May 2011 video game sales hit four-year low


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The video game industry hit the pause button on sales in May, posting its lowest monthly revenue from U.S. retail stores such as Best Buy and Gamestop since October 2006.

Sales of games, consoles and game accessories, such as extra controllers, dropped 14% last month to $743.1 million, down from $866.8 million in May 2010, according to a report released Monday from the NPD Group, a market research firm.


‘A light slate of new releases is at the heart of last month’s performance,’ said NPD analyst Anita Frazier. Just 42 titles were released in May, compared with 58 in 2010. As a result, only 28% of the month’s game sales came from new releases, down from 41% a year ago.

With fewer new games out, foot traffic in retail stores declined and, along with it, impulse purchases, Frazier said.

The release of a digital add-on level for Activision’s Call of Duty: Black Ops, which was sold via download from Internet connected game consoles, also likely diverted consumer dollars on games away from traditional retail stores, Frazier suggested.

NPD’s monthly game reports currently do not include digital downloads or online spending, which analysts have estimated account for a quarter to one-third of total spending on games.

The decline in shrink-wrapped discs sold at retail belies a game industry that’s actually growing. A report by Deutsche Bank Securities projected that U.S. game sales, not including game consoles, would grow from $20.4 million in 2010 to $29.8 million in 2014. Much of that increase, however, is expected to come from online games such as World of Warcraft, social games such as CityVille and mobile games such as Angry Birds -- not disc-based games.

For the past year, overall video game sales have suffered setbacks as average consumers curtailed spending on Nintendo’s Wii console, as well as music games such as the once-hot Guitar Hero games. Instead, titles for dedicated core game players who prefer Microsoft Corp.'s Xbox 360 or Sony Corp.'s PlayStation 3 have performed relatively well.

In May, for example, the Xbox 360 and the PS3 saw increases in unit sales, but sales of the Wii and handheld DS consoles declined. In addition, six out of the 10 best-selling titles last month are games designed to appeal to hard core gamers, including L.A. Noire, Brink, Portal 2, Mortal Kombat 2011, Call of Duty: Black Ops, and NBA 2K11.

-- Alex Pham


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