Video Game Sales Get Crushed, iPhone May Be Culprit

Video game sales in the US were decimated in April. It is not clear whether this is due to the growth of free games, especially online and on social network sites, or a pullback in consumer spending. The fall-off was the biggest since July 2009

Sales of games and consoles dropped 26% last month compared to April a year ago.  And, April 2009 was a month when numbers had already been cut down by the recession. Total revenue for games sold this April was $766.2 million, according to research group NPD.  Some of the drop was due to the fact that Easter was in April in 2009 which helped created a small uptick for the month lessening the impact of the weak economy.

Sales of consoles posted a 37% decline to $249 million. Much of this was due to a decline in sales of the Nintendo DS. The Japanese company sold 440,800 of the hand-held devices last month, compared with more than a million in April of last year.

Among consoles, the Nintendo Wii sold 277,200 units — about half the unit sales from March. The PS3 from Sony sold 180,300 units, while the Xbox 360 from Microsoft sold 185,400 Xbox 360 units. While Wii sales were down in April, Xbox 360 units shipped were up 6% and PS3 sales were higher by 43% compared with the same month a year ago.

One of the causes of the drop appears to be the large numbers of free games, many of which run on smartphones such as the Apple Inc. (NASDAQ: AAPL) iPhone. It is too early to tell if this is good news for Apple at least until it can register large revenue from game app downloads. So far, based on NPD numbers, that is not the case.

Apple has already disrupted the smartphone industry, and the video game sector could be next.

Douglas A. McIntyre