Summary:

Even the record-breaking sales of Activision’s Call of Duty: Modern Warfare 2 weren’t enough to bring the video game industry out of its sal…

Playing video games
photo: RebeccaPollard

Even the record-breaking sales of Activision’s Call of Duty: Modern Warfare 2 weren’t enough to bring the video game industry out of its sales slump. Overall sales (hardware, software and accessories) for November came in at $2.69 billion, down 7 percent year-over-year. Total sales for the year thus far were also down 12 percent, a nod to the double-digit declines predicted by EA’s John Riccitiello, and retail softness by Activision’s Bobby Kotick.

Drilling down further, software sales (games for both consoles and handheld devices like the PSP and Nintendo DS) sales were down 3 percent vs. November 2008. Though that’s far better than the 18 percent drop in October, it still shouldn’t be viewed as a “healthy start” to the holiday season, according to Jesse Divnich, director of analyst services at EEDAR. Also of concern is that “core” games like MW2 and Assassin’s Creed II fared better than casual titles in November, since family-friendly games typically drive holiday sales.

Still, NPD analyst Anita Frazier suggests that a combination of “frugal fatigue” — or consumers getting sick of pinching pennies — and better news about the economy overall could “positively impact industry sales” during these last weeks of holiday shopping.

There’s also some good news for publishers like Take-Two (NSDQ: TTWO) and Ubisoft that pushed the release dates of games like BioShock 2 and Splinter Cell: Conviction back into 2010: They avoided getting crushed by the MW2 launch, and Divnich also predicts that they’ll see stronger sales post-holiday than they would’ve if they’d rushed development for a holiday release. “This schedule shift will limit cannibalization and create a much stronger and healthier video game environment in the long-term,” he said, in a research note.

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