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Retail

Game industry needs new consoles to reverse sales declines - Pachter

Game industry needs new consoles to reverse sales declines - Pachter

Mon 08 Oct 2012 3:01pm GMT / 11:01am EDT / 8:01am PDT
BusinessRetail

Even the big holiday sales season this year is expected to be "relatively flat"

US retail sales of video games have not been good at all this year, with monthly declines regularly in the double digits. In an NPD data preview note, Wedbush Securities analyst Michael Pachter said that September's results (to be published this Thursday) won't be much better and that the industry really needs new consoles from Microsoft and Sony to push sales into positive territory again.

Even big software this holiday (Halo, Call of Duty, etc.) and the launch of the Wii U won't be enough to really reverse the damage done throughout the year. "We expect October - December to be relatively flat, and expect a return to negative territory again next year, at least until the launch of a next-generation console from Microsoft or Sony," Pachter said.

He continued, "A new console cycle is likely to reverse the negative sales trends of the last several years, with next-generation consoles expected from each of the three manufacturers over the next 18 months. Nintendo will launch the Wii U on November 18, and, while neither Sony nor Microsoft has yet announced new hardware, we expect a PS4 no later than November 2013, and a next Xbox no later than March 2014."

"Competition from social and mobile games hurt packaged goods sales over the last three years, but should serve to expand the market for console games over the long run, although it appears that the addressable market for handheld games will continue to erode. We expect the publishers to address the "problem" of free online multiplayer with evolving business models, adding increased opportunities to purchase virtual items, creating subscription-only serialized content, and adding premium subscription layers to the free offerings currently provided."

Ultimately, Pachter sees the next-gen consoles selling very quickly even if they are only a "modest improvement" over the current generation. He believes publishers are all planning big lineups for new systems from Microsoft and Sony, and that these games will help bring software sales back to prominence.

"We believe that the publishers plan an unprecedented number of new games for launch in the first two years of the next generation, providing relief from the gamer fatigue we've seen over the last three years," he said.

15 Comments

Jaime Wojick Producer & Game Designer

5 12 2.4
Popular Comment
Sales are not flat due to lack of new hardware they are flat due to a lack of new and innovative games.

Posted:2 years ago

#1

James Stanard Senior Engine Programmer, Lightbox Interactive

8 13 1.6
Popular Comment
So isn't the question then where are the new and innovative games? And the answer is that many publishers are saving those games for the next generation consoles. New, more powerful consoles enable new innovations. And a new console generation is the best time to launch new franchises.

Posted:2 years ago

#2

Andrew Animator

148 158 1.1
And the answer is that many publishers are saving those games for the next generation consoles. New, more powerful consoles enable new innovations
I don't really see how console power = more innovation. You only have to look at the indy scene to find some of the best examples of creativity and innovation in games which don't push any hardware limits.. Big publishers might be saving some new (innovative) IP's for the next gen because they feel they can make more money on the idea being a next gen title though.

Don''t get me wrong, I am looking to the next generation with excitement for what changes and ideas it may bring. I just hope more power doesn't just mean more polys and nothing else.

Edited 3 times. Last edit by Andrew on 8th October 2012 5:23pm

Posted:2 years ago

#3

Adam Campbell Associate Producer, Miniclip Ltd

1,199 1,012 0.8
I think its ridiculous to suggest we need a new wave of closed, expensive boxed every times there is a sales decline in the games industry but I wouldn't expect any less from this guy.

Posted:2 years ago

#4

Jim Webb Executive Editor/Community Director, E-mpire Ltd. Co.

2,282 2,485 1.1
Popular Comment
He says this like it's the first time sales have declined at the tail end of a console cycle.

It's called a cycle for a reason.

Posted:2 years ago

#5

Laurens Bruins Jaywalker, Jaywalkers Interactive

135 158 1.2
It might be ridiculous, but it doesn't make it less true. As James said, publishers are keeping their new IP's away from this gen. You might disagree with their reasons for doing so, but it's still true.

