Nintendo Wii Sales Drop for First Time, 'Video Game Index' Plunges
Japanese game-maker Nintendo said today that sales of its popular Wii motion-sensing game console -- which has outsold Sony's PlayStation and Microsoft's Xbox -- fell for the first time in its three-year history. Sony also reported today that sales of its PlayStation 3 console hit a two-year low.
This news comes two weeks after industry monitor NPD Group reported that June video game sales dropped more than expected, their fourth straight month of decline.
Taken together, these data suggest a sort of Video Game Index: one more way to gauge the health of this economy, now in its 19th month of recession.
Video games and game consoles are the very example of discretionary spending: They're expensive, they're a luxury, they should be among the first things to go in a recession.
Yet they had not been, at least up until a few months ago. Gamers were still willing to put money into their hobby, by buying new games. What's happening now is potential gamers are holding off buying the expensive consoles and current gamers are refusing to upgrade. Both are signs of a truly bad economy.
The official U.S. unemployment rate stands at 9.5 percent and rising (the Labor Department's own figures suggest a truer figure is closer to 16.5 percent). Even though the recession might technically end later this year, it will not be followed by a roaring recovery, most economists believe.
So it makes sense that finally -- finally -- people are deciding to hold onto that $250 instead of handing it over for a new Wii console. (Plus more for the games.)
Indeed, the U.S. personal saving rate -- how much of their money people don't spend -- hit a nine-year high in the first quarter of this year, according to the Bureau of Economic Analysis.
Interestingly, this Nielsen report from earlier this month indicates that gamers who already own consoles and games are playing them more than ever during this recession. We're guessing this is a statistic strongly linked to high unemployment.
In quarterly earnings reports out today, Nintendo said sales of its Wii game box were down 57 percent compared with the same quarter of 2009, sinking profits by 61 percent.
The Sony business unit that makes the PlayStation game machines posted a $418 million operating loss in the quarter ended June 30, compared with profit of $48 million in the same quarter last year.
Last week, Microsoft reported the lowest quarterly sales of its Xbox in two years.
July 30, 2009; 11:49 AM ET
Categories: The Ticker | Tags: Microsoft, Nintendo, PlayStation, Sony, Wii, Xbox
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