Sales of video game equipment and software in the United States fell 7.6 percent in November to $2.7 billion, research group NPD said on Thursday, as the struggling industry limped into the crucial holiday sales period.
Hardware sales fell 13.4 percent, while software sales dropped 3.1 percent. The results were worse than some analysts had expected.
This should not be viewed as a healthy start to the holiday season, EEDAR analyst Jesse Divnich said in a research note.
November sales include the Black Friday post-Thanksgiving weekend, the traditional kickoff to the annual holiday shopping spree.
The industry continued to slump despite recent price cuts on all the major consoles and the launch of a blockbuster game, Activision Blizzard Inc's Call of Duty: Modern Warfare 2.
The economic downturn this year has pinched spending on games and hardware from more casual fans, which the industry relies on for growth. Sales in the United States are down 12.1 percent for the year.
NPD analyst Anita Frazier noted that last year's huge sales tally has provided a difficult comparison for 2009.
Breaking even seems more out of reach. In order to break even to last year, December sales would have to be up 36 percent over December 2008.
WII, CALL OF DUTY LEAD
Nintendo Co Ltd's Wii was again the top-selling home console in the month with 1.26 million units, followed by Microsoft Corp's Xbox 360 with 820,000 and Sony Corp's PlayStation 3 with 710,000.
But PS3 was the only one of the three to show year-over-year growth, with sales rising nearly 90 percent. Wii sales were down more than 35 percent from last year, while Xbox sales were off 2 percent.
Nintendo of America President Reggie Fils-Aime said the Wii and its games still have a strong appeal to cost-conscious shoppers.
What we're seeing is the consumer is willing to spend as long as the value equation is there, as long as the software is there for the entire family.
Microsoft spokesman David Dennis said sales of the Xbox are up 5 percent so far this year and the company is happy with where the console is in its life cycle.
November is typically an indicator of what December will look like, he said. We certainly feel great about where we're at.
For its part, Sony Computer Entertainment America said PS3 sales are exceeding its expectations, and said some retailers are expected to see tight supply this month.
Call of Duty was the best-selling game in the United States in November with more than 6 million units sold on the Xbox and PS3, NPD said. Nintendo's New Super Mario Bros. Wii and Ubisoft's Assassin's Creed II also sold well.
Analysts expect the newest Call of Duty game to be one of the top-selling of all time, with global sales estimates ranging from 11 million to 13 million units by end-2009.
(Reporting by Gabriel Madway; Editing by Richard Chang)