Dec. game sales drop to cap 'miserable' 2009 - Analysts

Double-digit drop predicted for last month of the year; Modern Warfare 2 "sucking the air" out of lesser games' sales, 2010 delays justified.

As the industry was at the height of its midyear malaise, industry analysts pinned their expectations for US gaming sales growth in 2009 on a strong holiday season. With the realization that not even the blockbuster launch of Call of Duty: Modern Warfare 2 could push November sales into positive territory, analysts are now chalking up the year as a loss and looking forward to 2010.

Don't jump just yet; analysts expect 2010 to be a return to form for the gaming industry.

"2009 appears to be an all-out miserable year for both hardware and software sales," wrote Wedbush's Michael Pachter in a note to investors. "After two consecutive phenomenal years of growth, with software sales up 34 percent and 27 percent in 2007 and 2008, respectively, it should have been evident that a slowdown was coming, but many observers (including us) were lulled into the belief that the video game software business was recession-proof. Compounding our error was the belief that Wii sales would never slow, and that the music genre could continue to grow. We now see just how wrong we were."

Between the precipitous decline of the music genre and the popularity of hardware packages that include multiple games (reducing the need to purchase extra software), Pachter said December sales could be down as much as 10 percent. That sentiment was backed up by Signal Hill's Todd Greenwald, who told investors that a 10 percent decline to end the year "is reasonable at this point," and Pacific Crest Securities' Evan Wilson, who predicted "a healthy double-digit decline" for the month.

For his own December expectations, Electronic Entertainment Design and Research analyst Jesse Divnich gave a 7-12 percent range for software sales decline. He noted that titles targeting traditional gaming audiences were better represented in November than in years past. However, given that the December sales rely more on casual or nongamer audiences, that positive is a bad omen for the current month's sales figures.

As for other lessons pulled from the NPD sales data, Greenwald started with Modern Warfare 2 and its whopping 6.1 million copies sold.

"It is likely that MW2 is 'sucking the air' out of the competition, as the rest of the titles largely disappointed," Greenwald said. "While Super Mario Bros (1.4M units) and Assassins Creed 2 (1.2M) were respectable, most other titles underperformed."

Divnich noted the same trend, but managed to find an optimistic angle on it.

"This would suggest that publishers who purposely diverted their AAA holiday titles into 2010 made the proper decision and will likely realize stronger sales with a post-holiday release than a holiday release," Divnich wrote. "Additionally, a byproduct of this schedule shift will limit cannibalization and create a much stronger and healthier video game environment in the long-term."

While other analysts were focusing on the impact of Modern Warfare 2, Wilson took a deeper look at the Wii. Nintendo's console saw its hardware sales drop from 2 million in November 2008 to 1.26 million last month, despite the recent price cut.

"While most in the industry accept that the price cut was not significant enough to draw much of a new audience into the Wii installed base, these sales results show that Nintendo likely needs a much lower price to hold unit sales flat with previous levels," Wilson said. "Compelling new software is also needed to draw existing Wii owners back to retail. Nintendo thought that New Super Mario Bros. Wii would be that software, and at 1.4 million units sold the game had a solid launch, but it has not been nearly as influential as several releases Nintendo had in its previous fiscal year."

As gloomy as 2009 was, analysts are confidently optimistic about next year. Wilson predicted that sales would start to grow again in March due to easier year-on-year comparisons and a strong lineup. This year, sales shrank each month from March through August, so the bar for the same span in 2010 has been lowered accordingly.

Pachter also called 2010 "a very easy year to grow sales," saying the parade of hotly anticipated games in the first half of the year should push sales up an average of 18 percent from March through October.

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Discussion

309 comments
magusat999
magusat999

Game publishers need to focus on one thing - lowering prices of games overall. That's the bad part about Sony not running the show anymore, game prices have gone through the roof and to the ridiculous. Not as bad as the old SNES days when Nintendo had games jacked up to $80 - 100.00 - but in this economy its bad enough to put a damper on anyone's game buying budget. The physical medium of games is much less expensive than the old cartridges - and even now we have download-able games that do not need the expense of boxing and graphics. If some of these publishers would stop squandering the money they are saving on a cheaper production process and use those savings to deliver more appropriately priced games to the consumer, we would not have one game swallowing up the profits of another. They need to try and configure things with the mindset that a consumer can buy three games at a time - instead of trying to squeeze us as if their game is all we need to purchase.

Ubermensche
Ubermensche

Call of Duty is not to blame for poor sales. A horrible economic environment is to blame. Recovery my butt. Suck it Government.

