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The two-year slide for the gaming industry is still searching for a sandy playground bottom.
On Thursday, market watcher NPD Group posted some grim numbers for March. Video game sales clocked in 4% lower than they did a year earlier, as a 12% spike in hardware and a 13% boost in accessories weren't enough to offset a 16% slide in software.
NPD's data is limited to retail channel checks, so developers may very well be rocking on Web-served content. It's still problematic.
It isn't a surprise to see things hold up well on the gear side. Nintendo's (OTC BB: NTDOY.PK) 3DS debuted last month. Microsoft's (Nasdaq: MSFT ) Kinect motion-based sensors and Sony's (NYSE: SNE ) PlayStation Move controllers have sold millions apiece since being introduced late last year.
Strength in hardware has historically been a leading indicator for a rebound in software. Folks don't invest $150 on the camera-based Kinect accessory or $250 on a 3DS handheld with 3-D whimsy if they don't plan on buying new games that take advantage of the new features.
It may be different this time. Shares of Activision Blizzard (Nasdaq: ATVI ) have been trading in the pre-teens since two summers ago, and Wall Street is braced for lower sales and earnings this year. Electronic Arts (Nasdaq: ERTS ) hit a new 52-week high this month, but it's not because of the fundamentals. Analysts see EA's revenue taking a nearly 10% hit for its fiscal year that ended three weeks ago, only making back half of that dip in its new fiscal year.
Any hope for growth in mobile downloads is dashed by both the level playing field and the fact that $0.99 is considered a premium download for smartphone apps. The 3DS is cool, but some of its bigger selling points are the ability to stream Netflix (Nasdaq: NFLX ) content and free 3-D movie trailers. In fact, last week's Kinect update for Xbox owners allows for controller-free navigation on Netflix streams. A voice prompt or a hand gesture is all it takes to select a recommended flick or tweak the playback process.
Nintendo, Microsoft, and Sony realize that streaming video and surfing the Internet are major components of their consoles. These features help sell systems, making them the centerpieces of home theaters. Unfortunately, time spent streaming YouTube or checking Facebook feeds means less time spent on gaming itself.
There's a troublesome divergence taking place. Hardware sales aren't resulting in the desired surge in software. The industry has transformed gamers into couch potatoes, and it may be too late to turn back now.
Do you think the traditional video game industry will bounce back? Share your thoughts in the comment box below.
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Report this Comment On April 18, 2011, at 2:16 PM, kariku wrote:
Ok, so When Will Video Games Bounce Back?
Report this Comment On April 18, 2011, at 4:33 PM, bottomfisherman wrote:
Very interesting, hardware and accessories are up (Madcatz got hammered today though) but not games downloadable or otherwise. The used games market continues to thrive and those are a lot less expensive then new games. I see it as either people and gamers in particular cannot afford new games now and have put purchases on hold until something good gets released. There have not been any real exciting releases this year so far that may be a big part of it. So I see it picking up as soon as some of these expected new and sequel releases hit the stores.
Report this Comment On April 18, 2011, at 9:48 PM, CRACKTACTOR wrote:
ATVI is making money hand over fist, yet pays no dividend and the price has been stuck in the low teens since it split @ $35. Great company, but dead money...
Report this Comment On April 19, 2011, at 7:34 AM, marc5477 wrote:
@CRACKTACTOR
ATVI does actually pay a dividend but its not very high (1.5% or so). I have to disagree about them. WoW is responsible for about 50% of their income. Lose WoW and their shares will plunge and it is very possible that it might happen this year with the Star Wars mmo coming out. Stay far away from ATVI.
Report this Comment On April 19, 2011, at 11:46 AM, 100tradejack wrote:
I don't think ATVI is dead money. Yes, you will have to wait, but when it moves (up), the move should be dramatic.
Jack
www.100tradejack.com
Report this Comment On April 19, 2011, at 12:29 PM, Brent2223 wrote:
Any numbers on web-served content? Seems like an important piece of information here. I'd think that web-served content would be a much cheaper channel for developers (no packaging, shipping, inventory, etc.), so in theory this could be a positive story if physical sales are being replaced by web sales.
