In early April, Amazon bolstered its video game catalog with a devoted Xbox Live section, which currently offers 114 products.
However, these offerings weren't enough to buoy the online
megaretailer's income, which dropped 10 percent in its second fiscal
quarter compared to the same period last year. Speaking with the Wall Street Journal, Amazon CFO Tom Szkutak blamed the meager performance, in part, on what he called a "slowdown in video games and consoles."
"One weak spot was sales of media, including books and music, which
were flat in North America," he said, referring to the company's 0
percent media sales growth figure in the second quarter of 2009 over
last year, compared to a 25 percent increase from Q2 2008 to Q2 2007.
"You're seeing an industry slowdown in video games and consoles."
Szkutak's comments come after a report by the NPD Group
that found overall US retail sales of non-PC game software, hardware,
and accessories shrank by 31 percent in June, down to $1.17 billion
from $1.7 billion the prior year. The results were the worst monthly
showing since the 41 percent drop-off in September 2000, exceeding the 20 percent decline that many pessimistic analysts were expecting this June.
"The first half of the year has been tough largely due to comparisons
against a stellar first-half performance last year, but still, this
level of decline is certainly going to cause some pain and reflection
in the industry," said group analyst Anita Fraizer.
Although Amazon's media sales were stale, its quarterly net
sales for all its products rose 14 percent over last year, from $4.06
billion to $4.65 billion. However, its net income sank from $158
million to $142 million in the same period. For the next fiscal
quarter, Amazon predicts an operating income between $120 million and
$210 million, or anywhere from a 22 percent drop to a 36 percent gain
from the same interval in 2008. Last Wednesday, the retailer announced
it would acquire the online footwear vendor Zappos.com for about $847 million, which the Wall Street Journal called Amazon's largest acquisition to date.