Bashers79
Bashers79

I'm looking forward to the January sales.

kvan33
kvan33

I do agree with Maverick about the timing of games though. Bottlenecking all the AAA titles in a two month window isn't good for consumers. There was a huge gap in the summer that should have been taken advantage of. Oh, and just for good measure I'll also blame the Wii for the huge drop in sales.

kvan33
kvan33

Strange news in a way, because I think this is the year I bought more titles for full price than any in the past. I even picked up three games the week they came out (Batman, Borderlands, and MW2).

Humorguy_basic
Humorguy_basic

@Tauu, I am not sure what you are saying. you said 2009 was a crappy year, especially for non FPS games, and yet we are going to see much less of any non-FPS games in 2010. 2009 may turn out to be the last year we got three deep RPG's like Fallout 3, Risen and Dragon Age. If Two Worlds II and Witcher II come out in 2010 and IF Fallout: New Vegas is a real RPG, we might match it, but generally speaking, all the big titles delayed from Xmas 2009 are shooters, and very few PC gamers will buy EVERY shooter. I am an RPG fan, and it would be great if there were 8-10 a year from a choice point of view, but I wouldn't buy all if them. Most gamers like a choice, if all they are offered is one genre they will go elsewhere for other genres, even if that's retro or indie titles.

Tauu
Tauu

The 2009 Holiday season could have been good, but all the great games got delayed into 2010. 2009 has been a pretty crappy year for new games, especially for people who are not into FPS games. It doesn't take an analyst to figure out that 2010 will be much better than 2009.

Peng33
Peng33

Well, Diablo, I think you are assuming that just because a game is "retro" or "indie," that automatically makes it "casual." I agree with the other poster that you disagree with below. The smaller indie studios are the ones that make games because they WANT to, and enjoy doing so, and not because they are beholden to a huge publisher who demands more of the same (the "safe bets"). These are the kinds of studios who ARE changing things (slowly) in the industry. If it were not games like Flower, Braid, Everyday Shooter, the PixelJunk games (as well as other indie stuff on the 360), the gaming industry would contuinue to stagnate. As is mentioned below, gamers are fickle. They KNOW when they are being shoveled inferior sequels and cash-ins. A bit of creativity and risk-taking will go a LONG way towards the continued healthy future of this industry.

Diablo-B
Diablo-B

@Humorguy_basic

There are tons of great games slated to come out next year, ME2, FF13, Dante's Inferno, Bioshock 2, Dead Space, and lots others that I have not been following. Its fine that your not into big name, high quality titles and prefer the more casual type games. Too each his own. But don't bash them either.

Humorguy_basic
Humorguy_basic

Only marketing people would say a bad year meant it was easier to have higher sales! If sales are down 12% in 2009 and 'up' 6% next year, aren't they actually 'down' 6%?! And they keep on saying that sales are down because of the recession. I don't believe that. Increased indie and retro sales and the success of companies like GOG.com and Stardock all point to a revolution happening in gaming. Gamers are voting with their wallets and choosing lower graphic/higher gameplay games over the shallow, repetitive modern games we get. I think 2010 will be, at best, a flat year. Pretty much all that's coming out from the major publishers are shooters, and gamers are only going to buy so many games that are almost identical in gameplay, albeit with different stories. At the height of the PC gaming market, we had flight sims, and realtime and step time strategy games and adventure games, and puzzle games and deep RPG's and Action based RPG's and platform games and educational games and sports games and racing games and one-off games like X-Com and Civilization and Myst, etc, The lack of genres and he way major publishers now feel they have to play so 'safe' means we will see ongoing declines in AAA game sales and the hardware that uses them.

Diablo-B
Diablo-B

That not true. Microsoft gave us a console that breaks with great ease. Forcing you to buy dozens.

Sarcasm of course. i love my 360, but with delicate care.

Toysoldier34
Toysoldier34

Everyone already owns a Wii or at least the systems they want pretty much, hardware sales won't be increasing very much if at all this generation. People are gullible and will buy, but not enough to buy twice and that's really the only way now.

LindBergh2007
LindBergh2007

2009 will be known as the "Video Game Hardware Decline of '09" where due to the reccession, small amount of good game releases, and the software market crash of '08. Console sales slumped. 2010 should be better with more promising titles , and if I were an analyst I'd stop ignoring SEGA, they've got some special surprises for everyone in the coming year. Hint: On-Live's first contender and PS3's nightmare come true.

