NPD: Consumers to Spend Less This Holiday, Purchase Intent for Video Games Down

According to the NPD's latest annual survey of consumers’ holiday spending intentions, 30% of consumers intend to spend less this holiday season than they did last year; that's a 4% increase compared to 2008. Although the recession is clearly having an impact on the market, it could have been worse, NPD noted.

“That 4 percent increase is certainly a sign of the times.  On the other hand, that 4 percent is not as dramatic as it could have been,” said Marshal Cohen, chief industry analyst, The NPD Group. “I think consumers will be looking for the right gift, rather than the most extravagant or expensive one. That combined with the soft numbers we are up against from holiday last year, and I think we will see growth, albeit a modest 0.5 to 1.5 percent.”

The top five categories - apparel, toys, movies, books, electronics - haven't changed from last year, while video games maintained a spot in eighth place. That said, slightly fewer consumers plan to buy video games this holiday (20% vs. 22% last year). That 2% doesn't appear to be a big deal, but considering that the game industry makes an enormous chunk of its annual revenue in the fourth quarter every year, we're very curious to see how these last few months of 2009 shape up.

NPD indicated that almost 50 percent of consumers said the ‘state of the economy’ will have a significant effect on their holiday spending. The recent hardware price cuts should help, but most new video games are still $50 to $60 a pop, so thrifty consumers might limit their software spending.