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TMCNet:  Video game sales down, but why? [St. Joseph News-Press (MO)]

[December 06, 2012]

Video game sales down, but why? [St. Joseph News-Press (MO)]

(St. Joseph News-Press (MO) Via Acquire Media NewsEdge) If Nintendo brought about the Silver Age of Gaming in the mid- 1980s, it appeared the Golden Age of Gaming was kicking off in 2010.

Two years ago, video game creators were declaring their medium the next great art form. Titles like "Uncharted 2,' "L.A. Noire,' "God of War 3' and "Heavy Rain' were matching the drama and visual spectacle of blockbuster movies and also were captivating gamers all over the world with their interactivity.


The surging potential of the video game business was met with surging sales. More than 200 million Wii, Xbox 360 and PlayStation 3 systems had been sold worldwide. Sales of portable gaming devices like the PSP and Nintendo DS were up as well. More than 12 million subscribers were paying $15 a month to play Blizzard Entertainment's online game "World of Warcraft,' and Blizzard's competitors were developing worthy rivals. Following in the footsteps of the Wii, Microsoft's motion-sensing Kinect system was generating tons of buzz in 2011 by promising to free players from buttons with controllers.

Today, however, the video game giants find themselves in financial peril.

Through September of this year, retail sales of video games plummeted 20 percent in the U.S. This comes on the heels of a lackluster performance in 2011, when sales fell 8 percent. Not to mention, this was the year that the monthly $15 subscription for major online games became obsolete. Most business analysts predict that 2012 will be the worst year for retail video game software and hardware sales since 2005 or 2006.

The struggling economy certainly has been a factor in the decline, especially considering that young men " the core audience for video games " were hit so hard during the recession. But there's more to this gaming decline than a lagging workforce, says C.J. Strike, social media manager for Coin-Op.tv and former editor of GameplayUnlimited.com. He attributes the current downfall to a lack of console innovation. It has been more than seven years since Microsoft released the Xbox 360 and more than six since Sony put the PlayStation 3 on the shelves.

The wait for something new has been too long, he argues.

"The current hardware is still selling, but gamers want the next big thing,' Mr. Strike says. "They see PC games now that look magnitudes better than what's on consoles and they want that experience.' Nintendo finally closed the wide gap between console releases last month with the release of the Wii U. The Wii U is the first Nintendo console to support high-definition graphics, and it's the first console to utilize the GamePad, a controller that features an embedded touchscreen. The touchscreen is used to supplement the main gameplay shown on the television or, with some games, it allows the player to continue playing games when the television is off.

Anchored by these new features, the Wii U already has sold approximately 440,000 units in the U.S. and more than 1.2 million total around the globe (as of Dec. 3). That might sound like a lot, but the number is actually quite underwhelming. Consider this: The Xbox 360 radically outsold the Wii U in North America on the week of Black Friday. About 750,000 Xbox 360 consoles sold that week compared to only 400,000 Wii U systems. Even with those additional 750,000 units sold, Xbox 360 sales are down by a third this year (while PS3 sales are down by a quarter) according to Bloomberg's video game business analyst Doug Creutz.

Mr. Strike says the Wii U doesn't have the bells and whistles gamers have desired from a new console, and its sales might struggle because of it.

"The lack of new hardware has hurt a lot, and I don't think the Wii U is the hardware gamers were looking for to get rid of that feeling,' he says. "It is using only slightly better internals than the 360 and PS3.' Mr. Strike expects the gaming business to continue to suffer until the new Xbox and PlayStation consoles are released in the fall of 2013. These new systems certainly will boast many more features than the Wii U, he says.

"They will drum up hype and get those who had let their collection sit back on board and buying games,' Mr. Strike says.

However, Stephen Toltilo, editor-in-chief for the gaming website Kotaku.com, isn't so sure. For, you see, there is another reason that the major video game companies have been struggling since 2010.

"Big companies no longer dominate the creation of video games,' Mr. Toltilo says. "Free-thinking, independent creators are on the rise, and they're making some fascinating games.' This development will sound familiar to anyone whose CD collection is only collecting dust these days. Less expensive digital downloads are disrupting the video game business model. Nearly everywhere, it seems, people have been sharing "Words With Friends,' hurling "Angry Birds' at pigs or raising crops in "FarmVille.' All of those games, made for smart phones and tablets, are popular and can be purchased for pennies. This factor has really hurt the sales of handheld gaming devices.

"Kids are getting iPads instead of the Nintendo 3DS and the PS Vita,' Mr. Strike says.

These cheap smart phone and tablet games have damaged sales of new Xbox, Wii and PlayStation games. Few want to pay $60 for a new video game disc anymore, Mr. Toltilo points out.

The numbers are on his side. Mr. Kreutz says that seven non- sports games sold more than four million units in North America and Europe in the fall of 2011. This fall, he is predicting only four ("Borderlands 2,' "Assassin's Creed 3,' "Halo 4,' and "Call of Duty: Black Ops 2') will reach that mark.

It was 29 years ago that Atari buried millions of unsold video games in a New Mexico landfill. The video game industry barely survived the brutal recession of the early 1980s, and many are wondering if the gaming giants can climb out of this one. But a lot can be done, Mr. Toltilo says, with a little imagination and consideration.

"We can only weep for corporations so much' he says. "... The play's the thing. All else is second.' (c) 2012 ProQuest Information and Learning Company; All Rights Reserved.

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