he largest entertainment launch of the year wasnt enough to push video game sales into positive territory in November, raising concerns about the overall health of the industry.
Despite blockbuster numbers for Modern Warfare 2, video game sales remained in negative year-over-year territory in November, down 3.1 percent compared to 2008, according to The NPD Group, which tracks video game sales. Game sales totaled $1.4 billion with more than 25 percent of that coming from MW2.
The advance was notably lower than analysts had predicted. (Wall Street consensus had called for a 2 percent increase, though some analysts were looking for a jump as large as 7 percent.)
Activisions [ATVI 10.76 -0.03 (-0.28%) ] blockbuster lived up to expectations with sales of more than 6 million copies with over 4 million on Microsofts [MSFT 29.87 0.16 (+0.54%) ] Xbox 360. Activision had previously announced the action title recorded sales of $550 million in its first five days. More than 8 million people worldwide played the game in that time twice the number of troops in NATOs 28 member countries combined. (NPD only tracks North American sales.)
Meanwhile, the early winter price cuts by the console manufacturers still couldnt push sales of video game machines into positive territory. While each turned in vastly improved numbers compared to October, the year over year figures were significantly lower, down more than 13 percent, totaling just over $1 billion.
The Nintendo [NTDOY 30.5 0.15 (+0.49%) ] DS was, as usual, the months biggest seller with 1.7 million units, nearly quadrupling its October numbers. The Wii sold 1.3 million units, more than twice as many as it sold last month.
Microsoft saw a better than three-fold increase, selling 819,500 Xbox 360s. And Sony [SNE 28.39 -0.04 (-0.14%) ] more than doubled its PlayStation 3 sales, coming in at 710,400.
Only the PS3 and Nintendo DS beat the 2008 numbers. Overall, video game hardware sales are still 16 percent behind last years pace.
While Modern Warfare 2 was by far the sales leader, there were several other significant hits in November. Nintendos New Super Mario Bros. Wii sold 1.39 million copies and Ubisofts [UBSFF 15.55 --- UNCH (0) ] Assassins Creed 2 sold more than 1.2 million. Valve Softwares Left 4 Dead 2, which was published by Electronic Arts [ERTS 16.44 0.08 (+0.49%) ], sold 744,000 copies, despite some fan complaints about the sequels early release.
With November surprising and disappointing so many observers, many are trepidatious about what December might hold. Even if Modern Warfare 2 has strong legs at retail, most are expecting another disappointing month. (Industry sales have declined eight of the last nine months.)
Overall, the videogame industry is tracking 12 percent behind the 2008 numbers. Publishers, analysts and investors had hoped to end the year with just single percentage digit declines, but most acknowledge that seems impossible now.
As 2009 draws to an end, it is clear that it will end as a horrible year for video game publishers, said Michael Pachter of Wedbush Securities, who adds he expects December will once again slide into negative territory.
Others wonder if the strong of bad sales this year will finally convince publishers to lower the prices of mid-level games down from the current $60.
Really good titles are selling and theyre selling at premium prices, but consumers arent willing to pay $59 for second tier content, says Colin Sebastian of Lazard Capital Markets. I think thats why theres a concern for next year. Whats the right price for titles moving forward? Halo Reach will get $59, sure, but what about games below that? I think youll start to see prices decay. The NPD data, along with the discounts weve seen at retail this holiday season, will push that issue to the front burner.