One Video Business Is Getting Hit Hard - Should We Be Worried?

Think supply chain and inflation issues are not a thing? Get into the game.

For the fifth straight month, in March video-game industry sales slipped year-over-year in business --- down 15%, according to the NPD Group -- to $4.9 billion.

Hardware has been much tougher to come by, with sales falling 24% from the previous March to $515 million -- even as Microsoft’s Xbox posted its best March sales in 11 years.

But other problems remain.

Accessory spending collapsed by 23% to $227 million in March, and was down 16% for the entire first quarter to $592 million. The best-selling accessory for March and the first quarter was still the Xbox Elite Series 2 Wireless Controller.

The concern may be most problematic because the monthly declines are steeper than for previous periods -- down 6% in February, slipping 2% in January,  and losing 1% in December.



For those in the nascent field of advertising-supported console gaming, this is a major hit. Entrepreneurial advertising-sales companies have been ramping up operations on the continuing trend of strong video game usage.

The strong position of the business would seem to have put big video-game producers in an easier situation when it comes to finding the right approach to adding marketing messages to their console games.

Now the effort for the business is more focused around ensuring that new hardware is available, first and foremost.

Still, contrarians might say now is the time that video game producers and distributors could benefit from added monetization.

While there has been advertising on free mobile video games for some time, this has not been the case for the “big screen” video games.

The good news is that the business currently has modest near-term expectations to set up possible tests and experimentation showing how marketers' messages can work -- getting in front of many young media consumers with little negative reaction.

For example, last August, Simulmedia started up in a pilot test of its new in-video game advertising platform, PlayerWON, which has signed up 25 advertisers.

Top of mind for gamers right now is whether or not their prized games have advertising.

Still, if there was a way to get them the message that in-game advertising could help even out supply and price issues in the long term, would that be a good thing?

Game on.

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