Software Sales Still Down

Game software sales are still heading for a bad year, as sales in July were down 8% according to the latest NPD report (compared to last July). Overall, sales for 2010 so far are down 8% over last year, which as you may recall was also a bad year. The bright spot was that hardware sales were up 12%, driven entirely by the introduction of the Xbox 360 Slim. Which actually seems to me like a fairly slim boost for a new console introduction.

It's not the quality of the software, unfortunately. Larger market forces are at work here, I think. There are many less expensive options to new $60 games, including expanding availability of used games, free-to-play games, mobile and social games. Plus the economy is still rough, particularly for consumers in the key 18-25 demographic for videogame sales.

Usually games have done well in down economies, as people have sought better entertainment values for their smaller entertainment budgets. This time is different, at least for videogame titles; I think part of the reason is the number of hours of play you get from a typical videogame is down significantly.

I don't think this is just a temporary blip (not when it's gone on for more than a year), and I don't think that the Move or Kinect or the 3DS will dramatically alter the situation, nor will 3D display. Business models have to change, and that means big changes ahead. Batten down the hatches and get ready for the storm.