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Bad Times  For Video Game Industry

No one is expecting the video games industry to shrivel and die any time soon. But for five straight months, U.S. sales have been in decline, and some fear that 2009 will turn out to be a bad year overall for the industry.

Figures released by the NDP Group (a consumer and retail research company) show a 29% drop in video game sales in July. That followed drops in each of the previous four months, putting figures for the year down 14%.

Sales of games, hardware and accessories have all taken a loss compared to last year. Among game consoles, only Microsoft’s Xbox 360 has showed an increase in unit sales.

In the face of strong sales in 2008, some were saying that the video game industry was "recession-proof." It was assumed that in the slumping economy, consumers would spend more of their time at home and spend more of what discretionary money they had on video games.

It's now clear that assumption was wrong. On top of a seasonal slowdown, the recession has created a drop in sales that few had expected.

Can New Releases Turn the Tide?

There may be some good news on the horizon. Some new games, such as Madden NFL 10 (a football-based game from Electronic Arts), are or will soon be on the market. “There are some big titles to be released in the next several months,” wrote NPD analyst Anita Frazier in a recent report. “The worst should be behind us,” she said.

Still, the video gaming industry finds itself dealing with a recession that it previously believed it was immune to. Rather than riding through the down times, the recent sales slump points to a trend that few can ignore -- that the video game industry is facing its own economic crisis.