Analysts mixed following sickly July sales

EEDAR's Jesse Divnich and NPD's Anita Frazier weigh in on 29% monthly decline--and whether the industry can pull out of its slump before year's end.

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The industry-tracking NPD Group released its US game sales figures for July 2009 today, and the numbers were down 29 percent overall. Game accessory sales were the best-performing segment of the industry, and even they were down 12 percent year-over-year to $130.97 million, off from $149.49 million.

Divnich says Guitar Hero has peaked, and Activision knows it.
Divnich says Guitar Hero has peaked, and Activision knows it.

Electronic Entertainment Design and Research analyst Jesse Divnich told GameSpot that the numbers reinforced the notion that the recession has begun directly impacting the industry. The analyst had expected software sales to be down 10 to 18 percent anyway based on historical sales trends like prior month sales and review scores, but the actual 26 percent drop suggests that some larger force is hindering the industry.

While Nintendo's evergreen titles like Wii Fit and Electronic Arts' EA Sports Active made the month's top 10 sales chart, Divnich said it was the casual segment of the market that posted the most disappointing results. He pointed to Wii Fit's steep month-over-month drop, selling just 164,300 copies after last month's much stronger 271,600. And while EA Sports Active's 96,800 was enough to close out the top 10, Divnich said it was the first time this year a title failed to reach 100,000 yet still managed to make the top 10.

NPD analyst Anita Frazier held out hope that the rest of the year could turn the sales trend around, pointing to this month's launch of Madden NFL 10 as a game that could spur sales and looking ahead to The Beatles: Rock Band, Halo 3: ODST, and Call of Duty: Modern Warfare 2. Even so, she said the industry would need to be up 11 percent for the rest of the year in order to break even.

"Of all genres, the music/dance genre has suffered the greatest declines this year, with nearly $390 million less revenues than the same time period last year," Frazier said.

Divnich acknowledged the slide, but didn't see it as a necessarily ill omen for this holiday season's glut of rhythm games, including DJ Hero, Lego Rock Band, and Band Hero.

"Probably the single greatest factor that drives sales in the music category is marketing," Divnich said. "This is an audience that doesn't go to GameSpot every day and the best way to reach them is traditional brute force marketing. ... I think Activision has realized that the category has reached its peak and they have one last season to drive this category. The genre's going to be around forever, but we have to face the facts that it has peaked for the time being."

Looking ahead to the August sales figures, Divnich said Madden NFL 10 sales could be a big plus for the industry, even if they're flat year-over-year. His optimism extended to the remainder of the year, saying a strong lineup of games like Guitar Hero 5, The Beatles: Rock Band, and Halo 3: ODST should have the industry in better shape.

"It's not too bad," Divnich said of the current five-month sales slide. "We have to keep in mind the industry has grown over 70 percent in the last three years. So we shouldn't sniff at the fact that we're down a little bit this year."

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