April software decline inconsequential - Analysts

Trio of industry watchers offer double-digit sales decline predictions for NPD report later this week, blame it all on Mario Kart Wii, GTAIV.

April 2008 saw million-unit-plus game debuts on all three current-generation consoles. Released during the final week of April, Take-Two's Grand Theft Auto IV debuted to 1.85 million copies on the Xbox 360 and 1 million units on the PlayStation 3, whereas Mario Kart Wii burned through 1.12 million units in the US during its opening weekend.

Just how large will this stack of money be?

That being the case, April 2009 is in for a tough comparison when The NPD Group releases its monthly retail-sales recap later this week. And despite predicting a 17-25 percent year-over-year sales decline, industry analysts are quick to note that the dip has more to do with the aforementioned tough comparison than any weakness in the market.

Leading off a string of investor notes this week, Wedbush Morgan Securities' Michael Pachter said that April 2009 software sales data is expected to match last month's 17 percent slip. He expects that software fell to $550 million in April, down from $793 million in March and $655 million in April 2008. Top sellers for the period, according to Pachter, will be Halo Wars, Resident Evil 5, Pokemon Platinum, and Wii Fit, with EA's The Godfather II making the strongest debut at only 150,000 units sold.

"Console software sales growth was extraordinary in 2008, up 26 percent," commented Pachter. "However, year-to-date, sales have declined modestly, and we forecast another double-digit decline for April. Notwithstanding that sales will likely be tracking down 5 percent through April, we believe that the decline is more attributable to difficult year-over-year comparisons (which improve after July) than to overall weakness in the economy."

EEDAR's Jesse Divnich--who was one of the few analysts to predict Grand Theft Auto: Chinatown Wars' inauspicious start in March--also estimated April 2009 software-sales growth slipping 17 percent year-over-year to $548 million. Divnich noted that if his forecast were to hold true, the industry would be down 5 percent through April, the biggest decline since 2001.

"If April sales exceed $550 million, we believe it is a positive sign for the industry and an indication that sales may remain robust for the rest of the calendar year," Divnich cautioned. "Sales below $510 million would be an indication that consumer spending in the video game sector is beginning to contract over last year and could impact sales in the summer months."

The EEDAR analyst also offered an observation on the impact of celebrity-endorsed marketing campaigns on the sale of game software, especially as it relates to Nintendo's Rhythm Heaven for the DS.

"Rhythm Heaven is one of the few games in our industry where the marketing budget--expected to exceed $6 million worldwide--is likely larger than the cost of development," Divnich noted. "With video games now becoming a mass-market entertainment product, publishers must realize that to truly reach the mass-market audience, they must use mass-market techniques (such as celebrity endorsement) to market their products."

Pacific Crest Securities' Evan Wilson took the gloomiest stance on April's software sales figures, saying that he believes revenues slipped 25 percent year-over-year to $500 million. However, even he noted that this decline is hardly significant, taken in light of April's contribution to the total year-end tally.

"It is also important to note that we estimate April will represent 4.3 percent of total industry sales this year," he said. "Therefore, general weakness in April sales or weakness versus our estimate (if said weakness does not extrapolate to a trend) means little to our full-year estimate. As such, we recommend investors turn a deaf ear to the NPD sensationalists."

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41 comments
GamerEternal
GamerEternal

I really want to see less games. When I started gaming, there was a lot of games but at least you can keep up but when we live in times where AAA games for one system per year are practically in the hundreds then nobody wins. The problem isn't that there isn't any good games coming out, there's lots of great games coming out for all three platforms. The problem is that the industry has outgrown it's own players (and in a way, the people who started it, the people who really matter in my opinion because if nobody supported the NES, there'd be no SNES, if nobody supported the PS1, there's be no systems to follow it, WE are the backbone of this industry and it's because of us that it exists in the first place because we supported it through thick and thin) and there are way, way, wayyyyy too many games coming out per year. As I've previously stated, gaming is an expensive hobby/passion and for every GOW, Halo, Zelda, Metroid that sells in the millions, there are games that are just as good, that don't get noticed because everybody's buying Halo. Let me put it another way, I'm not a big football fan but I know there's rules and a certain amount of teams. What if every six months, they added five new teams to the franchise and in five years, you'd have close to ninety teams, maybe that analogy is off base but that is essentially what is happening, more and more and more developers are starting up and before you know it, there will be hundreds of developers and video games could face the crisis of another crash. It happened before and it could happen again. I blame part of the problem on all the damned commercials telling us that we can all be game designers, when we can't, plain and simple. Sorry but I felt that needed to be said, sorry bout the length.

