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No Quick Reset for Video Game Sales

As shown by the Microsoft's recent X10 industry event and the release of several major titles, it's clear video game companies would like their spring releases to become as popular as those that land during the traditional holiday season. Says the Wall Street Journal:

Taking advantage of that audience, which typically doesn't have enough time or money to buy too many games at once, is critical this year. That's because U.S. videogame sales fell 11% to $10.5 billion in 2009, according to market research firm NPD Group. With this year's more-staggered release schedule for games, Jesse Divnich, an analyst for market research firm Electronic Entertainment and Design Research, estimates U.S. software sales will rise 6% in 2010.

I say it's not going to happen -- at least not this year. Here's why:
  • People are broke: Consumer spending was down last holiday season, with video game sales down overall in 2009. Gamefly, the Netflix of video games, is more popular than ever, with monthly unlimited rental programs around $25. Why would users plunk down $50-plus for a game?
  • The space is too crowded: Over the past week a handful of AAA titles were released, including Bioshock 2 and Dante's Inferno. Wait a couple more weeks and there are Battlefield: Bad Company 2, Heavy Rain, Final Fantasy XII, God of War III and others. Each runs for about $60. Is it reasonable to expect post-holiday consumers to spend $500 within a few weeks? No. The recent Mass Effect 2 managed to sell a couple million copies - - wonderful for any time period - - but it also came out well before the field became crowded.
  • Spring 2010 has other media: Remember the iPad? Flash issues aside, the iPad is also a video game machine. The target market for spring purchases isn't the average consumer, but hardcore fanboys (and girls) who put more disposable towards games than others -- the very people who would take that $500 and buy a new device. Let's not forget new Google phones, a rumored new Kindle and other possible distractions.
I'm confident the gaming industry will eventually enjoy excellent sales year round, once these cyclical factors subside. But 2010 will not be that year.

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