Video games slide down the recession slope as April sales fall 17 percent

Hurt by the recession and a tough comparison to a year ago, video game sales fell 17 percent in April compared to a year ago.

That means game sales have fallen for the second month in a row, with sales in March also falling 17 percent.

Overall U.S. game console hardware, software and accessories saw sales fall to $1.03 billion compared to $1.24 billion a year ago, market researcher NPD reported. Software fell even more, sinking 23 percent to $510.7 million from $660.1 million. Hardware was down 8 percent to $391.6 million from $426.9 million, while accessories fell 15 percent to $129.4 million from $152.5 million.

Michael Pachter, an analyst at Wedbush Morgan, had expected game sales to fall 17 percent in the month, mainly because sales of Grand Theft Auto IV were so strong a year ago. But hardware sales fell even though Nintendo launched its DSi handheld during the month. That’s a disappointment.

Nintendo sold 1.04 million DS and DSi handhelds during the month, accouting for 31 percent of all hardware sales. That’s healthy. But the Wii sold only 340,000 units. The Xbox 360 sold 175,000 units. The PlayStation 3 sold 127,000 units, while the PlayStation 2 sold 172,000 (thanks to a price cut from $129 to $99) and the PlayStation Portable sold 116,000 units.

This weak performance elevates the importance of E3, where the game console makers are going to make their big announcements for the year. They will have to weigh strategies such as accelerating price cuts or introducing new things for fans such as better game controllers.

Anita Frazier, an analyst for NPD, said that while April sales might appear soft on the surface, it’s important to remember that April is being compared against a month a year ago that saw 50 percent growth over April 2007.  She said that this year’s performance still represents the second-best performance for the industry in the month of April, besting April 2007, which is the previous second-place holder, by 26 percent. May should be a much easier comparison, she said.

Frazier said that NPD’s monthly Consumer Spending Indicator study still shows that video games is the category that consumers  are least likely to cut their spending on in coming months.

While Wii hardware sales were weak, last year they got a boost from sales of smash games Super Smash Bros. Brawl and Mario Kart.  Taking that into account, Wii unit sales are still very strong, Frazier said. Nintendo had six titles in the top ten, but Wii Fit was No. 1. That game was introduced almost a year ago, and so it’s disappointing that no major new titles hit the top ten.