Console price cuts less beneficial to new game sales

Although all current generation consoles are seeing an upsurge in sales due to price cuts, new gaming consumers are likely to buy second hand games rather than new software to accompany their hardware.

That's according to analysts Doug Creutz of Cowan and Company, who said that while hardware sales are recovering after a six month slump, publishers of new software may not see the benefit.

"We remain somewhat cautious about the impact of hardware sales on near-term new videogame unit sales," wrote Creutz in a note to investors.

When the PlayStation 2, GameCube and original Xbox received significant price cuts in 2002-2004, the second hand market only accounted for around 15 per cent of all software sales in the US, noted Creutz.

But the second hand market has since grown to 30 per cent of all software sales today, and with consumers buying between 2-4 games to go with their new hardware, recent full-price releases are more likely to miss out on renewed sales.

"We believe that while new hardware purchasers are likely to buy games to go with their new consoles, a significant percentage of those games are likely to be used, dampening the boost to new game sales."

The NPD Group will release sales data for September this week, with expectations that the market in the US is bouncing back after a tough six months.