WEEK 2: EOC - Is the video game industry facing a recession?

Is the video game market facing a recession? With big titles that came out strong in 2010, one would think not. But in an article found in The Independent that was posted on January 19, 2011 called “US videogame sales flat in 2010:NPD”, the NPD’s, or National Purchase Diary, estimate on video game spending was from “$15.4 billion to $15.6 billion and factored in used games, downloaded content, and money spent on social network play as well as real-world store sales” which seemed to stay around the level with sales in 2009. (US Videogame Sales Flat in 2010:NPD) Even with titles like Call of Duty: Black Ops hitting and Starcraft II: Wings of Liberty hitting record numbers in sales, it wasn’t enough to catapult numbers to show the industry rising up.

                

 Video games used to target the hardcore masses, those that play video games as a hobby, which is why games like Halo:Reach and other big named games are created. However, because of games that come out on social networks , both console and PC hardware and title sales haven’t been as fruitful in years past. While there are still hardcore gaming enthusiasts out there, more sales are emerging from casual gamers. In an article that Ian Sherr wrote for the Wall Street Journal, he states:

Sales of new hardware consoles were hit hard in 2010, falling 13% to $6.29 billion from $7.19 billion a year ago. NPD said the only console to grow in sales was Microsoft Corp.'s (MSFT) Xbox 360. (Videogame Industry Sales Were Roughly Flat in 2010)

Consumers have been holding on to their money tighter because of the current state of the economy. On a brighter note, not all sales can be gauged by how many “physical product” has sold off the shelves. Dematerialized, or downloaded, products, such as games and game components that can be bought off the internet, have also attributed to much of the video games sales. In an article written by Sandeep for Pisqa, the author, in interviewing Georges Fornay, CEO of Sony Computer Entertainment France, Fornay says, “If we limit ourselves to the physical market, there is a decrease of 5.7% over 2009, due mainly to the drop in the price of consoles,” however after adding  downloaded games into the mix, Fornay says, “it is likely that this decline in overall value is much less important.” (The video game market, down slightly in 2010, put on laptops in 2011)

While video game sales might seem like it is declining, manufacturers have to find a way to reinvent themselves in order to makes sales for their company happen. With the market and the target audience changing, it might be the only way for the video games companies to keep up.