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Gaming Sales in 2010: Down, but Why?

by: M.S. Smith ; edited by: Michael Hartman ; updated: 4/17/2012 • Leave a comment

Recent years have been tough times for the gaming industry. Sales are down - but why? This article takes a critical look at the trends hurting game sales.

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    Gaming Sales in 2010

    Gaming has become a part of popular culture. Once considered an activity purely for nerds, game systems now can be found in family homes and fraternities everywhere. This widespread acceptance of video games resulted in industry euphoria. In the mid 00’s game sales grew massively, and as is common in such situations, there was much back-patting and premature congratulations to be found.

    Now the euphoria has faded. Sales for 2010 have come in as down 5% compared to 2009, which was down 8% compared to 2008. The mood entering into 2011 has become sour. Most game companies have trouble making money in the best of times – a downturn in the industry simply makes prospects worse. Why have consumers taken a step back from games?

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    The Recession is the Reason?

    Game Sales 2010 Industry analysts were quick to tell us that the games industry would be immune to a recession ( , reasoning that a recession will keep people at home more, increasing their desire to play games. Ironically, this has proven true despite the fact that it hasn’t increased sales. Consumers are spending a lot of time playing games, but they’re not spending as much money on them.

    Perhaps, then, the industry downturn is a simple symptom of the recession. People are saving money as much as possible by conserving their game purchases, buying used games, and renting. But if this were a case, you’d expect to see some casual correlation between game sales and economic health. Such a correlation doesn’t exist, and has never has. The game industry’s boom in 2003-2007 did not co-exist with any similar economic upturn, nor does the pullback match the economic slump. After all, America is technically in recovery mode.

    In addition to this, there were plenty of industries that saw sales grow recently. Take personal computers, for example – this high-tech item saw sales growth of 17% in 2010.

    Blaming the recession certainly seems dubious. So if the recession isn’t the problem, what is?

    Image Credits: Gamer Investments

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    The Mid-Size Studio Slump

    Video Game Sales 2010 If you don’t spend much time worrying about game sales it would be easy to miss the slump. After all, the sales of blockbuster games have made headlines. Call of Duty 5 blew the doors off all previous sales figures, for example; World of Warcraft: Cataclysm also destroyed previous PC game sales figures.

    The problem is all of the other games that studios have been pumping out – the studios that aren’t huge, but also aren’t necessarily what folks would consider “indie.” One example of a quality game from such a studio is Enslaved: Odyssey to the West, a platformer by Ninja Theory that made several best-game lists and at least one best-game-you-didn’t-play list. The game was respectable – it had a good story with great voice acting, generic but well executed combat, and action-packed platforming sections. Yet it didn’t sell as well as the publisher wanted, coming in at 800,000 unit within two months. The expected figure had been 1 million.

    This is a repetitive theme. Remember Mirror's Edge? DJ Hero? Mafia II? These are all examples of games that just didn’t do as well as hoped. These aren’t low-budget titles, either; they were expensive to produce. I don’t know if they lost money in the end, but given the frequency with which major game publishers run into financial issues, it’s not hard to come to the conclusion that many games end up costing more than they bring in.

    Image Credits: Namco

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    A Creativity Crisis

    Game Industry 2010 Of course, the mid-studio slump is only a problem. I’m interested in finding the reasons behind the problems. So why is it so hard for reasonably good titles to make money?

    I suspect that a lack of creativity is part of the problem. Let’s consider Enslaved again. Yes, it was a good game. But why buy it when you could instead play a generally superior platformer, such as Uncharted 2 or Super Mario Galaxy 2? There is no clear answer to this question. After all, the mechanics are similar – if anything, Uncharted 2 and Super Mario Galaxy are more creative and offer more surprises.

    This sounds like a glut of product. But that’s an issue that can be approached from two perspectives. One is that there are simply too many games being made; to solve the issue, fewer should be made. The other is that the games that exist are too similar; to solve the problem, make games different.

    Unfortunately, the game industry has repeatedly taken a third perspective; gamers only like one type of game, so let’s homogenize them as much as possible. This is a short-sighted trend that has hurt the games industry for years. Sometimes, I wish Steve Jobs ran a game company. Gaming needs visionaries; instead, it’s run by cynical suits like Bobby Kotick. You tell me – who’s the better CEO?

    Image Credits: Nintendo

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    Management Madness

    Game Industry Crunch Time Kotick’s name seems to come up frequently when bad management is spoken of in conjunction with games, but in truth the entire industry is plagued by an inability to manage projects well. Quality issues continue to be a problem, although no one in the industry wants to admit it. Electronic Art’s multiplayer games, for example, have repeatedly had server issues – there is still an unpatched bug in the Xbox 360 version of Battlefield: Bad Company 2 that causes players to receive the “Your Team Lost” screen even when they win a game, and vice-versa.

