E-Games Down 26% in April

The latest NPD numbers are in, and any hopes that this year would see a recovery in the game industry seem very far away... at least as far as the classic console business is concerned. Overall sales for hardware and software were down 26%. Note that this is for consoles and handhelds, as sold through retail stores. So we're not talking about Apple's devices, or social games, virtual products, DLC, digital distribution, or mobile games.

Still, console hardware tanked by 37% over last April, and software was down 22%. The industry was down 11% for the first four months of the year. That's not good at all, considering how crappy last year was, with sales down 8% overall even after significant price cuts on console hardware.

This does not bode well for the rest of the year. True, Microsoft will come out with Natal for the 360, and Sony will ship Move for the PS3, and everybody will attempt to drum up enthusiasm for 3D. All of this activity does not address the fundamental issues behind the slowdown in sales. Here's reality: Consumers have an ever-growing array of less expensive options, and they're becoming aware of them. Why buy a DS when you can get thousands of games for a fraction of the cost (or free) on an iPod Touch, which also plays music and videos and has many other functions, too? There's a terrific array of free-to-play games on computers that everyone already has, and most of those don't require any high-end hardware to run. New business models and new technologies are pulling gamers into different places, and the traditional $50 or $60 game doesn't look like that much of a deal any more... especially not when you get to read all of the reviews online ahead of time and can readily identify the real clunkers before you lay out hard-earned cash.

Traditional console games are having a tough time, but gaming as a whole is doing great. Publishers need to examine their business models and see if they're positioned to start taking advantage of trends, rather than being run over by them.