General Discussion

The video games industry realized a significant decline when compared to June 2008, the fourth consecutive month of year-over-year declines. The first half of the year has been tough largely due to comparisons against a stellar first half performance last year, but still, this level of decline is certainly going to cause some pain and reflection in the industry.

Because the question invariably arises, this month saw the greatest year-over-year monthly decline since September 2000 when the industry declined 41% .

Even with the industry down 12% year-to-date, with a strong back-half performance, full year sales could still be flat to slightly up to 2008's record-breaking performance. Of course, that could be put further at risk if more highly anticipated titles move out of 2009 into 2010 or later.

Our latest gamer segmentation study suggests that more than 4 million new 'players' have entered the games market since last year, so certainly the decline isn't due to less folks participating in the industry . Some of these are new retail consumers and some are playing online for free, and others are a mix of both. The trick is to continue to figure out how to monetize all the gaming that is going on across PC, mobile devices, and video game systems. Certainly there is plenty of opportunity in the industry, but the rate of change in many areas of the industry presents a lot of challenge as well .

This is one of the first months where I think the impact of the economy is clearly reflected in the sales numbers. While the aggregate of content may not be as strong as what we saw in the first half of last year, and while the consumer base willing to spend dollars on hardware at the current price points may be thinning, the size of the decliine could also point to consumers deferring limited discretionary spending until a big event (must-have new title, hardware price cut) compels them to spend.

The Xbox 360 is the only platform to have realized a unit sales increase over last June. YTD, both the 360 and NDS have generated an increase in unit sales. Although many track month-to-month sales changes, comparisons to May must take into account that June is a five-week reporting month while May spanned four weeks.

While Wii sales are down from last year, the platform is still realizing very strong sales month after month. Compared against historical performance of other systems this far into the console lifecycle, the unit sales performance is still strong.

Tiger Woods PGA Tour 2010 had a great debut at retail, nearly doubling the units sold in the first month at market of the previous best-two launches: PGA Tour '05 and '07, which sold 272K units each in their respective launch months . No doubt a combination of moving the release date of the game out of "Madden Month" into June where golf was heavily televised due to the U.S. Open as well as well-received new game features and attributes helped contribute to this success.

Interestingly, this is the first month since its launch at retail 29 months ago that Wii Play has not been featured in the top 10 list for the month. That's an astonishing record for this industry.

Prototype was the top selling title for the month, realizing roughly 600K units at retail across the two platforms. While this is solid performance for new IP, it's a relatively modest sales figure for any game capturing the top spot for the month.

While some of the decline in retail sales could be a migration on the part of consumers to acquiring content via digital distribution, our reports on downloads and subscriptions reveal that it's not yet having enough impact on the console market to be an overly meaningful factor in the retail down-turn. That said, there are increasing avenues for consumers to game, including via mobile devices, and it's clear the industry is sorting through how to manage all these opportunities while deploying resources appropriately.

Wii Motion Plus sold 169K units in its first month at retail, not counting, of course, those bundled with Tiger Woods PGA Tour 10.

Of the various accessory types, Video Game Point and Subscription cards realized an increase of 67% in dollar sales in June '09 as compared to last year.