Video Game Industry Going Down the Drain
Sales of traditional video games have declined at least 29 percent of its sales, NDP reported. Game studios are closing. Monthly sales numbers at brick and mortar retailers have declined steadily for the past seven months, and while some argue that digital distribution is making up that gap, the numbers don't back that up.
The NPD Group recently issued an updated sales statement for the first fiscal quarter of the year, folding in digital sales, used game sales and rentals. That raised the number from $1.5 billion to $3.4 billion – which sounds like a nice jump, until you realize that in the first quarter of 2011, that number was $5.9 billion.
Investors in the industry's publishers aren't happy. BMO Capital Markets' Edward Williams says shareholders believe the industry "is in a secular decline." That might be a bit dire, but things truly aren't good.
Many point to the fact that we're experiencing an unprecedented gap between new console generations. With the current console cycle in its seventh year (the Xbox 360 was released back in 2005), which is considerably longer than what previous consoles have faced, consumer fatigue has set in. Gamers are simply growing a little bored with their devices.
Some hold out hope that Nintendo's Wii U, due out later this year, will turn things around dramatically. But while the system could give a small boost to sales numbers, most analysts predict the real turn of the tide will come following the launch of the next Xbox and Playstation.