Analyze That: No Recession for Videogames Market

A quick glance at the NPD data for the United States related to the month of September showed a picture that seemed gloomy to most people. After all, sales of videogame related hardware went down and big releases like Madden NFL and Mercenaries 2 failed to become blockbusters.

 

But the analysts who watch the videogames industry closely are saying that, in fact, this segment is doing well. They point out two things: the American industry declined in September by more than 7% and September 2007 was a very good month because of the release of Halo 3, which boosted sales of both hardware and software. September 2008 saw a drop in the value of hardware sales because the prices of consoles dropped, but the number of units sold actually went up in comparison with the last year.

 

Michael Pachter, from Wedbush Morgan, says that “While overall sales growth was negative, implying that the consumer is beginning to feel the effects of the economic downturn, it was above most expectations, with solid hardware sales implying continued software sales strength through the holidays”.

Colin Sebastian, from Lazard Capital Markets, also believes that October will be a stronger month, because Nintendo is going to supply more Wii consoles while more users will be attracted by the lowered prices of the Xbox 360. The games which will sell best will probably be Rock Band 2, Left 4 Dead, the Wrath of the Lich King expansion for World of Warcraft, Prince of Persia and Far Cry 2 from Ubisoft.

Doug Creutz, from the Cowen Group added, “We think video games are a relatively recession-resistant category due to their high entertainment value/price proposition”. He also expects October to see better sales that will afterwards only rise as November and December roll in.

 

The line up for the rest of the year is certainly strong, with big games like Gears of War 2, Fallout 3, Resistance 2 and LittleBigPlanet still to come and rekindle buyers’ interest.