Roaring December Caps Gaming’s Rotten 2009

The overheated weapons and steroid-pumped terrorists featured in “Call of Duty: Modern Warfare 2” made a lot of noise in the gaming industry leading into the holidays. However, by the time receipts were totaled, it was a familiar little mustache-wearing plumber and his arcade-style melodies that sang the loudest during the winter sales season.

Nintendo, “New Super Mario Brothers” and the Wii came roaring back from a dismal fall to capture the top sales spots for December, according to the industry retail tracking firm NPD Group. 3.81 million units of the Wii console sailed off store shelves during the month, more than doubling the results of the nearest competitor, Sony’s PlayStation 3, at 1.36 million units.

However, Microsoft’s Xbox 360 wasn’t far behind at 1.31 million units sold. In fact, all hardware sales were up a whopping 16 percent from December ’08 to total US$2.58 billion in sales. The games themselves saw a 4 percent increase over the previous holiday period to total $5.53 billion.

The season may have been good to the industry thanks to pre-holiday price cuts for all the consoles and high-interest titles like “New Super Mario Brothers” and “COD:MW2.” However, the rest of the year’s recessionary woes had already done their damage to the industry.

“The video game industry experienced its biggest sales month ever, besting last December by 4 percent. It wasn’t enough, though, to compensate for the sales decline throughout the year, and so full-year sales came in 8 percent below last year’s record-setting revenues,” NPD analyst Anita Frazier said.

Nintendo’s Comeback

Nintendo and its market-leading Wii console may have suffered the most because of the recession’s effect on consumer discretionary spending, as it was unable to maintain the stellar growth it had seen pre-2008. However, it still was a top choice for those looking for gift-giving ideas and households wanting to try out unique Wii titles such as “Wii Fit” and “Wii Sports Resort” — two of the top-10-selling games of the month — continued to make Nintendo their first gaming stop at stores like GameStop.

So is the Wii back? “I don’t think it’s ever really gone away,” independent gaming consultant Michael Goodman told the E-Commerce Times. “We are late in the generation, so we don’t anticipate sales declining much more no matter what happens [with the economy]. Wii has been the market leader even despite declining numbers. It was still outselling the competition.”

Nintendo’s software also had a great December, with Wii titles taking up six of the top 10 games sold during the month. In fact, for the entire year, seven of the top 10 games were Nintendo of America products — either Mario-based games including holdovers like “Mario Kart” or the aforementioned “Wii Fit” and “Wii Sports Resort.” Yet analysts are still waiting for third-party software developers to build a breakout game taking advantage of the console’s motion-sensing remote.

“Nintendo has improved their support of third-party developers in this generation of machines, but the marketplace seems much more interested in Nintendo-brand titles over all else,” independent gaming analyst Mark DeLoura told the E-Commerce Times. “Cutting-edge technology titles just don’t end up on the Wii, since the hardware spec is much lower, and a lot of the titles from third-party companies just aren’t great quality, unfortunately.”

Games as Tech Industry Indicator?

The PlayStation 3’s continued climb out of third place also impressed DeLoura, as did the innovation being shown by Microsoft for support of its Xbox 360, particularly downloadable content via Xbox Live. However, he thinks December’s sales were an anomaly driven by games such as “COD:MW2,” “Uncharted 2” and the Wii titles.

“Soon we’ll get back to hearing how the traditional game industry is hurting,” he said. “Mainstream game publishers are still trying to work out how to compete in this new environment of casual and social titles.” He cited Electronic Arts’ recent bad news as an example — the company cut its fiscal year and third-quarter outlooks this week.

Despite reports driven by 2010 Consumer Electronics Show buzz over new hardware and indications that the tech sector may be coming out of its own recessionary downward spiral, Goodman isn’t ready to judge gaming as an indicator of overall industry strength.

“You could say that video games are a better leading indicator for consumer entertainment spend than for tech spending,” he said. “Historically, the view has been that video games are recession-proof. Last year didn’t prove that out. It depends on how deep the recession is. I still believe that [games and consoles] are at the tail end of things that get cut when incomes decline, and when discretionary income does improve, they’re going to get added back first. I wouldn’t put them up there with smartphones and computers — from a hardware perspective, yes, but I don’t believe consumers view them in the same spend bucket.”