Douglas McIntyre of 24/7 Wall Street writes that video games are an excellent economic indicator. And – given their lousy recent sales numbers – the indications aren’t good:
Video games… [are] inexpensive enough so that they should be a reasonable proxy for consumer discretionary spending.
The signals from the video game industry in April were troubling. Sales of games dropped 23% and game console sales were down over 40%…
The slide in console sales is so extreme that it is a clear sign that sales of consumer electronics are in a flat spin. When people cannot spend $300 on a console or $50 on a game which can be used for hours and played over and over again, the money for discretionary spending has dried up.
TIME thought enough of McIntyre’s analysis to repost on their site.
On the other hand, analyst Doug Creutz of Cowen and Company pointed out this week in an investors’ note that year-over-year April sales comparisons were negatively impacted by the April, 2008 release of two blockbusters, Grand Theft Auto IV and Mario Kart Wii. That was a tough act for April, 2009 to follow. Creutz also notes that most U.S. game publishers did well in April:
Three of the four major U.S. third party publishers saw significant sales increases in April. [Activision] saw a total game sales (incl. PC) increase of roughly +21%… Electronic Arts… saw total game sales increase +26%… THQ’s… total sales increased +23%…