2005 Video Game Sales Disappointing

Lots of news about game industry revenue shortfalls lately — time for a good summary.

Video game sales have dropped 18% year-over-year. Activision issued a profit warning for the third and fourth quarter. EA announced dour results in March and again in May, blaming weak sales of top titles (i.e. Need for Speed) and fierce competition. Being the two largest publishers, this news has relevance to the game industry as a whole. Now there’s also news of a vicious video game price war in the UK. Prices falling by 30%.

Much hand-wringing has accompanied this news. I must have read at least twenty articles (this week) declaring that a creative crisis is sapping the industry. (For the record, I agree to some significant extent, but I’m open to counterpoints.) Heavy blame has also fallen on the Xbox 360 launch, which has failed (dramatically) to meet customer demand. Can’t buy 360 games without 360 hardware.

Here’s what everyone should bear in mind. 1) Last year saw Halo 2 and GTA: San Adreas, which sold incredibly well. Tough comparison. 2) For literally years now, EA has been saying that this console transtion period would be a tough one — as they all are, to some extent. Some people are saving their money for a PS3 or Revolution, plus games. Some people want an Xbox 360 but can’t get one. That’s a temporary phenomenon.

What isn’t temporary is the industry’s continued inability to embrace female and older consumers (casual game developers notwithstanding.) I do hope that Nintendo’s Revolution strategy will change that.

Update: I forgot to mention that perhaps hardcore gamers are too busy playing WoW to buy new games. Silly me. 🙂

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