In advance of the NPD Group's February sales data (expected this Thursday), Wedbush Morgan Securities analyst Michael Pachter has issued his own sales preview, which forecasts software sales to be down yet again. Software sales were down 12% in January and Pachter believes they'll be down 10% to $665 million for February despite big name titles like BioShock 2, Heavy Rain, and Dante's Inferno.
He said the sales dip was primarily due to "continued weak music sales, and slightly below expected results for the big February launches." The big sellers in February are expected to be Call of Duty Modern Warfare 2, Mass Effect 2, New Super Mario Bros. Wii and Wii Fit Plus, along with February releases like BioShock 2 and Dante’s Inferno.
Pachter continued, "The February comparison is not as tough (+9%) as it was in January (+11%), but we expect another precipitous decline in music genre sales to around $20 million compared to $75 million last February, and do not expect the decline to be offset by sales of the big launches during the month. We expect industry sales to improve significantly starting in March, with a rebound to positive territory as high-profile games begin to be released on a more consistent basis (top March games are Battlefield: Bad Company 2, Final Fantasy XIII, Pokémon, and God of War III) and monthly music comparisons become easier. Last March’s music genre sales were only $64 million, presenting an easier comparison, and April – May sales were $46 million and $26 million, respectively, so we expect the impact of year-over-year declines to lessen over the coming months."
From a hardware perspective, although the Wii continues to be the top seller, it's still suffering from shortages and Pachter expects February sales declined 40% to 455K units. He also thinks Xbox 360's sales declined 10% to 350K units. PS3 meanwhile likely grew 9% to 300K units sold, he said. "We expect the Nintendo hardware supply situation to continue to be constrained in February. As such, we expect a decrease of 28% for the DS in addition to the Wii’s decline. Overall, we expect a 31% decrease in total hardware units and a 20% decrease in dollar terms, and do not expect hardware sales to climb until the middle part of the year (April – August), when Wii comparisons become easier and supply constraints should relax," Pachter noted.
He added, "We expect PS3 sales to grow in 2010, as the platform faces easy comps, while the Wii and Xbox 360 face more difficult comparisons. In the first quarter of 2009, Microsoft sold over 1 million Xbox 360s and Nintendo sold over 2 million Wiis, while PS3 unit sales were under 700,000 units. Xbox 360 sales have kept pace with PS3 sales since the price cuts, and we expect this to persist well into 2010, but this implies solid year-over-year growth for the PS3. We think that PS3 sales will be close to those of the Xbox 360 in February, due to increased advertising, the popularity of Blu-ray, and a promising slate of games coming out in 2010.
"We expect another price cut for both systems some time this year (most likely around September), but note that because its manufacturing costs are lower, Microsoft has the ability to lower price as early as March or April. At a minimum, we anticipate the introduction of a more feature-packed Xbox 360 in early 2010 (likely with a 250Gb hard drive) at the same $299 price point, and think that Microsoft will cut price before the fall only if it begins to lose significant market share to Sony. We believe Nintendo’s DS biggest sales challenge will be its own high installed base. Without a meaningful price cut, we expect a 25% sales decline for the DS in 2010."
15 Comments
March 8, 2010
My 360 just E-74'd on me. I;m going to trade it in for a PS3. I'm going to wait and see what Msoft does with Natal before i buy anything else from them.
March 9, 2010
Well PS3's aren't exactly extremely reliable either. Mines overheated after two years. I had to pay $150 for a fix which was really a replacement 60GB. Though I did have it on for hours and for some reason A LOT of dust accumulates here. I keep a fan on mines for long gaming/movie sessions.
March 9, 2010
Pachter's assertion that the DS market is beginning to saturate is an interesting one. It has sold so well heretofore that I had not considered it. I personally feel like the DS lineup at this point is overpriced, and Nintendo feels they can get away with a $189.99 DSi XL because it hasn't stopped it from performing well in Japan. However, I believe America is simply more price conscious than the Japanese public, who typically pay the equivalent of $20-30 more than we do for the same software. Oddly enough, hardware prices are usually on par. Either way, it will be interesting to see how well the XL performs in Western markets in it's first three months. If it doesn't meet internal expectations, I am positive Nintendo has the wiggle room to either drop the DS Lite to $99 or phase it out entirely, while reducing the DSi to $129 and the XL to $149, which seems more reasonable to me.
