In 2008, when the global economy was seen to be at a brink, many thought the gaming industry would be one of the few to leave the upcoming recession unscathed. The reasons for such thinking were twofold. First, video games had a strong loyal fan base that would be committed to buying games from their favorite brand developers no matter the economic environment. Second, just two years ago the launch of Nintendo Wii had completely changed the face of gaming to the general public. Games were evolving into the mainstream like never before with soccer moms and grandmothers now calling themselves “gamers.” Games were also seen as a low-cost alternative form of entertainment that could replace expensive vacations for families tied down by smaller budgets. Interest in traditional gaming was at a peak in 2008 with many forecasting it to be one of the high growth industries of the upcoming years.
But now it’s 2011 and the challenges to gaming appear stronger than before. In 2009, shockwaves were sent through the industry as month after month, game sales were reported as down year-over-year. The original thesis that gaming would outpace the recession no longer appeared true. However, plausible arguments could be made that these results should not have been unexpected. First of all, 2009 was a relatively weak year for gaming, with only a few concentrated hits such as Uncharted 2: Among Thieves and Assassin’s Creed II interspersed throughout. This was further compounded by the fact that many holiday releases were postponed until early 2010, presumably to avoid competition with Call of Duty: Modern Warfare 2 in the holiday season. Furthermore, interest in the popular music genre was beginning to erode significantly, with titles such as The Beatles: Rock Band selling far fewer units than originally anticipated.
With such a lousy backdrop painted in 2009, surely it would have been easy for the gaming industry to make a comeback in 2010. But in a year when Mass Effect 2, Final Fantasy XIII, God of War III, Red Dead Redemption, Super Mario Galaxy 2, Dragon Quest IX, Metroid: Other M, Kirby’s Epic Yarn, Halo: Reach, Goldeneye 007, Call of Duty: Black Ops, Rock Band 3, Donkey Kong Country Returns, Gran Turismo 5, Sony’s Move and Microsoft’s Kinect were all released, game sales were still down year-over-year. 2010 could forever be remembered as the year with the most high quality releases and most disappointing sales in recent memory.
Sales were not disappointing across the board, however. Sales of cheaper apps such as Angry Birds continued to skyrocket on the Apple iPhone. Indie titles such as Limbo, Super Meat Boy and Minecraft continued to see great levels of success. Video game companies raised a record $1.05 billion in 2010, mostly for mobile, casual and social games. Companies such as Disney stated that they were going to shift focus away from home consoles and towards these social and casual experiences. The question, then, is how can traditional video game companies and publishers respond? What place is there for the home console in 2011?
Wii was a novelty in 2006, but there have since been four years for that freshness to fade. 2010 was both disappointing and exciting for Wii, depending on the perspective. Despite stiff competition from Sony and Microsoft, who were each re-launching their own systems with motion control and also rapidly expanding their software libraries, Nintendo still came out on top in 2010 with 7.1 million Wii units sold in retail, according to NPD. However, Wii also sold 26% less this year than it did a year ago. Considerable debate exists on this subject, with one side claiming that this is a sign of Nintendo losing its edge, while the other argues that Nintendo Wii has sold so well that it has essentially saturated the market. After all, Wii still sells well, just not as well as before. Gamasutra analyst Matt Matthews pointed out that interestingly, the Sony PlayStation 2, the most successful home console of all time, also suffered a 26% year-over-year decline between years 3 and 4 and then rebounded the following the year. Matthews states however, that the PlayStation 3 had both a price cut and more persistent software sales and so he does not see a repeat performance for Wii.
While 2010 was a strong year for Wii content-wise with titles such as Donkey Kong Country Returns, Kirby’s Epic Yarn and Metroid: Other M, outside of The Legend of Zelda: Skyward Sword, little is known about the future of Wii in 2011. With the Apple iPhone and iPad at the center of attention in the public sphere, portability has become the focus as of late. Apple’s recent success has posed a problem to both Nintendo and Sony, with both companies preparing a response in the coming year. While iPhone can do many things, Nintendo hopes that 3DS can sufficiently differentiate itself as the ultimate gaming and entertainment device.
2010 was a remarkable year, showing an industry confused about what direction to take next. Despite being filled with blockbuster software titles, overall sales were disappointing. On the other hand, the most pleasant surprises of the year came from low-budget indie titles which continued to make the case for a future of digital distribution even stronger. The social and casual gaming trend also continued to get a boost, with renewed focus from major companies such as Disney, and investments in start-ups from venture capital firms. Social and casual gamers, who had propped up Wii originally, have an increased set of choices, including low-budget games that can be carried on their iPhone. In response, Nintendo and Sony have begun their preparations to renew their claim of the handheld space. But where does this leave the state of the traditional home console? Only 2011 can tell…