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June 2008 | Vol. VII - No. 6
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Video Game Market Sees a Slowdown

But Wii and XBox 360 Show Consistent Growth


June 19, 2008 – I have again analyzed the NPD data that has just come out on video games. The information tallies pretty well with my own retailer panel data and with what the buyers tell me.

The first graph below shows the cumulative percentage changes for total units sold for each month this year. January was below the same month last year, but the percentage went into positive territory in February and has remained there since.

It also shows that the total growth in terms of units is still accelerating but flattening out. Of the individual consoles, Sony’s PS2 has clearly been in negative territory for the last three months, whereas the handhelds and Sony’s PS3 are slowing down. The two consoles that have consistently seen accelerating growth rates up to now are the Nintendo Wii and the Microsoft XBox 360.


 
Looking further out, the numbers from my retailer panel suggest that unit growth has, during the first half of June, continued to flatten. This is also what the buyers have seen. The Wii, while still growing strongly, is no longer accelerating. The XBox 360 continues to do well on the back of “Grand Theft Auto IV.”

As for the video game category overall, the growth rate in terms of dollars has continued to accelerate. Individually, consoles improved their growth rate sharply, whereas software and accessories both began to flatten out.

  
 
There seems little doubt that the phenomenon of upward-trending growth rates for the video game category is over. That does not mean they will begin to decline. However, I predict that the above 30-percent increases are now a thing of the past and that we will see a gentle downward trend to the +20-percent level by the end of the year.

This trend is also suggested by both Web traffic [which typically correlates with purchase intent] as well as Blog Metrics [which demonstrate consumer interest levels]:






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Lutz MullerWriter's Bio: Lutz Muller is a Swiss who has lived on five continents. In  the United States, he was the CEO for four manufacturing companies, including two in the toy industry. Since 2002, he has provided competitive intelligence on the toy and video game market to manufacturers and financial institutions coast-to-coast. He gets his information from his retailer panel, from big-box buyers and his many friends in the industry. If anything happens, he is usually the first to know. Read more on his website at www.klosterstrading.com. Read more articles by this author

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