astounding considering Nintendo was struggled in the previous two generations of game consoles. I would even take a guess that it has not this much market share since the SNES back in the early-mid 1990s.
0 0 [Posted by: Harlz  | Date: 02/12/09 05:19:36 PM]
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