Any hopes that the gaming industry would buck its spring slide in May were quashed yesterday when the NPD Group reported US retail sales dipped 23 percent to $863.3 million during the month. Hardware sales took a particular drubbing, with Nintendo's juggernaut Wii selling just 289,500 units, the console's lowest tally since January 2008. Sony's and Microsoft's systems fared equally poor, selling a respective 131,000 and 175,000 units in May.
Speaking to GameSpot shortly after NPD's report, Electronic Entertainment Design and Research analyst Jesse Divnich told GameSpot that he believes Microsoft, Sony, and Nintendo have all "reached saturation at current price points," surmising that a round of price cuts could help reinvigorate the sagging console market.
In an investor note today, Wedbush Morgan Securities analyst Michael Pachter echoed Divnich's sentiments--and made another prediction. He believes supply of Nintendo's console has at last caught up with demand. "In order to hit its full-year Wii shipment forecast, we expect Nintendo to cut the price of the Wii before holiday, likely to $199.99," Pachter forecast.
"Next generation hardware sales were amazingly weak in May (down 21 percent overall on a unit basis, with consoles down 44 percent and handhelds up 15 percent), signaling that the video game consumer is being impacted by the recession," Pachter went on to note, before predicting that Microsoft and Sony may cut the price of their wares during the latter half of 2009 as well.
"In the second half of the year, we expect Sony to cut price for the PS3," he said. "If the cut is deep enough, we expect Microsoft to respond (either with bundles or with a price cut of its own, even as Microsoft just introduced an Xbox 360 Elite bundle with free games Halo 3 and Fable II). If we're right, hardware demand should get stronger in the back half of the year."