by Doug Desjardins

Up until 2008, the video-game industry seemed immune to economic downturns, riding out every slump and recession on the strength of a fan base that always found money to spend on new games and consoles. But The Great Recession that began in December 2007 changed that, and now the industry is hoping for a 2009 holiday rebound.

And it’s a rebound that’s likely to begin on Cyber Monday when manufacturers and retailers post sales and promotions.  Most game-console manufacturers are expected to discount consoles - at least for a day - and retailers will be dropping prices on popular new-release games.

“I do think promotions will be abundant this year but I think price cuts will come from the channel (retailers) instead of manufacturers and publishers,” said David Riley, an analyst with the NPD Group. “Both publishers and manufacturer have been cutting prices and offering titles at lower prices for some time now.”

Manufacturers did their part in August and September.  Sony and Microsoft cut the price of their consoles by $100 and Nintendo lowered the price of its Wii console by $50, moves that brought the price of all three consoles down to $199. And game publishers followed with the release of a strong slate of games including The Beatles: Rock Band, Guitar Hero 5 and Halo 3 to drive hard-core gamers back into stores.

And heavy Cyber Monday promotions at retail will be welcome news for the video-game industry, which sailed through 2008 without a hitch and generated a 16% increase in sales of $21.3 billion in sales, according to the NPD Group. But the economy caught up to the industry this year and sales have dropped dramatically.  The NPD Group reports that hardware and software sales totaled $9.1 billion through August, a decline of 14% compared to the same period last year.

But a double-digit increase in September sales, driven by a slate of new games and console price cuts, has analysts optimistic about the holiday season. “Overall, September sales and retail data indicate the pre-holiday season is off to a good start,” said Jesse Divnich of Electronic Entertainment and Design Research.

The one negative for game retailers heading into the holidays is a survey that showed fewer people intend to give games as gifts this year. The NPD Group survey found that 20% of consumers plan on buying a game as a gift this year, down from 22% in 2008.

Footnotes

Wii Joins Xbox, PS3 and Drops Console Price

COUPON TIME

For the best Black Friday sales on video games and more, check out the Black Friday Coupons page!  And our Cyber Monday Deals page has the latest on all the best sales on Cyber Monday.