Analysts: March sales slump will likely continue

GTAIV sparks pessimism among industry watchers about a near-term return to US sales growth, but they aren't pushing the panic button, either.


Grand Theft Auto IV

Yesterday, the industry-tracking NPD Group released its figures for US retail game sales in March, and the data showed slipping sales on all fronts. Overall gaming revenue was down 17 percent for the month, with hardware, software, and accessory sales all shrinking. Today, a handful of game-industry analysts reacted with a measure of concern, but not panic.

Clearly, GTAIV casts a large shadow.
Clearly, GTAIV casts a large shadow.

"Of course we should be concerned," Wedbush Morgan Securities' Michael Pachter told GameSpot. "Down 17 percent is pretty significant, and it's the first double-digit down month since May 2006. The trend has been so strong on the positive side that a reversal like this has to signal something."

However, Pachter noted that the March numbers need to be put in a larger perspective. He said that the game sales in March of 2008 were the highest of any nonholiday month ever, adding that last month's disappointing sales were still the third-best ever outside the holiday season. It didn't help that Easter weekend and its corresponding sales bump fell in the NPD's April reporting period this year, instead of March like last year.

"It's entirely possible that we were just up against an impossible comparison, and the Easter shift probably contributed 2-3 percentage points to the decline," Pachter said. "However, down is down--we're looking at a comparison to Grand Theft Auto IV in April, so it's likely that April will be down as well."

In a note to investors, Pacific Crest Securities' Evan Wilson also pointed to the Easter shift in explaining why new hardware and catalog software sales were below expectations in March. Looking forward, it might not just be Grand Theft Auto IV that threatens year-over-year sales growth. Wilson said that comparisons would be difficult for some time to come, noting that last year's April through July numbers saw monthly growth of roughly 40-70 percent.

Lazard Capital Markets' Colin Sebastian's take on the numbers were very much in line with his fellow analysts. He told GameSpot that March sales were "below expectations, but not a disaster," and echoed sentiments that growth would be difficult to come by in the next few months.

"The video game industry continues to exhibit a challenging pattern of sales concentrated among a small group of top-tier software publishers and the first-party platform holders, leaving little room for second-tier video games," Sebastian said in an investors note. "Importantly, we continue to expect the next several months will exhibit year-over-year declines before rebounding to positive growth in [the second half of 2009]."

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