Regarding the Wii shortages, I believe they are simply the result of Nintendo reducing capacity because of the sales slowdown of 2009 and not realizing that the impact of the price reduction plus the holidays would be as strong as it was. Their saving grace was that leading up to the price cut the retail channel was stuffed with product to sell, otherwise the numbers would have been much lower. I'm hopeful that the shortages will end by April, but it will simply depend once again on Nintendo making smarter forecasts and its suppliers catching back up to the current level of demand.
Likewise, Sony is in a precarious situation financially as Howard Stringer tries to reorganize the company to be more efficient and profitable. It's simply not good business to assume massive success (like Ken Kutaragi did) and therefore Sony was realistically cautious about it's production levels for the Slim. I'm sure they are working on increasing capacity as well, and I've heard that a big part of the holdup is their harddrive supplier. If I'm not mistaken, there was an article recently about Sony filing trademarks for new PS3 models that are functionally exactly the same, but I think they simply used new hard drive suppliers for these units.
Microsoft is cruising along as usual, and I think they are content to offer new bundle configurations every so often until the fall launch of Natal. I picked up a Modern Warfare 2 Elite bundle with 2 controllers, the game, a 250 GB HDD, and a custom design back in December. They are releasing similar bundles for the same $399 price with FFXIII, Splinter Cell Conviction, and possibly others throughout the year. Eventually I'm sure they will focus on improving the $299 bundle as well, probably over the summer.
May 5, 2010
Yeah I played GOW and I know it was a big cliff hanger just like Halo, just like they keep playing this game. Just having a cliff hanger has NEVER stopped anyone from claiming they may not be making the next one, or when. I remember them saying there may NEVER be another GOW. I remember them saying no comment until they finally admitted there was a GOW3 in development (which I knew from 2005 had to be in development). internet fax comparisons
May 9, 2010
I'll most likely be getting Medal of Honror, Ghost Recon Future Solider, Spec Ops The Line and SOCOM 4.
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May 13, 2010
Still people complain about how the Treyarch CoD games suck or aren't innovative, and they move millions of units. online fax
May 16, 2010
I will personally never play a game that uses such deception, mainly because of the intrussive measures to authenticate, and in this case require an active internet connection to play. And the sad part is that I was really hoping to play this one. I guess I'll just rent a console version from my library, or gamefly, becasue I certainly won't be purchasing one. cheap online fax
May 17, 2010
Damn. Pachter is stealing my language . . . I used the 'secret sauce' analogy elsewhere. internet fax solutions
May 20, 2010
Some might think they're being coy and a new God of War title being put in the pipeline as we speak, but God of War III Senior Producer Steve Caterson says differently. online fax
May 29, 2010
Overall, we expect a 31% decrease in total hardware units and a 20% decrease in dollar terms, and do not expect hardware sales to climb until the middle part of the year (April – August), when Wii comparisons become easier and supply constraints should relax," Pachter noted. Pandela Hosting Review
June 11, 2010
White-knuckled, close range dogfighting is not a common theme for video games. Most flight sims from the ancient times of computing would try to simulate flight more than combat, and those that did simulate combat strove for realism - which left little room for intense dogfighting action.identity theft protection service
June 13, 2010
Achievements that shadow a player's progress through the game proper -- usually a campaign or story mode . top email marketing
June 20, 2010
Pointing to the Red Bull Air Race space as a good example of the original content available.email marketing services software
June 29, 2010
What it comes down to is that the rights to the intellectual property has been treated as basically public domain. Make all the Elves and Dwarves you want, but only Lucas can make a game with a Jedi.poster printing
June 29, 2010
What it comes down to is that the rights to the intellectual property has been treated as basically public domain. Make all the Elves and Dwarves you want, but only Lucas can make a game with a Jedi.poster printing