Video Game Sales Drop Again in May, This Time 5%

Sun, Jul 4, 2010

Industry

After a massive slump in April, U.S. retail video game sales fell 5 percent in the month of May. Although May is typically a slow month for game retailers due to the focus on E3, this year failed to overtake last year’s relatively low numbers.

According to market researcher NPD, U.S. game revenues were $823.5 million, versus last year’s $865.7 million. Hardware sales were down 20%, from $303 million to $241.5 million. Software sales were actually up 4% from $450.4 million to $466.3 million, and accessory sales were up as well, rising from $112.3 million a year ago to $115.7 million. Taking into account the fact that the DSi launched last year and there were no major hardware releases this year, this month’s numbers seem a little less dire. However, May saw the release of two of the largest titles of the year: Red Dead Redemption and Super Mario Galaxy 2. In light of that fact, the software sales increase seems quite low.

So what’s happening? Well, the recession is not over and done with. The game industry was hurt badly by the state of the economy, with the strong getting stronger and a number of smaller studios closing their doors or being gobbled up in acquisitions. Also, a lot of larger studios have adjusted their philosophies, preferring to focus additional time and money on existing IPs that already have a foothold. Sequels and franchises are financially less risky than new and untried IPs; after all, the marketing burden definitely gets a lot easier. You don’t have to spend a lot of time getting the Infamous name in people’s brains; they already know it, so Infamous 2 will be a much easier sell.

So we’ve got less people making games, and the games that are coming out are trending towards sequels or franchises with longer, more intensive development cycles. That means less games in general, and less original experiences. I for one am a sucker for a new concept; I’d much rather shell out a chunk of change for a new and exciting game than the fifth iteration of a franchise. I’ve definitely bought a lot less games this year than I did last year; there are just less purchasable titles I’m interested in. I’ve drifted towards Facebook and online titles; I don’t have to pay anything if I don’t want to, and the games are smaller, faster, and newer than anything sold on the shelves.

Is the same thing happening to other gamers? Is this a trend, rather than an isolated preference? Maybe. It’s certainly one of the reasons that sales are being tracked so closely these days. If the cause of the trend can be positively identified, the game industry will definitely undergo a shift to compensate. What will that shift be? I guess we’ll have to wait and see.

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- who has written 290 posts on Frisky Mongoose.

Sarah Gray is a Weekend Editor at Frisky Mongoose focusing on video games and the social media that surrounds them.

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