Video Game Sales Hit Lowest Level Since 2006

August video games fell to their lowest level in four years. The belief that sales had begun to recover, based on numbers from late spring and early summer, has proved to be wrong.

U.S. video game  sales dropped 10% to $1.6 billion compared with August of 2009, according to NPD Group. Microsoft (NASDAQ: MSFT) Xbox 360 sales were strong. Sales of the Nintendo Wii dropped sharply. Sales of the leading 10 video games fell to 3.3 million units in August compared with 4.1 million a year ago despite the successful launch of “Madden NFL ’11” from Electronic Arts (NASDAQ: ERTS)

In a change of fortune, sales of the ever-popular Nintendo Wii were only 244,300–their lowest monthly level since the console was released. The Xbox 360 topped the sales chart of game consoles for the third month in a row by selling 356,700 units. The Sony PS3 sold 226,000 units.

The most important statistic from the NPD data is that the Nintendo Wii — the clear leader in console sales for over three years —  has lost its edge–probably permanently. The console is old. It is designed for casual gamers who did not want to navigate the complex features of the PS3 and Xbox 260. But Microsoft and Sony have been clever. Each lowered the price of its consoles late last year. Both companies have also built Wii-like features into their platforms which allows consumers to play simpler games and those that involve motion detection.

Nintendo made the mistake in its production of the Wii which has become a one-hit wonder. The Wii made the company successful, but now its management and shareholders must deal with the magic being gone and with it the company’s sales.

Douglas A. McIntyre