It's clear the drop is due to the Music genre no longer being such a beast. Whether this is due to the recession meaning peoples refusal to pay $100+ on one game, or just the genre has been milked and is now suffering cause of it. Plus most people have the instruments now, so buy the cheaper solus editions.

I think the other big factor was Modern Warfare 2 - the game was just so huge alot of people haven't bought another game yet. Last year consumers would have maybe bought 2-3 games as there was no huge big epic title that took nearly all the industries hype. Not to mention about 12 games being delayed due to MW2.

Next year should be interesting, the line up for the first 4 months is absolutely amazing at the moment and some big games are gonna get hurt, or delayed. If next years xmas line up for the 3 consoles has some big hitters (MGS, Natal, Wii Vitality, Halo Reach etc) I think 2010 will smash 2009 (And possibly 2008) simply because the year as a whole will be so strong.

Actually I remember seeing a score card of Pachter's predictions. Most of the ones he got right were either obvious or were predictions that he later reversed course on. For example he said something about Bully, then reversed it with an opposing prediction, and it turns out he was right in the first place. Of course if I predict it will either rain or not rain tomorrow, I have a pretty good chance of being correct :P

His biggest predictions all failed, of course. I mean look at the view he had of the console war as late as 2007:

http://www.gamepro.com/article/news/111890/analyst-blu-ray-may-lead-the-ps3-to-victory/

Patcher wrong? Again?

Old news are always good news =)

Oh, I found that older article with a scoring of Pachter's predictions:

http://russrenshaw.newsvine.com/_news/2007/08/11/891513-how-pachters-predictions-stand-up

If you look at them now (and eliminate the two contradictory predictions) he got 3 predictions out of 5 right. Two of them about price cuts (that basically everyone was expecting), and another one that GTA4 would be delayed.

This happens all the time in the game industry. It's not based on the generation but each Q. Some companies have good results and others don't, it's always been like that. Most companies this gen are profitable. The industry is a lot more stable than these reports lead one to believe. 2009 is a slow year and the profit declines are based on the lack of releases rather than the health of the industry. 2009 is going to be the second or third biggest year ever for gaming, the industry isn't in trouble.

Jarrod, I wasn't saying 2009 was terrible sales wise, as I said it's the second best year ever. It's just being directly compared to 2008 which is unfair considering 2008 was a monster of a year. I personally thought the year sucked for games but that's a different story. 2010 will change things and people will see the industry is just fine. A slight down time is nothing to panic about.

ROFLMAO

The situation right now is anything but normal.

Of the biggest publishers, most are losing money:

EA - consistently losing money

Ubisoft - losing money

Take 2 - consistently losing money (even after making one of the biggest games of the generation)

THQ - consistently losing money

Activision - making a little bit of money (after merging with Blizzard)

The saddest thing is, you're right that companies are selling lots of games and getting a lot of revenue. They just can't translate it into profits due to spending way too much money on game development. Imagine if they weren't getting those awesome sales...

Some of them are losing money based on releasing bad games. I know companies are losing money this year, but that's normal in any industry. Every industry has it's downtime and the lack of strong releases is hurting 2009. The revenue of the game industry is just fine, poor management may be hurting some companies as they adapt to change. It's nothing to be doom and gloomy about. Some companies report decreases in profit while others report increases. That's just how competitive markets are. 2010 will easily move things back into place due to big games actually releasing. Companies like EA and Activision will be just fine in the long run.

You don't understand what they're getting at: in terms of profit the game industry hasn't been having a bad quarter. It hasn't had a bad year. It's had a terrible generation. Almost universally, profits are down, studio closures are up, and even the big studios are starting to merge.

Companies aren't just losing money this year. Many of them have been losing money basically since the generation started. That goes for EA, Take 2 and THQ. Ubisoft and Activision are the ones doing better.

Activision I'm sure will be fine, if nothing else because they have Blizzard.

EA, they have downsized by about 25% and are still losing huge amounts of money. It's not a one-time situation that you can brush aside as being normal.

You can attribute it to "just bad management", but I don't. I attribute it to development costs rising faster than revenues (which yes, can also be seen as bad management, but at a more critical level). In each of the last few generations the average development cost of a game has doubled. The size of the gaming population and revenues certainly haven't (even after increasing the price of many games from $50 to $60).

It's basic mathematics that the game industry's path was unsustainable. We're now seeing the results of that, and will continue to see them.