Game Industry Analyst Pachter Disturbed By Weak April Game Sales

Wedbush Morgan analyst Michael Pachter, the game industry’s most outspoken financial watchdog, sees troubling signs for the industry in the recently released NPD April game sales charts.

"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,” observed Pachter. “The sequential decline of 55 percent 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 percent 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."

Pachter partly blamed the decline on what he felt was a relatively weak lineup of games – he deemed Ubisoft’s Splinter Cell Conviction the month’s only “AAA” title. He went on to cite that the fact that the game was only available on Xbox 360 to be at least partially responsible for the steep drop-off in April sales. Pachter feels the May lineup, which includes such titles as Red Dead Redemption, Super Mario Galaxy 2, Alan Wake, and Skate 3, is much stronger across the board and should help spur great retail sales.

However, Pachter feels there are other factors at play. “"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 claimed. He also felt that increased offering of aftermarket DLC is contributing to the problem.

Because of this new business environment, Pachter feels some investors have come to view the game industry as being “in a state of persistent secular decline."

Going forward, he expects that publishers like Activision will make greater attempts to “monetize” online play of their popular multiplayer games like Call of Duty: Modern Warfare 2.

via Industry Gamers