On Thursday, The NPD Group is expected to release its video game sales report for the month of June. Following a downright terrible April and a worse than expected May, June game sales are likely to be down yet again, according to Wedbush Morgan Securities analyst Michael Pachter. He's expecting software sales to come in at $575 million, an 8% dip year-over-year.
Part of the problem is that June saw little in the way of new triple-A releases and sales were probably led by Red Dead Redemption and Super Mario Galaxy 2 again. "Despite improved June hardware sales of Xbox 360 and PS3, we expect June software sales to be down 8% due to a difficult dollar comparison ($627 million), a disappointing May (up only 4% despite a strong release slate), and a lackluster release slate," said Pachter. "We believe that positive momentum from May’s high-profile releases will be limited, as Red Dead Redemption was the only breakout hit. Super Mario Galaxy 2 and UFC Undisputed 2010 both had strong sales, but significantly underperformed their prior versions, while the other May releases are unlikely to display staying power in their second month. We expect music genre sales in June to be $18 million compared to $39 million last June, with the impact from declines lessening each month going forward."
As for hardware, Pachter estimates sales of 400,000 Wiis (up 11% y-o-y), 325,000 Xbox 360 units (up 35% y-o-y), and 195,000 PS3 units (up 18% y-o-y). He noted that Wii sales "should increase due to the May introduction of the new bundle. Xbox 360 sales should be up due to the introduction of a new slim version and $50 price cuts on discontinued models. We think that PS3 inventory improved during the month, allowing for a modest pickup in sales. DS sales should continue to decline now that the 3DS has been announced for release before March 31." Pachter added that even with the hardware sales improvement, he's expecting an overall 17% decrease in hardware dollar sales due to lower overall ASPs.
4 Comments
July 12, 2010
It's beginning to look a lot like a bad Christmas... one of the key questions is this: Are game sales lagging because of fewer high-quality titles, or because of general economic conditions, or (worst case) gamers are choosing lower cost alternatives (used games, DLC to extend interest in titles they already have, downloadable games, mobile or social games)? If it's the third case, publishers are going to have to make some major changes in order to respond.
July 12, 2010
I think it's a combination of all the things you said Steve, not any one in isolation. I would say that I don't think there are fewer high-quality titles; it's just that consumers for the most part are only really flocking to the ones that are the biggest hits, like Red Dead Redemption. That means that a lot of really good titles don't sell as much as they should because consumers are being more thrifty.
July 12, 2010
James, it's not reassuring to think that there are just as many good titles as ever (I happen to agree with you on that), but consumers are just getting pickier. This is not an easy problem for publishers to fix... more spending on marketing to boost sales means lower profits, even if it works. I think the time is right for some bold moves. We are seeing some things happen: FIFA coming to social gaming, investments in different areas, publishers making money from subscriptions and virtual goods and DLC. The used game onslaught is only going to grow, and that's going to make sales of new products suffer. Lowering new release prices isn't really an answer unless you can lower development costs, which requires rethinking the whole design process and distribution model. I'd like to see a major publisher try a League of Legends or Torchlight release; when that happens I believe we may see some better results. Until that time, I predict continued weakness in the sales channel.
July 13, 2010
Things don't look great for the retail gaming industry... I'm sure many people are hoping Kinect and Move give things a shot in the arm. We'll see about that.