Video Game Sales Hit Four-Year Low in May

5:43 AM PDT 6/14/2011 by Georg Szalai

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Activision

"L.A. Noire" was the top-selling game, but one analyst says a digital release for "Call of Duty: Black Ops" "shifted some dollars that might have been spent on new physical content at retail.”

NEW YORK - The video game industry in May hit its lowest monthly U.S. retail revenue from physical product since Oct. 2006.

Total games sales of $743.1 million, including hardware, software and accessories, compared with $866.8 million in the year-ago period, marking a 14 percent decline, according to research firm NPD Group.

"A light slate of new releases is at the heart of this month's performance," said NPD analyst Anita Frazier. "As a result of a lighter release slate, promotional activity at retail and in circulars was reduced as well, which undoubtedly affected not only planned but impulse purchases."

She highlighted that her company's figures "represent just the new physical portion of the market for video game hardware, software and accessories and not the growing portion of the industry that is comprised of digital format content distribution."

For example, May saw a notable digital release in the second map pack for Call of Duty: Black Ops, entitled Escalation. "Undoubtedly, this shifted some dollars that might have been spent on new physical content at retail," said Frazier.

The news of the weak gaming sales came as PricewaterhouseCoopers outlined a lower five-year growth forecast for the video game industry than last year.

Total U.S. console software sales for May came in at $376 million, down 19 percent and "well below" his estimate of $465 million, or about flat results, said Wedbush Securities analyst Michael Pachter. "Activision, Electronic Arts, Nintendo, Take-Two, THQ and Ubisoft each came in below our expectations," he added.

The top games for the month were L.A. Noire from Take-Two Interactive Software, followed by Brink from Bethesda Softworks and Lego Pirates of the Caribbean: The Video Game from Disney Interactive Studios.

Cowen & Co. analyst Doug Creutz said L.A. Noire sold 899,000 units in May. Take-Two has never given sales predictions or targets, but the analyst said the sales were "well short" of his more optimistic 1.26 million unit expectation.

Email: Georg.Szalai@thr.com

Twitter: @georgszalai