With consumer electronics down broadly last year, some categories just holding their own, some down by half, and tablets the only category that was up impressively, how did the video game segment fare?
According to yesterday’s headlines, the video game business was flat at best in the United States and United Kingdom. The more fortunate retailers are reporting same-store sales the same as the previous year, and most are down about 5 percent. Ominously, though, video game hardware sales were down about 15 percent from the year before. Hardware doesn’t make up a big part of the profit in video games, but if there are no hardware sales then software sales cannot follow.
U.K. retailer Game Group fared worse than most and is the subject of particular concern after its holiday-season sales, down 15 percent year over year, were not good enough for it to live up to the terms of its financial arrangements. The company’s stock value fell to about £13 million, down almost 99 percent from its 2009 peak, reflecting stock traders’ opinions about the probability of bankruptcy.
Part of what is going on is that people are playing games on phones and tablets. These games tend to be simpler and less expensive than games for dedicated game consoles, and people play them for shorter periods of time, just a few minutes at a time instead of an hour or two.
The industry has some compelling software releases on the way for the new year, but the number of new video game titles continues to decline, and game publishers are selling into a shrinking market.