More dire March predictions

Lazard Capital Markets' Colin Sebastian expects US game sales to be down 20 percent from the year before, warns of more volatility ahead.

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On Monday, Wedbush Morgan analyst Michael Pachter predicted a drop of 18 percent in US game sales. Today, one of his colleagues came out with an estimate that undercut even that drop.

Lazard Capital Markets' Colin Sebastian today issued a note to investors predicting that industry-tracking NPD Group's March numbers (expected to be released on Monday) will show sales 20 percent lower than the year before. In his analysis, Sebastian notes a number of factors that played into his assessment.

On a general scale, he blames a "challenging retail environment," and points out that the numbers from March of 2005 were a difficult act to follow (up 31 percent from the year before). As for specific reasons for the drop, he points to declining sales on current-generation consoles, ongoing Xbox 360 hardware shortages, having to compete with the PSP launch the year before, the sliding of the Easter holiday from March to April, and the lack of new baseball games.

While Take-Two and Electronic Arts' March 2005 baseball releases sold more than 900,000 copies in the month of their release, those publishers warmed the bench this time around. Sony's MLB '06: The Show was the only baseball slugger to debut at retail this March. Take-Two currently has third-party exclusivity on the MLB license, and didn't release its Major League Baseball 2K6 games until this month.

As for what succeeded at retail, Sebastian says top-selling new releases included Tom Clancy's Ghost Recon Advanced Warfighter, The Godfather, The Elder Scrolls IV: Oblivion, and Kingdom Hearts II. EA's Black, released at the very end of February, also posted strong sales, according to Sebastian.

Discussion

43 comments
Jd1680a
Jd1680a

maybe these predictions is true. maybe the reason is out side of video games that is causing people to buy less video games. maybe the price of gasoline? im going to be paying close to $60 a month on gas for my little car. other people have different driving habits that would require them to drive more then i do so their cost could be double assuming they drive the same size car. parents who are driving SUVs is a different story, they probably be spending $200 a month on gas alone. higher expenses at the pump could be leading to lower sells of video games, because there may be less avaliable cash for parents to spend on their kids, same goes for young adults.

i_love_my_ds
i_love_my_ds

metroid prime hunters wasnt even mentioned in the article. it was a really hyped game!

SilV3RSix
SilV3RSix

thatguytony: Last time I checked, aren't all the different entertainment industries hurting? The American economy is terrible right now, why is everyone so surprised that sales are down, stupid analysts. Dude.. where have you been living? The American economy slowed down its phenomenal growth for a bit, but horrible? The jobless rate hit the floor this past quarter, the Dow is close to its pre-911 numbers, and the trade deficit is growing (the trade deficit has grown everytime the American economy has grown since they have been keeping track of it).

jaefrmbk2k
jaefrmbk2k

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wolfofthepack
wolfofthepack

if we stop commentin on these anaylists prediction maybe they will stop or maybe not but as usally another anal-ists has just wasted 10 mins of our time

biobug
biobug

its george bushes fault for not signing the kyoto treaty. lol. just wait till revolution launches in japan and america. then thell shut there buisness degree no nothing mouths

WeeWeeJumbo
WeeWeeJumbo

The prediction is that sales will be down in 2006. Only people who "haven't done their homework" are taking this as proof that developers aren't innovating enough, or gamers aren't rewarding innovation enough by buying, or the "industry is dying," or other such conclusions that aren't logically valid. This prediction is made every year. The indicators are trends that have been tracked for years by people who do this for their living. You hear about it when their predictions are remarkably wrong, and you don't hear about it when they are right. But many people do trust them, because they've used these predictions to earn and save millions of dollars. Maybe you have the same knowledge as a professional analyst, even if you never took a business class; maybe thousands of investors have earned millions more by following your advice. That still doesn't change the fact that most of the people posting here (even some of the more rational ones) are inferring far too much. Again, all the predictions really say is that, given a comparison of several important indicators, 2006 should yield a smaller sales total than did 2005. I'm sure everybody involved is aware that part of this is because 2005 was a banner year for lots of companies. Calm down and catch your breath, nobody is saying the industry is in trouble, and nobody is causing trouble by saying sales will be slower.

