The video game industry is in trouble, even if most of the
headlines say otherwise.
Industry watcher NPD Group released its data for
September, and it's hard to see why the media is hailing this
as a turnaround for the beleaguered gaming sector. NPD is
reporting that video game hardware and software sales clocked
in at $1.28 billion last month, essentially flat with the
$1.27 billion the sector rang up during September of
2008.
Technically, that
isan increase, ending a
problematic streakof year-over-year declines in each of
six previous months. Still, I'm not impressed.
If the video game industry had truly turned the corner,
breaking the negative streak wouldn't be a matter of decimal
points. There are several reasons why September should have
been off the charts.
slashed their system pricesas we head into the
holidays. Lower selling prices naturally take down the sum
of dollars, but the industry has historically been able to
make up such shortfalls in increased sales volume. This
time, despite the price cuts, hardware sales actually
fell.
The software component rose 5%, but the release of
Microsoft 's (Nasdaq: MSFT) chart-topping
Halo 3: ODSTand the success of
Viacom 's (NYSE: VIA) genre-widening
The Beatles: Rock Bandshould have provided a
bigger punch.
Activision Blizzard (Nasdaq: ATVI) had a
meaty incentive for buyers of
Guitar Hero 5, offering gamers a free copy of a
Van Halen version due out in December if they purchased
GH5in September. Alas, it seems this franchise is
in trouble. The twofer was only good to push the title up
to ninth place on NPD's list of bestsellers, and it'll be
giving away a lot of David Lee Roth in two months.
The industry may as well also start worrying that
Sony 's (NYSE: SNE) PS3 became the hottest
selling console last month. Owners may find themselves
divided between splurging on games or Blu-ray discs, instead
of throwing all of their discretionary income at the software
companies.
Thankfully for the industry, there are plenty of meaty
titles coming out in November -- including the latest
installments in the
Super Mario,
Call of Duty, and
Assassin's Creedfranchises -- to counter a potential
dip in October.
However, I still stand by my original bearish thesis that
the industry -- and especially physical distributors such as
GameStop (NYSE: GME) -- will be in for a
rough holiday season.
Diehard gamers can laugh at my notion that folks are
spending too much time on their ad-supported App Store casual
games, or playing
FarmVilleor
Mafia Warson Facebook. But the industry is faltering
because these same mainstream gamers are staying away from
consoles.
The Beatles: Rock Bandwas supposed to be a title to
turn an older generation into plastic guitar wizards.
Unfortunately, a flat September isn't a very memorable
tune.
Where do you see the future of gaming? Did it peak for
keeps? Let us know in the comment box below.
This article was originally published as
You Call This a Rebound, Gamers?on
Fool.com
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