In spite of the latest report from the commerce department finding that domestic retail sales inched slightly higher in July, the video game industry suffered its worse month since October of 2006, according to the NPD Group.
The report, released late last week, found that overall sales fell 20 percent in July from $855 million in 2010 to $687 million this year.
This latest figure also represents a new low point for the industry, with the previous month’s flaccid numbers easily supplanting the 14 percent drop in retail sales the NPD Group reported in May of this year.
However, unlike that slip, which was largely attributed to a lackluster release schedule, sagging hardware sales were primarily to blame.
Here, the report saw this segment of the market contract by 29 percent to $223 million in a year-over-year comparison.
Adding to the growing sense of consternation among analysts is that most believe this trend is likely to continue until the next consoles are released, because the prevailing sentiment is that the current generation has reached its technological zenith.
Nevertheless, Microsoft quickly issued a statement ahead of the release of last week’s figures, reporting that U.S. sales of its Xbox 360 topped 277,000 units during the month of July.
The company also pointed out that not only did this latest figure give their aging console a 45 percent market share against all other systems for the month, but that it was also the fifth month that 2011 Microsoft’s flagship device had accounted for more than 40 percent of monthly hardware sales.
Software sales fared only slightly better, falling 17 percent in July to $336 million.
Again, the scarcity of new releases, coupled with general apathy over the month’s lineup, all contributed in pushing figures down.
Accessories also suffered last month, in spite of remaining the one area that has shown some signs of growth throughout the year.
For July, accessory sales fell by nearly 8 percent from $138 million to $128 million. However, for the year, this segment is still up by as much as 7 percent over 2010.
Unfortunately, this latest report is not without its share of controversy, primarily because of the NPD Group’s exclusion of non-physical retail sales, as well as other channels in its estimates of software.
This extra data, which encompasses direct downloads and mobile games, for example, are only provided by the group on a quarterly basis. As such, some have argued that the latest figures may be showing an inaccurate picture of the industry that is actually poised to grow this year.
Surprisingly, many analysts share in this thinking and point to the fact that while the industry may be down for the year, it’s still well within striking range of matching last year’s total if not beating it by a couple of percentage points.
Adding to this confidence is also the release of several highly anticipated blockbuster titles, such as “Gears of War 3” and “Call of Duty: Modern Warfare 3.”