SavoyPrime
SavoyPrime

All these analysts are pretty much saying the same thing. This is getting old!

golden_ashen
golden_ashen

How is buying an xbox 360 going to help the sales of games mezonesxbox? Its because of the types of game on it at the moment that sales rates are so low in the first place. Games are either being repeated over and over, and / or ppl like me are fed up of paying ridiculous prices for games. games like Halo any fool can go out and pay for when i have so many ways i can play the game for free and complete them.

jonfigs
jonfigs

Well sports game do sell a lot of units but I would go so far as to blame it on that one aspect alone. It is not fair to compare this march with last year and the launch of the PSP. It is unfortunate that investors don't care about changes in the market from year to year. They see it as we made lots of money last march, we should do the same if not more this year. They forget that system launches don't happen every year. If you ask me, and I am by far not expert, I think that the problem with the industry is that they always put all their eggs in one basket. What I mean is that they always wait for the 4th quarter to blast us with their so called "hits". What ends of happening is that you do have your diamonds in the ruff, you expected hits that actually live up to the hype and then you have the flops. The rub is in the fact that people do increase spending at the end of the year for the holidays but not always on all their **** games. I always pass on 3 or 3 "expected/hyped to be good titles" every holiday season. Guess what? I rarely ever end of picking them up. Why, well inevitably I read a review or hear from a friend or just end up buying a winter/spring title that is a sure bet. So when that game that was suppose to come out in Q2/Q3 slips to Xmas time doens't get bought, well maybe it was because there was toooo much of the same out at the time. Couple that with the fact that a person only has so much time to play games and there you have it. My advise industry, spread out you titles, stop waiting for the 4th quarter.

mr_squibble
mr_squibble

E3 could generate some more hype certainly, but we basically have games for 7 systems in the market now (GBA, DS, PSP, GC, PS2, XBOX, XBOX 360) which could contribute to the market's saturation. Consumers only have so much money to spend. I'm more likely to purchase a good $30 handheld game than a $50 console game any day of the week, which doesn't help industry sales figures. The launch of the DS Lite in North America could help things too. Sure it will cannabalize the sales of the current DS, but overall the DS and DS Lite should sell more units together this year than the original DS would by itself.

LordAndrew
LordAndrew

NO NEW BASEBALL GAMES! INDUSTRY IN SHAMBLES! Oh noes!

chrisdojo
chrisdojo

lots of recycled games being released....... people getting tired of playing the same games over and over again............ march sales numbers down......... makes sense to me.

thatguytony
thatguytony

Last time I checked, aren't all the different entertainment industries hurting? The American economy is terrible right now, why is everyone so surprised that sales are down, stupid analysts.

Viquist
Viquist

very true mhder - I agree, and whoever said that about 10 games I'm excited about... I could probably name 5 to 7 but not 10 as of yet, however, we don't know all the games for REV and PS3 launch and the short time period thereafter left in this year so while we may be in a slump now E3 will skyrocket pre-orders (and while you're in the store you pick up something you've been putting off) so I say E3 and the launch of the REV and PS3 (plus shortages of XBox 360 soon not to be an issue -bluuuuuhhhhh) then the "industry" will pick back up again just in spurts.

mhder
mhder

samekila: "true games cost allot and gas prices are killing my game collection " If the price of oil stays high, it might raise the price of your games even more lol. Games have to be trucked around (gas) and plastic is made from oil too. Maybe someone should make a game based on the uses of oil... it'd be more exciting than a lot of the crap that gets crapped out these days.

samekila
samekila

true games cost allot and gas prices are killing my game collection

UnlivedPhalanx
UnlivedPhalanx

It would help if they stopped jacking the prices on games up $10 every 2-3 years.