Fady117
Fady117

Yea well they can't just make every game with a known figure from now on!!! We don't want to limit our imagination and see only Tom Cruise here and Laurence Fishburne there now!!!! and yes, sales slip down sometimes, but the developers should also keep in mind that the mass market has ALL KINDS OF FANS so they shouldn't concentrate on specific types of games just to boost their earnings and disappoint us.....

prioritymail
prioritymail

Simple, the games that came out in April kinda sucked (no offense to any good games that came out in April, I sure can't remember any)

LindBergh2007
LindBergh2007

There's a SEGA Sammy blog that reveals what the RingEdge project is http://fgnonline.webs.com/ Qoute: "The link appears to be fake but if you read carefully almost everything on the blog sounds accurate and makes sense. "With the Nintendo Wii hitting retail and gaining worldwide superstardom of the likes never witnessed SEGA SAMMY once again immediately got to work on another system with orders from the boss himself Satomi-san. This system shall be a HD casual console and is designed to compete with the successor to the Wii. The design of the system FGN can officially confirm was finalised in late 2008, it's arcade variant goes by the name "RINGEDGE" the specifications of the system are as follows. The chosen CPU is the Intel Pentium E2160 Allendale 1.8GHz Dual-Core Processor, the GPU of choice is the Shader Model 4.0 compliant 9600GSO with 384 MB GDDR3 RAM, System memory measuring 1GB DDR2-800. Other features include an onboard HD audio DSP, 32GB SSD, standard DVD, and WiFi connectivity. SEGA SAMMY plans on shipping the system with two controllers, a motion sensing remote and one which looks similar to the Saturn 3D controller. One for casual gaming the other for non-casual. To top this off SEGA SAMMY shall be using a stripped down version of Microsoft's Windows Embedded Standard 2009 for ease of development. This particular version differs from the standard version where only the DirectX functionality is included, the standard edition costs $90 per shipping device. As SEGA SAMMY's version doesn't include the non gaming features SEGA SAMMY has managed to get a hold of the OS for less than half of that cost. SEGA SAMMY plans on launching the system in time for the holiday season of 2010 for no less than $200 and no more than $250. The company doesn't plan on publically acknowledging the project this year, thus an official announcement won't take place until the 1H of 2010. Stay tuned for part 2 of our world exclusive where we shed light on SEGA SAMMY's consumer plans for the "RINGWIDE" According to the blog, the NEW system will launch in 2010. Plus there's some mysterious youtube user named "RingEdge" who's now claiming that SEGA of America will give some sort of hint at a new console at E3 and rumors that SEGA may annouce the machine as early as September 9,2009. Sega also has two booths at E3 as well and a meeting room. My prediction, Capcom and many other Japanese publishers have a surprise for everyone. There's also a link for two controller patent designs. http://www.patentgenius.com/image/7488254-19.html (I know it looks like the Saturn 3D pad but the patent filing number 7,488,254 is way ahead of Sega Saturn's us patent number which is "5,371,792.) Here's another one: http://www.patentgenius.com/image/7488254-32.html (it looks like the Genesis/Mega Drive six button pad but with added motion sensors)

Sins-of-Mosin
Sins-of-Mosin

fps_d0minat0r - Halo Wars was more successful then KZ2.

LindBergh2007
LindBergh2007

The basic problem has been pure and simple. It's costing way too much to develop high end software games, none of the current development kits seem to offer a solution to lower development costs. For one people don't like paying $60 and $70 for games especially in this economy. On an interesting note, a NEW Sega Sammy blog has revelead that SEGA will indeed launch a NEW system codenamed "RingWide" in 2010. http://fgnonline.webs.com/ If you look at the link, it sounds fake but all of the details on it are almost completely factual. " With the Nintendo Wii hitting retail and gaining worldwide superstardom of the likes never witnessed SEGA SAMMY once again immediately got to work on another system with orders from the boss himself Satomi-san. This system shall be a HD casual console and is designed to compete with the successor to the Wii. The design of the system FGN can officially confirm was finalised in late 2008, it's arcade variant goes by the name "RINGEDGE" the specifications of the system are as follows. The chosen CPU is the Intel Pentium E2160 Allendale 1.8GHz Dual-Core Processor, the GPU of choice is the Shader Model 4.0 compliant 9600GSO with 384 MB GDDR3 RAM, System memory measuring 1GB DDR2-800. Other features include an onboard HD audio DSP, 32GB SSD, standard DVD, and WiFi connectivity. SEGA SAMMY plans on shipping the system with two controllers, a motion sensing remote and one which looks similar to the Saturn 3D controller. One for casual gaming the other for non-casual. To top this off SEGA SAMMY shall be using a stripped down version of Microsoft's Windows Embedded Standard 2009 for ease of development. This particular version differs from the standard version where only the DirectX functionality is included, the standard edition costs $90 per shipping device. As SEGA SAMMY's version doesn't include the non gaming features SEGA SAMMY has managed to get a hold of the OS for less than half of that cost. SEGA SAMMY plans on launching the system in time for the holiday season of 2010 for no less than $200 and no more than $250. The company doesn't plan on publically acknowledging the project this year, thus an official announcement won't take place until the first Half of 2010. Stay tuned for part 2 of our world exclusive where we shed light on SEGA SAMMY's consumer plans for the "RINGWIDE" According to the blog, the NEW system will launch in 2010. Also SEGA may change thier mind and make an annoucement this fall depending on how the economy is. The new console will run on HD DVD and compete against Wii HD.

