UK Hardware Sees 32 Percent Drop In First Half Of 2010, Market Down Overall

Video game hardware and software retail sales in the UK are declining, as today new data from ELSPA, Chart-Track and ISFE shows the market overall down 16 percent to £963 million ($1.4 billion) for the first half of 2010. Hardware sales in the UK took the biggest plunge, falling 32 percent to £256 million ($383 million) over the year's first half -- this despite the fact that the three current-generation consoles, Wii, PlayStation 3 and Xbox 360, as a group saw unit sales increases. Retail software sales also declined by 10 percent to £533 million ($798 million). ELSPA director general Michael Rawlinson cited the environment of "economic uncertainty" in the UK as one factor in the decline. The UK government's recent budget -- the same one that pulled the plug on planned tax relief for the region's game developers -- included an increase in the VAT (value-added, or sales tax) to 20 percent, and the government said the decision to get rid of the tax breaks was aimed at saving £190 million ($283.54 million) in a time of economic stress. However, Rawlinson believes the new technologies shown in-depth last month at this year's E3 have the potential to turn things around: "With the introduction of Kinect for Xbox 360 and PlayStation Move in addition to significant plans for 3D gaming on Nintendo 3DS and PS3, the market is sure to start buzzing," he says. And the decline in sales numbers may point at least in some part less to a shrinking business and more toward a shift in the way it is monetized -- importantly, data trackers like Chart-Track and the U.S.'s NPD don't yet quantify digital revenue. "UK consumers are also getting their gaming entertainment in a variety of ways," Rawlinson points out. "They are increasingly downloading video games from websites, and are playing games on their mobiles or through social networking sites – not only on consoles. This is proof that interactive entertainment is expanding way beyond its traditional boundaries," he adds.