Video game industry takes another big hit in August

August figures show the video industry's sales are down 16 percent year over year. And there's no guarantee that the trend will end anytime soon.

The video game industry is having trouble reversing its poor showing over the past few months.

Industrywide revenue in August slipped 16 percent year over year, market researcher NPD Group reported Thursday. And total year-to-date sales were down 14 percent.

PS3 Slim
PS3 Slim....the next console leader? Sony

Neither software nor hardware could stop the industry's slide . Hardware sales came in at $297.6 million for the month--down 25 percent compared with August 2008. Video game sales brought in $470.32 million--a 15 percent hit, year over year.

Hardware
Nintendo once again dominated both the handheld and console markets in August. The industry's leader sold 277,400 Wii units in August. Consumers purchased 552,900 Nintendo DS units.

Microsoft's Xbox 360 barely held onto second place in console sales, pushing 215,400 units into homes.

Buoyed by the cheaper PlayStation 3 , Sony's console trailed the Xbox 360 with 210,000 units sold. Its PlayStation Portable handheld was another popular item with 140,300 units sold. Ironically, Sony's PlayStation 2 continues to sell well. According to NPD, Sony sold 105,900 PS2 units--not bad for a product that isn't even considered "current gen."

Software
Unlike many previous months, Nintendo Wii games didn't dominate the top-10 list of best-selling titles. The company's console had only three of its titles make the list. Even so, that's the most games for any single console in August.

And this time around, a Wii game didn't take the top spot. Instead, Madden NFL 10 for the Xbox 360 reigned supreme with 928,000 units sold. Nintendo's Wii Sports Resort captured the second spot with 754,000 units sold. Madden NFL 10 for the PS3 captured third place, selling 665,000 units.

After the top three, sales dropped off considerably. Batman: Arkham Asylum for the Xbox 360 and PlayStation 3 sold 303,000 units and 290,000 units, respectively. Still finding a way into the top 10, Wii Fit and Mario Kart Wii enjoyed strong sales. Nintendo sold 128,000 Wii Fit units and 120,000 Mario Kart Wii games.

Looking ahead
NPD analyst Anita Frazier was quick to point out in her analysis of August's NPD figures that the industry saw "its sixth consecutive month-over-month decline, and while improved over the last several months, it's still a notable decline." Worst of all, the industry is so far behind 2008 figures that September through December sales would need to "be up 14 percent in aggregate for 2009 to come in flat in comparison to 2008 sales," Frazier said.

Frazier did note that Microsoft's and Sony's decisions to cut the prices on their hardware made an "impact on units sales."

Going forward, there might be a light at the end of this long, dark tunnel. Frazier pointed out that "all hardware systems with the exception of the PS2 realized an increase in unit sales over NPD July 2009." Ironically, the console that has trailed notably behind the competition--the PlayStation 3--enjoyed the "the greatest increase month-over-month with unit sales boosted by 72 percent over July levels." The PlayStation 3 was also the only console to capture year-over-year increases in software sales.

Frazier was suspect of Nintendo's need to drop the price of the Nintendo Wii. Even though Nintendo's competitors have lowered the price on their consoles, Frazier thought it was "interesting to note that the Wii is still selling at levels comparable to what the PS2 was doing at about this point in its lifecycle." In other words, maybe Nintendo can maintain the Wii's $250 price tag.

There is a general shortage of optimism in the industry right now. The one bright spot: sales generally jump during the holiday-shopping season, but to what degree those sales will increase remains to be seen.

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