Darkmoone1
Darkmoone1

Good lord guys, December isn't even over yet. :lol: We still got Christmas and stuff like that.

dmdavenport
dmdavenport

Too many sequels and too many console exclusive games. Those are the two main reasons that 2009 was down, and 2010 won't be any better. Personally, I would have bought at least three games had they been available for the xbox. The same is probably true for ps3 users. When is the industry going to figure out that they only hurt themselves with exclusive titles? Game devs should be SCREAMING at the console makers - letting them know their product is not going to be tied to one machine anymore.

wiirkokonuts
wiirkokonuts

Wow, not even the giant that MW2 is can stop game sales to stop dropping. This isn't looking that good.

Zartan3000
Zartan3000

People are buying more 2nd hand games which wouldn't show up on these figures. Its a shame because I think 2009 has been one of the best for games ever. Hope this doesn't mean no big games in 2011.

tevic
tevic

What would be interesting is showing how the HD hardware & software fared in 2009. if you remove the decline of the Wii perhaps the rest has stayed at the same level in 2009 or even grown ???

Chickenesta
Chickenesta

Looking back, I dont think all quality of titles in 2009 was as good as previous years.

jmartinez1983
jmartinez1983

You can really blame the game publishers for it this year. This year seemed more than any year to be a rush for easy cash. Rushed sequels and no less than what, 10 music games? Within a month we got Beatles Rock Band, 3 Guitar Hero games and DJ hero... no market can digest that much similar content. Of course there were some amazing diamonds this year with Batman, Borderlands, Uncharted 2, Dragon Age, Left 4 Dead 2 and of course MW2, but they can't make up for an industry that is forgetting that gamers are a fickle crowd and we won't just eat the same crap over and over again.

LosDaddie
LosDaddie

2009 was going to be down anyway

thecraponahat
thecraponahat

but there arent any good games in December oh but after that theres some good ones coming >.>

pure_impact
pure_impact

Next year will be worse for gaming sales if unemployment keeps rising..

lamprey263
lamprey263

it's not hard to see why game sales go up and down in a year, all you have to do is look at the list of quality titles released at any given time, looking back at last year's holiday season they had nearly a dozen exceptional games released within a month of each other, highly anticipated titles that received favorable critical reception and sales, this year's releases don't even compare to last year's releases and I think quality and quantity are the biggest contributing factors as to why this year's sales are low then again, many of the games that would have had potential to be big holiday sellers got pushed back to early 2010, some due to development delays, some delayed so that they wouldn't be released in a competitive holiday season release window; however, some irony exists here because those publishers that did delay games to avoid sales dominance of games like Modern Warfare 2 that would compete against sales of their own games ended up delaying their games to the 1st quarter of 2010, which has quite a strong line-up of titles that should make the 1st quarter a very competitive sales season the potential that many quality titles will be released in so little time should cause quite a bump in overall game sales in early 2010, I myself think that the 1st quarter 2010 could see some record game sales considering the coming releases

KrazzyDJ
KrazzyDJ

It's time we started analyzing things on our own !!!

Merl57
Merl57

For everyone's sake I hope it gets better

wiidsduelpack
wiidsduelpack

If the analyst is warning investors, then they are telling us readers to not spend your money this year. / Want to see more sales GS, lower the price of ds games to $30 again and they will sale like pan cakes. A game that is $35 on the U.S is $38 and something and that discourages anyone from buying a game.

maverick_76
maverick_76

I think we have been asking that question all along: Why do all the games tend to come out at this time of the year? Maybe they will finally spread out the releases and take advantage of the especially dry summer months to release some cool new titles.

Spitz6860
Spitz6860

well, i don't see a single AAA title released in Dec

Lionoversusking
Lionoversusking

maybe if the games were quality enough to live up to the hype i may consider spending more on games

checampbell
checampbell

who listens to analysts anyway ? they get paid big $$ to incorrectly predict trends i could get wrong for nothing. get a real job and start contributing to the world instead of making sh*t up

denicola_a_god
denicola_a_god

2010 will be a great year in gaming and definitely agree a return to form with massive games tons of them releasing every month probably until holiday of next year

Kan0nF0dder
Kan0nF0dder

Global recession + lack of innovative games + more sequels cause their sales aremore 'reliable'

Triton
Triton

Yep, 2009 - cant wait to bury, should get better mid 2010. Just hang on.

mad_gamer23
mad_gamer23

well said dark_surge, I completely agree with you. What is it with this e-peen 'my console is better than yours, har har har'. I get it, after all they need to impress and reassure investors. At the same time they're screwing themselves by releasing absolutely sub-standard products and content.

