Study: Game industry sales slip

Sales of video game consoles and software fell in dollar terms, but actual units sold rose marginally, NPD says.
Written by Dinesh C. Sharma, Contributor
Sales of video game hardware and software dropped slightly in the first half of 2004, a new study has shown.

Industry dollar sales declined to US$3.4 billion in the first two quarters of 2004, compared with US$3.5 billion in the same period last year, according to figures released Thursday by The NPD Group. This represents a fall of 2.5 percent for hardware, software and accessories. However, overall unit sales went up by 1 percent, the market researcher said.

Richard Ow, senior video games analyst at NPD, said price reductions on Microsoft's Xbox and Sony's PlayStation 2 helped offset the loss somewhat. Both companies have trimmed prices to boost sales of both hardware and software in preparation for follow-on machines.

"The reduced price points for Microsoft's Xbox and Sony's PlayStation 2 helped to stabilize industry sales during the first half of the year," Ow said in a statement. "While the first quarter of 2004 was showing double-digit losses in console hardware unit sales, with the help of lower price points for the Xbox and PS2 during the second quarter of 2004, the industry actually saw double-digit increases in unit sales for the entire second quarter of the year."

Console hardware, portable hardware and portable software recorded sales drops of 17 percent, 10 percent and 12 percent, respectively. But software revenue jumped 4 percent, and accessory revenue was up 8 percent.

While the fortunes of the traditional game industry fluctuate, online games are fast gaining ground, particularly multiplayer online games. This is reflected in the rise in accessory sales in the first half of 2004. NPD said sales of accessories--Internet components and specialty controllers--rose by 120 percent and 184 percent, respectively.

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