It Had to Happen Sometime…Video Game Sales (Gasp!) Decline

Everybody seems a bit amazed that video games – the growth engine of much home entertainment over the last 10-15 years – are in a downturn. Games sales plummeted over 20 percent in the first eight months of 2012. That came after a sluggish 2011 as well. In fact, it’s possible that game sales (including hardware and software) will be the worst this year since 2005. But all in all, I’ve gotta say…this doesn’t surprise me one bit. At DVA, we buy and sell a lot of used games. Some games that were supposed to be enormously popular just aren’t. Some retailers over buy and want to unload some of their unsold inventory. Luckily, we are able to help. We have access to all kinds of retail channels that still have a need for product. If you remember my post about consumer electronics, I said that there are all kinds of consumers at all different phases of the buy cycle. And this is as true for the video game industry as it is for consumer electronics. Many gamers can’t afford the $50-$60 for a new console title. They are forced to wait six months or so for the price to go down. But for retailers, six months is too long to have unsold inventory sitting on shelves or in warehouses. That’s where we come in. To my mind, the video game industry is simply like most other industries in our economy. This industry is being affected by all the same forces that are changing other parts of the entertainment world: namely the recession, digital distribution and the Internet. A couple things about the video game biz:
  •  Gamers are primarily young males. It’s a bit of a stereotype but it’s true. This demographic group was hit pretty hard by the recent recession. They have less cash in their pockets as a group to buy those expensive titles and cough up those monthly fees.
  • Games on mobile devices and social networks – even ones without sophisticated gameplay – are taking a bite out of the market for the big-ticket titles. But even companies like Zynga – the maker of the massive hit Farmville – have been having financial trouble. No one is immune.
  • There have been a few creative duds lately in the gaming world. I’m not a connoisseur but if you ask people in the know they will tell you. This happens in movies too, right? Big studios put out bombs. Sometimes people lose their jobs or the company’s stock takes a plunge. It happens.
The long and short of it is that the video game business is now a mature business. It probably won’t see the astronomical growth of the last 10-15 years ever again. But video games aren’t going anywhere. Call of Duty Black Ops 2 is coming out on November 13.  This is a huge title from Activision. Robert Downey Jr. is in the commercial. That tells you something. Will it be a bomb or a bonanza? We’ll have to wait and see.

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