Recession Thumps video game Sales

50cent video game

The video game industry is not recession-proof after all.

After posting a 10% increase in sales in Jan 2009, video game sales dropped 29% year-over-year in June 2009, the WSJ reports, citing numbers from NPD Group.

Analysts predict that the industry will stay at last year’s $11 billion, or grow by not more than 5% this year.

Console sales dropped by 38%, says the Journal.

Last week, reported weak numbers in its media business, saying it was due to a decline in video game sales. Take-Two Interactive Software’s chairman said initial orders for video games were lower.

Why the demand decline?

  • Consumers are thinking harder about spending on games, especially as they anticipate console prices to drop.
  • Digitally downloadable games, like those on the Apple app store, are cheaper or free entertainment alternatives.
  • With upgrades and online features, users can update games they already have, and delay buying new games.

The Journal says analysts expect console prices to drop this year, though none of the console makers confirmed this.

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