Get_Shorty
Get_Shorty

The videogame industry isn't like any other industry out there. Declines here don't mean anything is weak just that no GTAV came out this month.. which would be impossible to do every year. The industry is fine.

10below
10below

If the game or title is good - they'll sell...always have always will. If it's a second tier game, they may have to drop their initial $60 pricetag, or more people will rent or buy used. I wouldn't mind if the second tier games were cheaper than $60 anyway. Other option is that second tier games get released online - which would put a huge savings in production, making the lower price tag worth it for the game manufacturers.

fps_d0minat0r
fps_d0minat0r

who cares if theres a decline......if ppl think the games aint good enough then they aint gonna buy em. apart from KZ2, SF4 and RE5 i cant think of any other big names released this year that were sucessful.

kavadias1981
kavadias1981

You can't compare sales from each year. These things are determined by the title, not the economy. Durr.

rgame1
rgame1

:lol: i balme madworlds and other games demise on MArio Kart, Wii fit and GTA4!!! I mean as long as they are on the shelves other games will not be looked at.

Merl57
Merl57

I would play more games if I wasn't so busy with school

TurambarGS
TurambarGS

These figures are ALWAYS going to be full of weird jumps and troughs like this though - whenever there's a big title released, the figures will be thrown out for that quarter. It's going to happen again for MW2 and probably ODST as well.

zinoalex
zinoalex

Good games will generate sales.Goos games have been few a far between lately.Sure the economy has a lot to do with sales of games and systems.But make great games and gamers will find the cash for them---somehow.

MATERAZZI_23
MATERAZZI_23

I just want to see how the PS2 is doing after the price cut....

rkaycom
rkaycom

Not many good games have come out in the last couple of months, hence declining sales...

ChamomileBaths
ChamomileBaths

We've seen the top of the sundae. Marketing is right though, and once they start marketng these games they'll realize they're all still competing for a fairly similar market and then the games will diversify and be better outside of NIntendo systems.

shawn7324
shawn7324

Tobacco season starts soon & I'll then have the money to start buying more new games as I've pretty much just been working the used market so far this year.

Mikethechimp
Mikethechimp

Who cares about the sales, give us good games

Pete5506
Pete5506

That s to bad, sale would be going down though since there art many good games coming out right now

Epicurus-Reborn
Epicurus-Reborn

@okassar Time enjoyed wasted wasn't wasted (-John Lennon)

jeremiah06
jeremiah06

@okassar Agreed as long as such a thing as spare money exist I'll be gaming. lol Even if spare money disappears then I'll be stealing or getting temp jobs either way I'll keep gaming.

Sins-of-Mosin
Sins-of-Mosin

I've been predicting sales numbers for a year now and only been wrong once.

okassar
okassar

I wasted all my money on games during the holiday season,and I'll probably do it again this fall--don't worry gaming industry:) lol

tu2pac
tu2pac

@Nephilim83 lol, exactly, lol

tu2pac
tu2pac

I bought games in February and March ... (SF4 / RE5) I think I deserved to take April off ... They should track games sales on eBay ... I bought 4 this month ...

Autolycus
Autolycus

@andrew_ribbons I hear ya. I've been trying to get into it my whole life, but unfortunately I am the only person that seems to share the passion and have a wicked little problem of working hard in a team setup (so it doesnt feel like I am the only one trying). Its not easy getting into it, and I am not claiming it to be. I Just find it hilarious that people make a living Analyzing something they've never taken part in or have any idea of what goes into it... because its impossible to analyze if you simply cant understand the inner workings.

angelGP32
angelGP32

I predict that the newest Petz game will surpass the previous record and sell 15 copies.

