No Recession for Game Console Makers

Americans are tiring of US$4.50-a-gallon gasoline, dire warnings from Iran and nasty political rhetoric. So they seem to be taking our their frustrations by blasting alien invaders and enemy soldiers and playing tennis with their TV sets.

Video games seem to be providing consumers a better entertainment bang for their buck this summer, as a dour economy forces them to choose “staycations” over vacations. Year-to-year June sales of video-game consoles surged 54 percent, spurred by strong sales from Nintendo’s Wii and Sony’s PlayStation 3, according to an NPD Group industry report.

Those sales figures, plus previews of fall offering from this week’s E3 video-game trade show in Los Angeles have analyst Michael Gartenberg predicting the best year yet for the industry: total estimated sales surpassing $20 billion.

Bucking Economic Trends

“Consumers are basically saying that video games represent a good value for our entertainment dollar,” Gartenberg, vice president and research director for JupiterResearch, told the E-Commerce Times. “We’re getting a lot for our money in what’s out there, and that’s good news for an industry at a time when consumers are faced with increasing prices for many goods and services and are looking for ways to cut back.”

Americans especially found value in Nintendo’s strategy of expanding the video-game market beyond hardcore gamers. The company sold 666,000 of its still-hard-to-find Wii consoles in June, with Sony’s PlayStation 3 coming in second at 405,000 units sold, NPD said. Microsoft sold nearly 220,000 units of its Xbox 360.

“The console race is much closer than any previous console cycle, and we have a market that can support three very strong players. The lead shifts consistently, and the game is not over yet,” Gartenberg said.

Tried-and-True Games Will Sell

Now that the console territory is established, Gartenberg said the real test for the industry will come with new software offerings in the fall in time for Christmas sales. Sony has already established a firm foothold with “Metal Gear Solid 4,” which led June game sales with 774,000 copies sold. Nintendo kept up the pace with its “Wii Fit” and “Wii Play” offerings and the handheld version of the popular “Guitar Hero” franchise.

“What determines who wins will be the fall sales,” Gartenberg said. “Who’s got the best titles and who can get those titles out in the fall. The right pricing points will also be important, because when it comes to buying the games in this economy, consumers are not going to change their habits. They’ll want proven quantities, something that’s going to be universally fun, and that’s going to be a challenge for companies wanting to do new or different things.”