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Physical Video Game Sales Are Looking Pretty Bleak

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The monthly ebbs and flows of hardware and software sales are, frankly, something that gives game industry analysts and writers something to talk about. We all know that, in the grand scheme of things, sales are middling through some parts of the year and wonderful through others. That this happens year after year is hardly news, unless something unexpected, like the Wii's early breakthrough, or long-awaited, like the PS3's recent uptick, happens. In this case, the long-awaited event is this: The end is near.

The story thus far this year is one of lowered expectations. Recently, NPD put it out there that July was the worst month for software sales in the US since 2006, though analysts correctly point out that NPD doesn't track downloads - surely that should account for much of the change? After all, in 2006 download services weren't what they are now. But then a look at VGChartz's tally of worldwide sales for July - sales of hardware and software for every console are down from last year, and not just a bit. The PS3 and the Wii have dropped the least since last year in terms of hardware - at only 19% and 23%, respectively. Meanwhile, the 360's hardware sales are down 58%. One could argue that Nintendo's loss is due to announcing a new console, but then why is everyone suffering? In terms of software, the PS3 and 360 have lost the least ground, at around 15% each. Meanwhile, software sales for the Wii and handheld consoles (not including the 3DS, which doesn't yet have year-over-year sales) are down between 35% and 48%. Looking back through 2011, the picture doesn't change that much. Sales are uniformly down, though the 360 has had some good months and February wasn't as relentlessly down as other months. But those are the outliers, rays of sunshine in stormy skies.

Now, there's a silver lining to this, of course. Though sales may be in decline, it's not like they're bottoming out. It doesn't look like any console maker is going under any time soon. That being said, the big question here is how long can this continue? Microsoft and Sony saw a jump in sales last year following the release of Kinect and Move, but what's next? Nintendo has already shown its hand. The Wii U is coming and the 3DS is now priced at a much more consumer-friendly point. Sony's releasing the Vita, but insists the PS3 is finally "hitting its stride" (though this has been going on for some time, apparently) and won't be revealing the PS4 soon. Meanwhile, the people at Microsoft are keeping tight-lipped. One thing is certain though: These companies have to show growth to keep their shareholders happy. The numbers suggest a high likelihood that new consoles are coming - soon - from both Sony and Microsoft. This is, after all, what the end of a console cycle looks like: Relentlessly low numbers, PR posturing about staying the course (to keep current consoles selling), and releasing peripherals to boost sales. No one should be surprised that Nintendo has gone quiet on the AAA software front: All of that stuff is coming for the Wii U, now; as Twilight Princess was the Gamecube's swan song, so will Skyward Sword be the Wii's. Still not convinced? If this July's numbers are the lowest since 2006...well, what was so bad about July 2006?

It was just a few months before the Wii and PS3 were released. It was the end of the last console cycle.

If this year's sales predict anything, it's this: Expect the year-over-year declines to continue. There's no Big New Thing coming out this year to push home console sales, no Kinect, no Wii fit. There's excitement over particular games, but that happens every year. So expect big news at E3 2012...and expect NPD to start tracking download sales as soon as it can get that worked out.

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