    These problems aren’t acceptable. Bugs will always exist in games, but the number of games that have multiplayer problems at launch is mind-boggling; only Blizzard and (to a lesser extent) Valve seem to have figured out how to launch titles online without widespread problems.

    But bugs aren’t the only quality issue. There are other problems as well, such as poor storylines, low-quality voice acting, and the need to register a wide variety of accounts. Then there is a simply lack of imagination – missions that are effectively remakes of levels from previous games, shooting controls that aren’t remotely precise, and more. Even big-league games like Call of Duty 5 and Red Dead Redemption are guilty of these sins.

    Are these issues surprising? No, they’re not, considering the management style used by many game studios. Reports of crunching – periods of time during which employees have to work 6 or 7 days a week, sometimes sleeping at the studio – are commonplace. For example, a disgruntled Kaos employed recently complained to the media of 10-hour days, 7-days a week, which extended over the holidays. Many of these employees rarely see their families because of work. One also has to wonder if they ever find the time to play their competitor’s games.

    This sort of behavior on the part of companies is morally unacceptable. It’s also unproductive. Put yourselves in the shoes of a developer. You’re working constantly in order to meet a deadline. If you don’t meet the deadline, you’ll get yelled at by an executive. What would be more important to you? Making sure that the game is bug-free, remotely original, and well polished? Or slogging through the mess in hopes that you’ll retain your job after the project is done and maybe even spend some time with your friends and family again?

    Is it any wonder that bland games are common considering the work schedules of those employed at game studios? These forced marches are a symptom of the cynical management style used by some many game executives. Push the slop out as quickly as possible, and the masses will buy it – or at least that’s the theory. Reality, of course, is more demanding.

    Image Credits: THQ

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    The Zombie Consoles

    Game Industry Sales in 2010 There is no doubt that the lack of creativity and quality in games has had a major impact on the industry. There’s simply no room for mid-grade titles in the market anymore, and the unproductive management style used by so many companies ensures that costs are high and quality low. There is another problem lurking, however – gaming hardware itself.

    The last decade was incredible for hardware. The Playstation 2 was released in 2000, with the Xbox and Gamecube following in 2001. The 360 came in 2005, with the Wii and Playstation 3 following in 2006. Given this history, it’s time for the game industry to release exciting new consoles. But none are on the horizon.

    New consoles are expensive to design and produce. It’s likely a wise move, from a hardware cost perspective, to extend the lifespan of console hardware as much as possible. New consoles also drive game sales, however, as they make it possible for even a middling quality title to seem new and different. Extending the life of the hardware may increase revenue from the hardware itself, but it also decreases revenue from games, and makes it hardware for middle-tier studios to make a profit.

    This is a reality that Microsoft seems to have comes to grip with. The Kinect wasn’t just an attempt to beat the Wii – it was clearly an attempt to reboot the console entirely, as evidenced by the release of redesigned (but not upgraded) hardware in conjunction with the release of Kinect. The strategy has had some success so far, at least in terms of selling Kinect hardware. But will it kick-start game sales? I’m more skeptical of this.

    In any case, the entire industry is facing a difficult reality that it somehow had ignored. Gaming is a technology industry. If the tech is old, consumers won’t be willing to spend as much for it. The boom years were in all likelihood the result of the release of three consoles, all of which are competitive – the Xbox 360/PS3/Wii fight is probably the most even console battle there has ever been.

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    Atari 2600 The gaming industry has been around for a while, but in many ways it appears to remain in infancy. Most studios still have problems figuring out how to manage game development and turn a profit. Creativity is often discouraged out of simple fear of the unknown. And the major hardware/software companies still haven’t figured out how to introduce new hardware frequently without drowning in red ink.

    Back in 2007, many seemed to believe the game industry invincible. Its growth was considered an act of nature; bound it happen, no matter what. Now we’re facing reality; quality does matter, creativity does matter, hardware technology does matter. If they’re not the best they can be, consumers won’t spend.

    It’s important to remember that gaming has had a boom before. In the early 1980s gaming was in popular culture and was growing in popularity. The industry was ultimately brought down because of the proliferation of low-quality titles and the age of it’s the hardware powering major consoles, such as the Atari 2600. These problems ultimately brought the industry into collapse.

    I doubt so severe a future exists for the gaming industry today, but there are reasons to be concerned. There is no sign that project management in the industry is evolving beyond infinite cram-sessions. There is no sign that game executives are willing to embrace creativity. And there is no sign that the hardware companies grasp the importance of cutting-edge technology.

    These issues are, above all, symptoms of a bratty cynicism that oozes from most top gaming executives, who are more likely to talk about ways to squeeze more money from consumers than speak of creative new gameplay ideas or exciting hardware technology. This attitude will eventually need to be cured if the industry is to recover; gaming is a choice, after all. Consumers can and will stop gaming if they don’t feel the entertainment value is there.