Apart from that, I think more power could definitely mean more innovation, if what you are looking for is innovation in immersion. More power means more of everything and less of anything pulling you out of the experience. In any case, thinking of the Oculus Rift coupled with next gen systems gets me very excited. At some point most ideas are already thought up, and it's depth you're looking at, not breadth.

I also hope that, with the coming of next gen, less time needs to be spent optimizing, allowing more time to be spent where it matters.

Edited 1 times. Last edit by Laurens Bruins on 8th October 2012 6:22pm

Posted:2 years ago

#6

James Prendergast Research Chemist

735 432 0.6
@Adam Campbell:

Analysts can only work on pre-defined certainties because they are only able to predict based on previous trends.... obviously, the current and soon to be new generation do not follow these trends as does the PC industry - hence the whole "PC is dying" mentality over the last 5-7 years. It's just a lack of understanding and data.

Posted:2 years ago

#7

Tom Keresztes Programmer

692 347 0.5
Pachter has a reputation for getting it wrong ALL the time. Other analysts are occasionally wrong.

Posted:2 years ago

#8

Adam Campbell Associate Producer, Miniclip Ltd

1,199 1,012 0.8
Yup James, because Pachter's predictions based on the information in front of us are often correct right?

He seems to have an impeccable lack of understanding of data, at the very least what he chooses to tell the general public outside the more intricate aspects of his work,.

Also, I still disagree that new consoles are necessary for more sales. I think the industry needs to learn that more games and prices coming down (in my opinion a gradual shift to DVD/Blu-Ray-like pricing) are necessary for sales to keep up. New loss making platforms with even more restrictions are hardly what I call a good economic solution. Especially looking at the losses Sony are trying to claw back - still and the new hardware in handhelds that has already been released.

Whilst I do think sales could increase on a new console launch, its an old method in trying to excite gamers and their pockets and won't always sustain anyway and won't always bring profits.

Posted:2 years ago

#9

Paul Jace Merchandiser

945 1,433 1.5
So when alll three new platforms launch and sales continue to stay flat or slightly decline after a few months what excuse will all the publishers come up with next?

Posted:2 years ago

#10

Morville O'Driscoll Blogger & Critic

1,611 1,473 0.9
Piracy.

Heaven forbid that the poor general quality of games or the continued use of the September-December period for AAA releases (gamers have only so much free money during a month to buy games) be blamed for flat sales. But, hey, maybe this'll convince publishers to look at the long-tails of releases.

Oh, no, nevermind.

Edited 1 times. Last edit by Morville O'Driscoll on 9th October 2012 7:03am

Posted:2 years ago

#11

Andrew Coyle

7 0 0.0
New consoles? We knew this last year. It was expected last year. But no announcements. E3 came and went, as it did this year, to much disappointment from gamers. Nice one, Patcher, for repeating last years failed predictions. Repeat the same thing often enough, and perhaps the console manufacturers will make new consoles and finally make you right.

Posted:2 years ago

#12

Mats Holm Technical Process Analyst, EA BioWare

55 50 0.9
Wait, I am not following, are we berating Michael Pachter for stating the obvious or for being incorrect?

Posted:2 years ago

#13

Jim Webb Executive Editor/Community Director, E-mpire Ltd. Co.

2,282 2,485 1.1
Wait, I am not following, are we berating Michael Pachter for stating the obvious or for being incorrect?
Both. That's all he does.

Either he states the most obvious of the obvious or he makes an absolutely bold prediction that everyone else in the industry would love to place a Vegas bet against.

Posted:2 years ago

#14

Michal Korec Editor/Analyst

9 1 0.1
Now I still do not get two things.

First, why is Pachter convinced that Sony will hit the market with next-gen console before Microsoft does? Considering the fact they already post losses (although due to Vita failed sales season), will they go deeper with it? November 2013 for global Sony launch might be theoretically correct, but putting Microsoft with spring 2014 behind it? After all success gathered in this gen while launching first?

Second goes to all publishers. Let us assume that next-gen will indeed launch next holiday season and they bring 1 or 2 new IPs each. What sales do they expect for launch window when some 5-8 million consoles would be on the market? vs. the current install base of 135 million.

Posted:2 years ago

#15

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