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Gaming Industry's Booming January, Activision's Busted Quarter

By Walaika Haskins E-Commerce Times ECT News Network
Feb 19, 2009 4:00 AM PT

The gaming industry was the recipient of news both good and bad this past week. On the up side, the monthly NPD Group sales report for January indicated gaming continues to be relatively recession-resistant. Gamers also have something to cheer now that Nintendo has announced the U.S. release date for its Nintendo DSi handheld gaming machine.

Gaming Industry's Booming January, Activision's Busted Quarter

Activision, however, announced losses in its fourth fiscal quarter.

Recession? What Recession?

Sales figures released by The NPD Group last week show that the gaming industry continues to grow despite the decline in overall consumer spending as the economic crisis deepens. Total gaming sales grew by 13 percent year over year from US$1.18 billion in January 2008 to $1.33 billion last month.

The industry saw the most growth in hardware sales, which increased from $380.3 million the previous January to $445.4 million last month. The Wii from Nintendo topped the hardware sales chart for the 16th month in a row. Consumers purchased 679,200 of the consoles and another 510,800 Nintendo DS portable gaming devices.

Microsoft and Sony trailed significantly. The Xbox 360 sold roughly 55 percent fewer units than the Wii, while the PlayStation 3, PlayStation 2 and PlayStation Portable lagged behind with 203,200 units, 101,200 units and 172,300 units, respectively, in January.

Gaming software and accessories brought in $676.6 million and $209.8 million in sales. "Wii Fit" came in No. 1 in software sales with 777,000 sold, followed by "Wii Play with Remote" and "Mario Kart," "Left 4 Dead" on the Xbox 360 and "Call of Duty: World at War" rounding out the Top 5.

Oh Yeah, That Recession

Despite the good news for the industry as a whole, times are still challenging for individual publishers and game makers, many of which have posted losses and turned to layoffs in an effort to mitigate the effects of the current recession.

Activision became the latest publisher to post losses for the final months of 2008. For the quarter that ended Dec., 31, the company reported a net loss of $72 million. Net revenue totaled $1.64 billion, nearly four times more following its merger with Vivendi in July. The company's total profits were $429 million.

Despite its status as the largest game maker in the world, Activision's forecast for the year did not meet analysts' projections. The company expects sales to reach just $550 million, close to half of its earlier $951.7 million projection.

The tough economic times and less-than-stellar outlook for Activision left Bobby Kotick calling on hardware manufacturers to "reconsider their pricing." That, he said, would be a "big benefit to consumption."

All publishers are going to be incredibly cautious for 2009, Stephanie Ethier, an InStat analyst, told the E-Commerce Times. "I think lowering the prices on the consoles would really make many consumers on the edge of purchasing a console stand up and take notice -- and most likely take advantage of lower prices not yet seen on the market," she said.

"Due to the weakened economy, consumers are staying home and looking to enhance the home experience. Boosting the gaming environment within the home will be part of that, and lower prices for consoles could spur both console upgrades as well as new console customers," she added.

A New DS Cometh

Finally, Nintendo said it plans to launch its new DSi portable gaming device in the U.S. on April 5. The third iteration, priced at $169.99, will be available in blue and black.

The DSi will include a camera, a music player and DSi Shop. The most notable feature, according to Nintendo, is the gaming device's dual cameras -- one on the external body and the other pointing at users when the DSi is flipped open. The camera includes 10 different interactive "lenses" that can be manipulated for photos.

With DSi Sound, gamers will have an interactive voice recorder and music player in one. Users will be able access different audio files or control the pitch and speed of recorded voice or music files to alter voices or change the tempo of song.


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