A customer plays a game on a Nintendo Wii at Best .
(photo credit: ap)
Kathleen Byrnes and Justin Choi, a married couple
attending medical school at Tulane University, say $40 is just too much
to fork over for a Nintendo Wii game they might not enjoy. They haven't
bought one since last fall, when they picked up "Star Wars: The Force
Since then? "Nothing really interesting came out," said Byrnes, 23.
Their reluctance helps explain why this is a rough summer for
the video-game business. More people than ever are playing the games,
but it's been a while since a blockbuster title arrived. Consumers are
watching their money more closely in the recession and managing to
resist games that can cost as much as $60.
The trends came into play last month as Sony Corp
. and Nintendo
Co. each reported console sales are dropping. Sony posted a loss for
the April-June quarter, while Nintendo Co. revealed a large drop in its
The Microsoft Corp
. division that makes the Xbox 360 said last month it lost money in the last quarter too.
"The health of the industry is terrible," said Wedbush Morgan analyst Michael Pachter.
For gamers, at least, there's some good news: Console prices will probably come down.
Sony's PlayStation 3, the costliest of the bunch, still sells
for $400. Nintendo hasn't lowered the $250 tag on the Wii since its
2006 launch - an extreme rarity for an industry that relies on regular
price cuts to broaden its audience.
Despite the bad earnings results, Sony and Nintendo both
reaffirmed their forecasts for the year. And Pachter thinks each
company "has no prayer" of meeting the target without cutting prices to
lure buyers. In Nintendo's case, that might mean keeping the Wii at
$250 but throwing in more free games.
At first, it didn't seem the recession would be big trouble for
the video-game business, which has managed to expand its audience in
recent years and become a mainstream form of entertainment. By many
estimates, the video-game industry is now larger than the music
Sony, Nintendo and Microsoft, as well as software publishers
like Electronic Arts Inc. and retailers like GameStop Corp., have
pitched video games as cheap entertainment. Players can get many more
hours in front of a TV screen from a $60 video game than from a $25
But people squeezed by the economy may not have even that to
spend. Many have turned to online games that are cheaper or free. Even
loyal, "hard-core" gamers are being more selective instead of lining up
to buy every new release, and many are trading used games among
They're also waiting for bigger, better titles coming later in
the year - in the holiday season, when video-game companies often roll
out their biggest blockbusters. With many players now expecting
something close to movie quality in their games, these titles can take
years and tens of millions of dollars to develop.
When the spring of 2008 brought massive hits like "Grand Theft
Auto IV" and the exercise game "Wii Fit," that was an exception. "Grand
Theft Auto IV" raked in more than $500 million in its first week in
Last year's big spring would have made for tough comparisons
this year even in normal circumstances. But by industry standards, the
first half of 2009 has been unusually slow when it comes to top-flight
game launches. Combine that with the recession, and you get one chilly
Ben Nielsen, a 29-year-old architectural designer in Portland,
Oregon, usually buys three or four games a year. This year he's gotten
only one: "Mirror's Edge" for the Xbox 360. And that's only because it
was on sale, at $30.
He also has a Wii, but for that system, Nielsen said he hasn't
seen "anything compelling enough to buy, especially considering the pay
cut we took at my firm earlier this year."
Byrnes and Choi might spring for the $50 "Wii Sports Resort," a
recently launched follow-up to the "Wii Sports" game that comes with
the Wii and buoyed its popularity. "Wii Sports Resort" also comes with
an accessory that attaches to the Wii's controller to make it more
In general, though, they remain cautious. They own seven games
for their Wii, and say they were disappointed with about half of them.
"With that kind of a track record," said Choi, who is 25, "we are not about to take more chances on future titles."