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Microsoft, Sony and Nintendo all stumble – not recession proof after all

By on July 31, 2009
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The first quarter results for the three major platform holders make grim reading and explode the myth that console-based gaming is recession-proof.

  • Microsoft annual revenues from the Entertainment and Devices division were down 5% ($8.20 billion year to June 2008, $7.75 billion 2009). The quarter ended June 09 suffered even worse, with a drop of 25%.

“Revenue from our Entertainment and Devices Division decreased across most lines of business including Xbox 360 platform and PC game revenue which declined primarily as a result of decreased console sales and revenue per console due to price reductions during the past 12 months, partially offset by increased Xbox Live revenue.”

Microsoft Earnings Release

  • Sony’s newly created networked products division, which includes Vaio laptops as well as PlayStation, reported a fall in revenues of 37% for quarter ended June 09 and an operating loss of Y39.7bn. Sony blamed weaker game and VAIO PC sales

“Sales in the game business decreased year-on-year as a result of a decrease in unit sales of PSP and PlayStation 3 hardware and an overall decrease in software sales, as well as the impact of the appreciation of the yen.

Sony Earnings Release

  • Nintendo’s revenue fell by over 40% compared with June 08. Nintendo squarely blamed the lack of new, blockbuster software titles for the fall in popularity of its hardware

“Regarding Nintendo DS Software sales in the first quarter, the Pokemon Platinum sold well overseas, however, there were few new popular titles.”

In the console business, there were fewer blockbuster titles that briskly drove hardware sales this June quarter versus the same period a year ago when titles like Mario Kart Wii and Wii Fit were launched in overseas markets.”

Nintendo Earnings Release

Alongside the NPD data showing continued declines in US software sales, these results paint a pretty gloomy picture of the recession proof nature of the console-based games industry.

About Nicholas Lovell

Nicholas is the founder of Gamesbrief, a blog dedicated to the business of games. It aims to be informative, authoritative and above all helpful to developers grappling with business strategy. He is the author of a growing list of books about making money in the games industry and other digital media, including How to Publish a Game and Design Rules for Free-to-Play Games, and Penguin-published title The Curve: thecurveonline.com
  • deftangel

    I'm not sure the recession has much to do with social gaming, there are other things driving that trend.

    I wouldn't say any of the consoles are in atrocious shape either. Over 100m sold thus far vs 180m last generation. Naturally, there has been dramatic industry growth since then but you also need to factor in this generation will be significantly longer. At least as far as Nintendo & Sony are concerned, they're presently over-priced for differing reasons of their own making. The real alarm bell for me starts ringing if the PS3 price cut and whatever Nintendo do whenever they can be bothered to pull their finger out doesn't move the needle and 2010 continues in the same vein.

    A dearth of compelling software, tough comps to last year, market saturation at the various price points AND a recession would make growth in 2009 a difficult proposition from the outset.

  • Indeed, but even recession-resistant is looking like a pipedream. Yet companies like Playfish and Zynga continue to grow fast. The console is in a very difficult position…

  • deftangel

    I believe the term now is “recession resistant” The backtracking from recession proof started a couple of NPD releases ago 🙂

  • I'm not sure the recession has much to do with social gaming, there are other things driving that trend.

    I wouldn't say any of the consoles are in atrocious shape either. Over 100m sold thus far vs 180m last generation. Naturally, there has been dramatic industry growth since then but you also need to factor in this generation will be significantly longer. At least as far as Nintendo & Sony are concerned, they're presently over-priced for differing reasons of their own making. The real alarm bell for me starts ringing if the PS3 price cut and whatever Nintendo do whenever they can be bothered to pull their finger out doesn't move the needle and 2010 continues in the same vein.

    A dearth of compelling software, tough comps to last year, market saturation at the various price points AND a recession would make growth in 2009 a difficult proposition from the outset.

  • Indeed, but even recession-resistant is looking like a pipedream. Yet companies like Playfish and Zynga continue to grow fast. The console is in a very difficult position…

  • I believe the term now is “recession resistant” The backtracking from recession proof started a couple of NPD releases ago 🙂