It's been a common refrain in the media since the record breaking Black Friday sales this past November that the U.S. has managed to avoid a double dip recession and the economy is now on its way to recovery. And yet, individual data points continue to appear that should indicate that this renewed green shoots mantra is nothing but BS. Video games sales have been a leading category driving consumer spending the past 20 years, so this story as reported by the Washington Post on Thursday ought to be sobering to any realistic observer:
U.S. retail sales of video game hardware, software and accessories fell 21 percent in December from a year ago to $3.99 billion as players bought fewer games for their aging consoles, according to market researcher NPD Group.Sales fell 21% during the height of the Christmas shopping season? Holy shit, Batman! How can the industry possibly corporate FlackSpeak their way out of this one?
The results are “not entirely surprising given that we are at the back end of the current console lifecycle,” said NPD Group analyst Anita Frazier.Oh, that's good, NDP Group Analyst Anita Frazier. Damn you--you win this time. But rest assured, I'll be back.
Actually, to be fair, Ms. Frazier did have a little bit more to say:
However, the tally was clearly a disappointment. Frazier said the month’s poor performance was unexpected given the quality of new games including “Call of Duty: Modern Warfare 3,” which was the top-seller, and “Just Dance 3,” which placed second.So you mean tying a new video game release to a $40,000 special edition Jeep didn't help sales? How "unexpected."
Lest you think this was just a one month problem, the article goes on:
For the year, overall sales fell 8 percent to $17.02 billion. Hardware sales fell 11 percent to $5.58 billion, software sales fell 6 percent to $8.83 billion and accessories sales fell 11 percent to $2.61 billion.My take as a completely uninformed blogger sitting on the couch in my basement is that the continued sluggishness of the economy is what's causing a big drop in sales of what really are luxury items. As for December sales, the drop there was no doubt caused by the insane efforts of retailers to pump up Black Friday figures, which then brought a good bit of what would have been December's demand for video games forward. With few or no good paying jobs being created as the jobs recession drags on, there has been no increase in the number of people who can afford to blow hundreds if not thousands of dollars on frivolities like video games.
Bonus: Joe Walsh's tribute to the early days of video games
My 15 year old son and his friends spend every spare cent they have on video games and hardware. Video games are a huge part of the culture of young males. This is a real bellweather of the true state of the economy, 21% is a huge drop and indicative of how broke the younger generation are now. It’s things like this we need to watch, as official figures like the inflation and unemployment rate are now so politically distorted as to be all but meaningless. The only thing we can measure with the official figures are the ever growing delusions of our political and economic leadership.
ReplyDeleteThat NDP lady's explanation doesn't wash for me. I'm no whiz as to the financial world of gaming, but I've been a gamer my whole life, and while these systems have been out a long time, that also means that many people have them in their homes; more so than, in say, 2008 or in 2005-2006 when the systems debuted. So, the more people who own the systems, the bigger the market there is for software. And software is what brings in the profit in the video game business; Microsoft and Sony usually sell the systems themselves at a loss.
ReplyDeleteMy guess as to why the downturn in profits is so sharp is that retailers were really offering deep discounts during the Black Friday period, and that's when people bought their games. I wanted to buy Uncharted 3 (a new game for the Playstation 3) on Best Buy's website; they were having a cyber sale, in which the game was under 30 dollars. Its regular price is usually 50 to 60 dollars. I know a lot of games had similar deals attached.