According to the NPD Group and NPD analyst, Anita Frazier, sales in October showed a decline compared to October 2008 and it was the third-best October on record (Oct 07, Oct 08).

Anita said, "Based on typical industry seasonality, the industry is on track to generate full-year revenues in the range of $20-$21B  in the U.S., which would put it just a bit below last year’s sales of $21.3B."

Considering the state of several other industries this year, that’s not a terrible place to be really. She also believes that:

"The continued economic turmoil, and in particular the troubling unemployment rate, is undoubtedly impacting industry sales.  Our latest Economy Tracker indicated that although consumers’ general opinion about the economy is improving, their outlook on their own personal situation is worsening.  If consumers’ personal outlook continues to erode, they could very well be much more conservative with their holiday shopping this year."

Yet if we’re only going to be off, as an industry, by at little as $300M for the year in the US, it’s still a pretty good year overall.

Driving sales through the holidays of course undoubtedly will be games like Call of Duty 4: Modern Warfare 2 which is breaking all records (94.67% on GameRankings currently). Anita said, "With the excitement already being generated by Call of Duty: Modern Warfare 2, and the incredible buzz around upcoming titles, New Super Mario Bros. Wii, and Assassin’s Creed 2, November is poised to be a strong month for the industry."

While hardware sales were down overall (17%) they did increase per week. Yes less units are selling than last year, but that’s to be expected as the current generation of consoles ages and more and more people already have them in their homes. The recent price drops might stimulate some additional sales for the season but I personally believe that we are beginning the downward decline in hardware unit sales. That doesn’t mean it’s time to start putting out new ones. It just means that we’re reaching the plateau as the hardware becomes entrenched in the market. It’s a normal trend for console sales to begin tailing off sooner or late and with years under the belts of this generation, it’s about time.

Perhaps surprising was that the PS3 contributed 26% of total industry sales, an 8% rise from last year. New models and pricing I think could be the culprits. Either that or the fact that almost everyone has an Xbox 360 and Wii already, so why not buy a PS3? Well maybe it had to do with some great games finally getting releases. Uncharted 2 was certainly worth the wait and took the number one spot for the month.

Speaking of hardware Anita had this to say:

"On a year-to-date basis, only the Xbox 360 and the NDS have realized unit sales increases over the same time frame last year.  While overall portable hardware unit sales are down, dollar sales are up thanks to an increase in the average selling price of portable hardware generated by the higher price points of the new portable systems and bundles."

Overall it seems to me that even though there is a global economic crisis we are still shelling out money for video games. The long-term entertainment value to price ratio is high. It’s not just a two hour film or a one-read book (not that there is anything wrong with either of those media). It’s hours upon hours of fun and I think that is why it’s possible that video games will survive. Sure some companies are having all sorts of problems (EA, Midway to name a few) but they were on track to have these problems before the Great Economic Meltdown really. As I said, a $300M decline in a $21.3B market is not as bad as some. That’s about 2% and even if the industry only reaches $20B this year it’s still only around 6%. So buck up gamers, we’ll have plenty of games and companies around for the future.