Game Sales Not Withstanding Recession After All

Uh-oh. Game Group shares were more than 12 percent down in Tuesday-morning trading after the retailer said sales in the calendar year to December 5 were down 10.8 percent.

Many had pegged video games to be a kind of at-home entertainment that would prove strong through the downturn.

But sales in the last 18 weeks (the pre-Christmas period on which Game sets out so much) are even worse, down 11.3 percent.

Game says price cuts given to PS3 and Xbox 360 have not stopped a fall in hardware sales. The next eight weeks will be crucial, traditionally accounting for a quarter of Game annual turnover.

The patterns are strange – the traditional pre-Christmas rush of the last few weeks has seen some massive releases like Modern Warfare 2 and Left 4 Dead 2, which has smashed all previous sales records. But they haven’t lifted the sector as a whole; Game says: “The exceptionally strong performance of these titles was in part offset by softer than expected sales of some other releases.”

In fairness, Game – at its September earnings – said last year’s revenue had been buoyed by exceptional software sales coming on to what were then relatively new console platforms. Now Game finds itself in that cyclical point where hardware sales are plateauing.

Game also says it’s being undercut by supermarkets. But its preowned discount scheme may yet continue to serve customers well.