And then the bad times came to ... the video game market. According to a report released today by the national market researcher NPD Group, sales of video games sank 31% in June to $1.17 billion -- the sector's fourth consecutive month of declines, and its largest monthly decline since September 2000. Shares of GameStop ( GME) dropped 3% to $21.55 in morning trading, Microsoft ( MSFT)declined 1% to $24.21 and Sony ( SNE) slipped 2% to $24.32. All platforms suffered a drop-off compared to June 2008, as gaming hardware tanked 38% to $382.62 million. Microsoft's Xbox 360, however, actually managed to post an increase on a month-to-month basis, selling 240,600 units. While these companies have been able to avoid price cuts amid the recession, banking on product demand, they may be forced to consider slashing sticker prices before the end of the year. One thing is certain, however: the declining sales cannot be attributed to waning interest in the sector. NPD says more than 4 million new players entered the gaming market since last year. Most likely the drop in sales is due to consumers waiting to spend until new products are released or prices come down.
Gamers are also looking to free online outlets for games. "The trick is to continue to figure out how to monetize all the gaming that is going on across PC, mobile devices and video game systems," NPD analyst Anita Frazier said in a statement. But Frazier said digital distribution does not yet have enough impact on the console market to be an overly meaningful factor in the retail downturn. NPD does not include PC games in its monthly sales data. Even with the industry down 12% for the year-to-date period, experts still believe full-year sales can be flat to slightly up compared to 2008, as long as highly-anticipated game releases are not pushed back to 2010.