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06.11.2009 10:34 pm

Video game sales figures will continue to fall

St. Louis Post-Dispatch
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Any question whether video gaming is surviving the recession can be answered by a visit to your local game store.

There, at a glance, you’ll see used titles outnumbering new ones two to one, as consumers start to prefer pinching pennies to emptying their wallets. As recently as Christmas, the ratio easily went the other way.

So it shouldn’t shock anyone that NPD Group found game-related sales in May were down — way down — from a year ago. The market researcher estimates that spending on games fell 23 percent in that period.

Though the final tally of $863 million in sales last month sure looks healthy, it actually represents the first month below $1 billion since late 2007, and marks the third consecutive month that sales have been on a downswing.

The economy has been swooning since last summer’s housing market collapse and was agitated by overspending elsewhere. For a while however, game-related sales continued to flourish, spurred in part by the Christmas shopping season and the belief that more Americans would try to save money by staying home to play games instead of going out for entertainment.

They may well be doing that, but two other factors probably are tweaking NPD’s numbers. One relates to those used games piling up at game stores. Employees at a couple of GameStops in south St. Louis say overall sales volume remains about the same; it’s just that people are picking up used games instead of new ones, and some of those used games are marked down as much as 70 percent.

The other factor relates to the sales venue — more transactions are taking place online instead of in stores. NPD’s own research in an earlier study found 17 percent of PC game sales taking place online. And market analyst Michael Pachter of Wedbush Morgan Securities told Reuters news service he thinks digital downloads will account for 2 percent of all game sales this year.

With the economy expected to remain sour through the year, video game sales probably won’t pop again until Christmas shopping starts again. Even so, consumers may find it less expensive, and easier, to download their games online — and that may prompt NPD to rethink the way it conducts its research.

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