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Thursday, December 29, 2005

Xbox 360 launch marking a downturn for gaming?

Xbox 360 launch marking a downturn for gaming?

"The Xbox 360 launch has been meet with mixed enthusiasm. While the console debuted mostly to yawns in Japan, the launch in North America was hectic: long lines, short supplies, and still thousands of people hoping for a post-Christmas miracle in the form of a New Year's Xbox 360 rush. The European launch was also strong. You might be inclined to think that the gaming industry is feeling good about itself right now, but according to the Wall Street Journal (sub. required) that's not really the case.

Restated game sales figures from the NDP Group show a depressed November, with games sales dipping 18 percent from the same period a year ago. Gaming stalwarts like EA and Activation are warning that their profits will be less than hoped for when all is said and done for this quarter, putting a sad face on many investors. This has many folks scratching their heads; isn't this the hot time for gaming? How can it be that holiday 2005 didn't end up gangbusters? It looks as though this year's scapegoat may be the Xbox 360 launch, but there are signs that 2006 could continue this trend.

It all depends on how much gravity these new systems really have. Analysts attribute a big part of the decline in sales to a lack of purchasing conviction among gamers, who they see as reticent to buy games for what is now officially an "old console." While far more people have the original Xbox than the 360 at this point, the mere release of the 360 is seen by some to be enough to drag original Xbox game sales into the gutter. Why buy a game for an old console when you could be saving for a new one? The worry around the industry is that this trend could last through much of 2006, as new consoles from Sony and Nintendo make their way to the populace. In a conference call last week, Warren Jenson, CFO at EA, said "we have no reason to believe this abrupt shift in demand for current generation software will reverse itself."" [more]

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