wraithbladeuk
wraithbladeuk

@JimBob2424 Thats a bit of a misguided statement... Just because the product they sell makes a lot of money doesnt mean their outgoings match their income. You have to keep in mind games like Left 4 Dead 2 that spent $25million on advertising their game, meaning they would have to sell a whole load of copies just to make back that initial investment. The companies that make the game itself only get the amount of money that the retailers buy it for, not the amount you buy it for. On average, a new $60 game will make the developer about half that. Knock of off that the price of advertising, staff, printing CD's, instruction books and case inserts and your profit starts dwindling away. Keeping with the Left 4 Dead 2 example, that game sold 2 million copies in 2 weeks. This is is about $120million . Knock off the retailers average markup of about 35-40% leaves you with around $75million left for Valve. Knock off the $25million they spent on marketing, a years worth of wages for the dev team and all the other production/distribution costs and you're probably left with about $20-25million of actual profit, most of which is invested to create new games. This means the average games company would need a few decent titles under it's belt in order to make a nice tidy profit, which is what they're all here for. Also, banks raised interest rates because the majority of them as an overall organisation posted a financial LOSS of millions. I work for a bank, and while my department made a profit of $4 million, the group as a whole posted a $22million loss.

SadPSPAddict
SadPSPAddict

So a bit of a percentage drop - stll doesn't take the industry to 2007 levels so don't know why all the doom and gloom! Most games are still making a profit!

firehawk998
firehawk998

I dont trust these analyst these days. They said that the games industry is recession proof but now the gaming market is down. According to them the casual gaming market with music games like Guitar Hero will be killing regular games market but it didnt happen.Now they are saying that in the year 2010 everything will be fine and the recession will magically go away. Now matter how many good games come out next year unless the recession is gone and the employment grows dont expect the gaming market to improve.

JimBob2424
JimBob2424

Yes.. the games industry only sold like 50 billion dollars (no idea what the real number is, but considering there was 2 billion in sales in the US in just November I'd say I'm well short) worth of games this year. What an awfully unproffitable world this has become for games! It's like banks raising their intrest rates because they were only going to make a 100 billion profit instead of the projected 120 billion. Absurd.

turkish_cobra
turkish_cobra

Its simple why Wii sales have slowed, because you only ever buy 1 Wii because they dont fail! I wonder how many of the Xbox 360 sales are from consoles that have failed being replaced, or consoles that have ben banned from Xbox live being replaced!?

Hockenberry
Hockenberry

I am suprised that Uncharted 2 was not listed as good as Super Mario Bros and Assasins Creed 2. That game was a hit and is probably my most favourite game ever! I remember in Vancouver waiting to buy it, the line up was humungous!! And thats just for preorders too!

Petch1984
Petch1984

I brought 3-4 full price games on PS3 and 360 this time last year but none this time round...this is not due to the recession as such but more a lack of varied titles being released. I think the first quarter of 2010 will have huge sales as it seems all the games have been pushed into that area.

mlg_oriongamer
mlg_oriongamer

@intrakitt just because you think final fantasy 13 will suck from screen shots doesnt mean it will theirs been games where all the screen shots videos and then the demo sucked but turned out to be a good game and vice versa + square enix made it and their like infinity ward their expected to do well because 95% of the time they do and you must be looking at some poor sources because the graphics look waay good because that is another thing square enix is good at is setting a bar for graphics the game play looks decent itsw a new system which they ussally do to keep it from being the same thing halo for example great game but primarly the same thing time after time and its been previewed well and the story looks awsome you cant always go by other peoples opions and / or screen shots oh and lost odessy sucks idk why everyone likes it their is way to many cut scenes and reading screens for you to walk for 2 minutes with 1 random encounter to fight a way to powerful boss i had multiple bosses down and it was still dumb like that it just plain out sucked but i will personaly be preordering the new final fantasy and will be hopeing 14 which comes out this summer comes to the 360 which might be ok bc i might buy a ps3 in janurary anyways but microsoft has to stop fighting with sqaure enix about most likely ps3 - 360 cross communication

crazyshooter93
crazyshooter93

@Intrakitt i think you fail to understand what he said, he said major tech "AND" games like ff13

izmickey
izmickey

@Intrakitt I really cant agree with you. Mass effect better than FF series? Why are you comparing to games that didnt even come out yet? On topic, we all know what we think of analysts right....BS.