Video game sales growth plummets, but 2010 to remain strong

The video games industry is expected to slow dramatically over the 2009 year, with sales growth expected to come in at just 3% compared to the nearly 45% figure recorded over the past two years, new figures reveal.

New data from research firm GFK predicts video game sales to reach about $2 billion, while games should account for about 45% of all toys sold during the Christmas period.

The figures come despite a number of massive titles for the industry, including the release of Activision’s Call of Duty: Modern Warfare 2, which has now earned billions worldwide since its release over a month ago.

But Mark Langford, chief executive of video game retail franchise GameTraders, says the drop in activity makes sense.

“Overall, our growth hasn’t been what it’s like in the past two to three years, and that’s mainly due to the fact that console sales have slowed. We haven’t reached saturation, but every household seems to have a console, and there’s a drop in those sales. There’s no profit margin there anyway, so for us we wouldn’t say that’s necessarily a bad thing anyway.”

“Also part of it is the lack of a few big titles, but we’ve had some few bigger ones this year, and those are continuing to sell pretty well.”

The drop in console sales is a seasonal event, usually occurring in the middle of a “generation”. The last of the three major video game consoles – the Xbox 360, Nintendo Wii and Playstation 3 – were released in March 2007.

Langford admits some of his stores have seen significant drops in activity, but also says a number of stores have seen sales rise. But looking ahead, Langford says the industry shouldn’t expect the same amount of growth during 2010 as it experienced in last few years.

“I don’t think there will be the same amount of growth. We were running at a pretty high average due to the release of consoles such as the Wii, Xbox 360 and the Playstation 3, which prompted a huge rise in activity and sales in software. Those new generation consoles have been out for a while, and of course the activity will slow as a result.”

Langford also says the financial crisis has caused some gamers to purchase second hand titles instead of new releases, but suggests the rise of “social gaming” and new demographics will hold retailers over if sales begin to dip.

“We’ve noticed a slight increase in our second hand sales, but nothing substantial. Additionally, we see a lot of older people such as parents getting into gaming, especially those over 50 who are buying a lot of the Nintendo products.”

“Gaming is essentially a family product now, it’s family entertainment. You’ve got parents into the games as well, and now Nintendo have brought out the DS which is especially popular among young girls… which is a really good move to target that demographic, it’s definitely helping our sales.”