Game Sales in April Show 'Something is Terribly Wrong,' says Pachter

Following the worse than expected and highly disappointing NPD results for April, Wedbush Morgan analyst Michael Pachter has reacted to the data, and it seems he's stumped. 

"The April sales results are baffling to us," he began. "The dollar sales level of $399 million is the lowest since May 2007, when this generation was barely underway, and is the weakest April result since 2005, when console software sales totaled only $6 billion for the full year. The sequential decline of 54% is the greatest in the 11 years that we have been tracking monthly data (except for December-January declines), dwarfing the previous record of 42% set in March-April 2002. For the first 13 weeks of 2010, video game software sales averaged just under $162 million; for the four weeks of April, they averaged just under $100 million."

He continued by noting that many gamers likely played the games they already had and were waiting for the AAA games that are shipping this month. 

"It’s easy to blame the lineup, which was quite light (Ubisoft’s Splinter Cell Conviction was the only AAA title, and it was an Xbox 360 exclusive), but the results suggest something is terribly wrong," he said. "Unfortunately, we are at a loss to identify precisely what was wrong, given relatively robust sales for the three months prior, decent weather, an improving economy, and a deep catalog of recently released titles. We do not believe that core gamers suddenly shifted allegiance to Facebook or iPhone games in April, nor do we believe that Call of Duty Modern Warfare 2 online play increased dramatically during April. As we cannot explain the reasons for the shortfall, we can only conclude that April was a fluke, with many core gamers enjoying recently purchased games and looking forward to new releases coming out in May."

He added, "The May lineup is indeed stacked in favor of dramatic growth, with Red Dead Redemption, Super Mario Galaxy 2, Alan Wake, Prince of Persia, Lost Planet 2, Blur, SKATE 3, Iron Man 2, LEGO Harry Potter, UFC, and Shrek 4. We think that this lineup is quite appealing to a broad audience, with one Xbox 360 exclusive, one Wii exclusive, two hardcore shooters, two adventure games, one racing game, two action sports game, and three movie licenses. In other words, May has something for everybody."

Pachter also noted that investors in the games industry are likely to be "spooked" by April's poor performance and many will "continue to believe that the video game industry is in a state of persistent secular decline." Part of the problem is that gamers are able to enjoy the same titles for longer, thanks to multiplayer and DLC offerings.

"We think it is inevitable that there will be a shift in delivery of video games away from packaged products and toward digital downloads, but don’t think that the shift is occurring in a material way in 2010. Rather, we believe that the publishers and developers of games have created more robust multiplayer content in recent years that has resulted in core gamers playing the same games for much longer, on average, than they did in the past, leading to lower sales of new games," Pachter explained. "We expect the publishers to monetize the value created by online play, led by Activision. We anticipate that Activision will find a way to monetize the 1.75 billion hours of Call of Duty Modern Warfare 2 online play on the Xbox 360 in the first five months following the game’s release. This game play suggests that as many as 12 million gamers (PS3 and Xbox 360 combined) played online for an AVERAGE of 10 hours per week for the five months since the game’s launch. It is obvious to us, and likely equally obvious to Activision, that these gamers are spending a lot of time that was monetized only through the original purchase. In the future, we think that Activision will find a way to charge for some portion of online game play, and if successful, we think that other publishers will follow suit."

Website http://www.industrygamers.com/news/game-sales-in-april-show-something-is-terribly-wrong-says-pachter/

I suppose the reason could be because this gen has peaked.

So what does everyone think is the cause of this sales decline are we experiencing a gaming rescission?

yes, it means YOU, Pachter, are terrible wrong.
DS and PSP are old systems, Wii has already peaked and the games have still to come out, PS3 and Xbox 360 are not selling very well speaking of hardware and software isn't enough to recover the terrain...this means the gen is ending, and it's normal. We'll start with PSP2 and 3DS between 2010 and 2011, maybe the new Xbox will be out by December 2011, Wii 2 will not launch before 2012 but 2013 seems too much for a console which lacks third party support and the PS3 is the only console which has a shot or remain the main machine until 2013. Pachter is wrong, that's it.

Um....I know! It's spring. People don't buy much games during this time. People go on vacations, kids go to summer camp, etc. I don't even game that much during this time of the year.

I love the argument that a month over month decline can show a changing trend in gaming. If it takes only a month to happen, it is not because of a fundamental shift in human nature.

March 2010 was a huge month for game releases, as was April 2009. That is why April 2010 looks bad on either a month over month or year over year comparison.

It couldn't be the econmy, no not that!

Infact, more detailed post from scottie

Lets assume that march and April are the lowest selling months in the year.

When Pachter says that this is the weakest month since March 2007, he means it is weaker than

April 2007 Super paper mario, Guitar Hero 2, Prince of Persia, 3 Final Fantasy games, Pokemon diamond/Pearl
March 2008 God of War PSP, Smash bros brawl, Tom Clancy rainbow 6 vegas 2, GT5 prologue and a lot of medium releases
April 2008 Mario Kart, Wii Fit. Need I say any more?
March 2009 Tom clancy, Hawx, Resident Evil 5 (outside of Japan) resistance retribution, total releases 582
April 2009 Pokemon mystery dungeon and lots of medium releases, 426 games total
March 2010 Battlefield BC, FFXIII, God of War, 500 games total

By comparison, April 2010 saw the release of 413 games with Super street fighter and Monster Hunter tri being the only two of note

he has many good points... they need to find a way to monetize the online time... it's crazy... but I think he's thinking in the wrong direction... Patcher is often told he's stupid... but you fucks are the ones who don't know what you're talking about... this man doesn't just pull this shit out of his ass he has reasons for believing this way

um, no.  The economy went down a long time ago, and it is actually starting to recover in the US which is what he's talking about.  It's not a 1 month thing. 

The consoles can't sell 5 mil a month anymore. It's now 2010. Sales had to slow eventually.