On Thursday, we learned that Activision Blizzard (ATVI) is doing fairly well in a tough economy. But Friday night, market-research firm NPD reported March 2009 video-game industry sales, and there wasn’t much to get excited about.
Overall sales fell 17% to $1.43 billion, with hardware down 18%, software down 17%, and accessories down 15%. The problem wasn’t the economy - it was more a case of incredibly tough year-over-year comparisons.
In March of 2008, hardware sales were up 51%, while software sales were up an insane 63% on the back of Nintendo’s (OTC:NTDOY) Super Smash Bros: Brawl, Ubisoft’s Rainbow Six: Vegas 2, and Electronic Arts’ (ERTS) Army of Two.
Capcom’s (OTC:CCOEF) Resident Evil 5 sold a solid excellent 1.5 million units across the Microsoft (MSFT) Xbox 360 and Sony (SNE) PS3 platforms, but even that paled in comparison to Brawl’s insane 2.7 million unit sales on the Wii last March. Even at a 17% lower price, that’s a significant difference in dollars. There may also have been some residual impact from higher used-game sales and discounting at the failing Circuit City.
So if you look at two-year industry growth, the numbers look pretty good, even with the decline. March 2009 hardware sales are up 24% relative to March 2007, with software sales up 35%.
The real takeaway, however, is that Sony needs to cut the price of the PS3, pronto. It is losing more and more ground to the Xbox 360 and Nintendo Wii every month, and at this rate, it will never catch up.
Looking forward, April should be another tough month for the industry as it laps the release of Take-Two Interactive's (TTWO) Grand Theft Auto IV and Nintendo's Mario Kart Wii.
Disclosure: I am long Activision Blizzard.