Report this Comment On April 19, 2011, at 3:09 PM, eurotransient wrote:
@marc5477
There's no doubting the importance of WoW on ATVI's books, but I'm skeptical about Star Wars: The Old Republic's chances at dethroning WoW's subscriber base.
For starters, SWTOR has been reported to be among the most expensive games ever made, enough so that recouping expenses alone will be difficult.
It will also very likely launch with a traditional (read: aging) subscription model, at a time when more and more MMOs will be transitioning to a free-to-play model, which has been a financially successful transition for some MMOs (though definitely not all). In fact, I wouldn't be entirely surprised to see WoW make a transition like that at some point in the not too distant future.
I think the bigger play comes with the release of Battlefield 3 this fall, which should give this year's Call of Duty release a serious run for the money. Despite the massive sales Call of Duty has racked up over the years, there's a feeling of stagnation to the series as a whole, not to mention concerns with all the developer turmoil over the past year. ATVI's lost the brain trust behind the Call of Duty series (and to EA, no less!) and it remains to be seen how they'll innovate the series further -- a task that was primarily left to the shell-of-its-former-self Infinity Ward every other year.
Battlefield 3, on the other hand, comes from a developer with a tremendous track record at delivering on all the things people love about CoD. The past few years have seen "smaller" releases in the Battlefield series, but this year brings the big one to all platforms. I think it's got a shot at dethroning Call of Duty from the populist throne of first person shooters. If that happens? ATVI's in BIG trouble.
Report this Comment On April 19, 2011, at 4:19 PM, Realexpectations wrote:
My personal opinion:
Video games are way way to expensive, especially when they first come out.
60$ a game is a large chunk of cash for the average person especially when everything else the is mandatory that we buy gas, food etc is already pretty much over priced for the consumer.
Even when the Playstation 2 was out and it was
50$ a game I think was border line.
People hate waiting 2 years for the price to come down rather than buying the knock off game at half the price or less on amazon.
Ex: Grand theft auto IV: my opinion: horrible doesnt even have half the things San Andreas had.
Or you could buy saints row 2 which had more than triple everything GTA IV had.
To me they deserve the lower sales, its their own fault.
For Battlefield taking market share from COD, its about time because all the new ones are nothing like 2 or 3.
yes I am angry with the video game industry for going BACKWARDS not FORWARD
Report this Comment On May 01, 2011, at 1:52 AM, ffcloud321 wrote:
I know the cost of production has skyrocketed with the newest generation of console games, but the cost of new games is reaching a dangerous high.
I make a good living, but I cringe at a 65$ price at the register. Especially with the uncertainty I get from so many games now a days.
Capcom wants you pay 60$ for an unfinished game, then they want you to pay them to finish it...Its obvious crap.
Portal 2.....yea.... I am so excited.....yea.....
OH and another mortal kombat to get bored with in 2 weeks....yay
Maybe we have come too far. They need to think of ways to make it cheaper to make games...
Also where are all the turn based RPGs???....
I mean those things were like crack on the ps1, its the reason I ended up buying a Ps2...yet even that system didn't have as many turn based rpgs as I wanted.
They abandon a cash cow......its crazy. I guess the game developers have it in their head that people don't like turn based rpgs.....
I can assure you that all the faggots that complained about turn based rpgs back in the day...were not the demographic that was buying new games.
Trust me I know those faggots, they own one twisted metal game and a few FPS's and madden. They don't even play games that much.....yet you took their advise on turn based rpgs....guess what ???!!
THOSE KIND OF GAMERS ARE DUMB People THAT BUY ONE GAME EVERY 2 YEARS!!...
So no Suikoden VI, No Front Mission 6, no traditional Final Fantasy's, no Kingdom Hearts 3, Dragon Warrior 10 on ps3 anybody??? ANYBODY!! Wild Arms? Breath of Fire? Chrono???
Wtf Japan.....wtf.....
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