Nintendo and Sony report steep declines in video game and console sales

Today, both Nintendo and Sony reported substantial declines in video game revenue and console sales for the quarter ending on June 30. While much of the decline stems from the strengthened Yen which is causing huge currency exchange losses for all Japanese electronics companies, video game spending has hit a brick wall.

Nintendo, which has spend most of the current console generation far ahead of competitors Sony and Microsoft, sold approximately half as many consoles as it did in the previous quarter. Wii unit sales were down 47% in Europe, 60% in Japan, and 65% in the Americas. Globally, Nintendo's popular DS handheld sold 6 million units, or a decline of 20% over last year. This drop in sales, accompanied by the exchange problem with the Yen amounted to a 61% decline in profits year over year, or ¥42 billion ($443 Million.)

Sony's sales decline was a little less dramatic than Nintendo's, but no less serious. In total, Sony sold 32% fewer PlayStation 3 consoles and 65% fewer PlayStation Portables than it did in the same quarter last year. Sony's Networked Products unit, which includes Sony Computer Entertainment, Vaio, and Walkmen lines posted a loss of ¥39.7 billion. In its overall business, Sony experienced its second straight losing quarter, chalking up a net loss of ¥37.1 billion ($390 million).

Earlier this month, NPD reported that the total U.S. gaming market fell 31% with only a few blockbuster titles released in the quarter. But as Nintendo noted in its earnings call this time around, non-console games are beginning to have an effect on sales. Apple's iPhone, for example, is starting to seriously cut into the handheld market, and iPhone games that can be produced comparatively quickly and cheaply are competing with games that take much longer to produce and release.

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