VenomRitual
VenomRitual

they should just stick to qtr growth ratings. month to month is just ridiculous, you don't learn anything and can always attribute it to "well this month had this certain game released".

metalkid9
metalkid9

I don't think its a big deal because as they release heavy hits later on the year the sales will hopefully go up. and it will even go more up if lets say we see bioshock or any other major game released the same month as cod:mw2

Nephilim83
Nephilim83

Man, I wish I was a video game analysist. Give me a bunch of money to guess what's going to happen in the coming months. Lemme give it a try: InFamous will sale 1.2 copies nationwide and account for 100 percent sales profits earned by developer Sucker Punch throughout the rest of this fiscal year. Also the Wii will lose steam almost completely up to the release of The Conduit. Sales will decrease dramatically until gamers are given a reason to play it again. 360, thanks to Halo 3 and COD4, will keep chugging along as usual...... How's that?

LindBergh2007
LindBergh2007

The basic problem has been pure and simple. It's costing way too much to develop high end software games, none of the current development kits seem to offer a solution to lower development costs. For one people don't like paying $60 and $70 for games especially in this economy. On an interesting note, a NEW Sega Sammy blog has revelead that SEGA will indeed launch a NEW system codenamed "RingWide" in 2010. http://fgnonline.webs.com/ If you look at the link, it sounds fake but all of the details on it are almost completely factual. " With the Nintendo Wii hitting retail and gaining worldwide superstardom of the likes never witnessed SEGA SAMMY once again immediately got to work on another system with orders from the boss himself Satomi-san. This system shall be a HD casual console and is designed to compete with the successor to the Wii. The design of the system FGN can officially confirm was finalised in late 2008, it's arcade variant goes by the name "RINGEDGE" the specifications of the system are as follows. The chosen CPU is the Intel Pentium E2160 Allendale 1.8GHz Dual-Core Processor, the GPU of choice is the Shader Model 4.0 compliant 9600GSO with 384 MB GDDR3 RAM, System memory measuring 1GB DDR2-800. Other features include an onboard HD audio DSP, 32GB SSD, standard DVD, and WiFi connectivity. SEGA SAMMY plans on shipping the system with two controllers, a motion sensing remote and one which looks similar to the Saturn 3D controller. One for casual gaming the other for non-casual. To top this off SEGA SAMMY shall be using a stripped down version of Microsoft's Windows Embedded Standard 2009 for ease of development. This particular version differs from the standard version where only the DirectX functionality is included, the standard edition costs $90 per shipping device. As SEGA SAMMY's version doesn't include the non gaming features SEGA SAMMY has managed to get a hold of the OS for less than half of that cost. SEGA SAMMY plans on launching the system in time for the holiday season of 2010 for no less than $200 and no more than $250. The company doesn't plan on publically acknowledging the project this year, thus an official announcement won't take place until the first Half of 2010. Stay tuned for part 2 of our world exclusive where we shed light on SEGA SAMMY's consumer plans for the "RINGWIDE" According to the blog, the NEW system will launch in 2010. Also SEGA may change thier mind and make an annoucement this fall depending on how the economy is. The new console will run on HD DVD and compete against Wii HD.

Rottenwood
Rottenwood

While few businesses (if any) are truly 'recession-proof,' gaming should be better off than most. Games offer an excellent entertainment-hour-per-dollar ratio, especially if you're patient enough to wait for a price drop or two. My only real concern would be companies going into safe mode and working on nothing but sequels and retools of proven hits, to prevent any major losses.

andrew_ribbons
andrew_ribbons

"people get paid to half ass guess this crap? A video game analyst has to be the EASIEST job on the planet." Unfortunately a lot of people go into the Games Industry thinking it's an easy ride with a big paycheck. Urm, no. Creating games is no easier than creating a work of art, an album of music, or a full length film. It takes a lot of skill, dedication and late nights to create truely fantastic games. Then you've got leaches. People who try and be a part of the industry with hopes of getting big paychecks simply because the games industry is so huge now. Well wake-up call: Working in Gamestation gets you a tad above minimum wage, being a VG analyst gets you only a tad more. So yea, they do get paid to spin off random numbers all day, then go home. However i can bet none of them own a Yacht.

Autolycus
Autolycus

people get paid to half ass guess this crap? A video game analyst has to be the EASIEST job on the planet.

nappan
nappan

Ok, we officially need to hear more from Jesse Divinch and a looooot less from Pachter. Very interesting analysis, but somewhat heartening really. If the biggest concerns gaming has to worry about on the fiscal front is a recession that is effecting everyone (not just them), and the need for more and better marketin... that's fixable.