Naruto-freak
Naruto-freak

I say its because last year was a good year

EricTheO
EricTheO

A jump in new game prices should also be mentioned as a reason for slow sales!

MayorJohnny
MayorJohnny

minerl99, Well said! The media likes to pounce on things that will make the story seem more exciting, which usually means a quasi-negative or fairly critical perspective on the story.

MayorJohnny
MayorJohnny

These analysts just like to be negative, eh? Anyway, I'm sure that Metroid Prime Hunters sold very well! Why wasn't it mentioned? Are these cynical analysts biased against Nintendo, as well? I wonder how the Ice Age 2: The Meltdown video games sold in March, too, leading up to the release of the movie (which was GREAT, in my opinion!).

Imavnas
Imavnas

Extremely well put minerl99. No need to say anything more after that. Even added a famous quote to top it off. Definately couldnt agree with you more.

minerl99
minerl99

$445m should be a 20% drop from $534m last March, which is $89m less in sales. Where did the $89m go? The 900,000 Baseball games, which were shipped last March and warmed the bench this March account for about $40m of the $89m. The remaining $49m might be the PSP launch from last March... Since last March had a 31% increase from the previous year's March, that would mean the last 3 March numbers looked like this: March 2006 $445m down 18% (although up 9% over 2004's March...) 2005 $534m up 31% 2004 $407m Thus, the increase from March of 2004 to March 2006 was 9%. If March 2005 didn't have the PSP launch and March 2006 didn't have the missing 900,000 baseball titles, maybe we don't have much of a story at all. The headline might read... ========================== OBLIVION LEADS MARCH TO AN OUTSTANDING 9% INCREASE IN GAME SALES. INDUSTRY ON A ROLL! OBLIVION SELLS 1.7m UNITS FOR $85M in SALES... ========================= The press needs panic, exhilaration, or anything else that's a story. "DIRE PREDICTIONS" is an interesting headline.... "200,000 Commercial Airliners Didn't Crash Today" isn't... No need to panic. Sales are down a bit, but that's to be expected. As Mark Twain once said, "The reports of my death have been greatly exaggerated...".

runstalker
runstalker

The market is pretty saturated. By November we'll have like 10 active game systems and a huge software glut. Transitional times. When the market settles down (i.e., post worldwide PS3 and Revo launch), the numbers will probably stabalize. Sometimes you get the impression these doom & gloom analysts don't really do their game industry [history] homework

NeoJedi
NeoJedi

Oh well, the trend continues I guess...

IceCold87
IceCold87

100% Agreement with MasterManiac772, the creativity has left the developers in the dust and they are trying sadly to catch it again. I refuse to hand over more than 20$ for some of the wretched material (UberSoldier) that has been released this year. Kudos to MasterManiac772!

mezonesxbox
mezonesxbox

WaiT!!! It will get better once everyone gets their hands on the XBOX 360!! Seriously i have 10 games and already bought about 20 accessories. WE NEED MORE CONTENT!! If we get more content the Xbox 360 will recover and be the KING!! Ps3 wont because of its price and low installed base will keep developers away for a long while. Not xbox 360 the only thing that has affected it from skyrocketing are the shortages, but since those are about over now it will be a party!!! 360:cheaper+ better= success PS3 :expensive=low sales+ low fan base= low recovery time= slow $$ for SNY M=r2 (squared) the formula for Ps3's demise(not really only how much $$ it will cost) LOL

nuttysack
nuttysack

I don't know what to blame, but I doublt it will be down 18%, dido to the gas prices causing trouble!

frankeyser
frankeyser

everyone is waiting for the next generation to really start into a run not its current limp.

MasterManiac772
MasterManiac772

Baseball games. Now that's pretty funny. Anyway, this really is a disturbing trend - I mean, setting aside the numbers, it's obvious that the industry (I loathe calling it that, but for lack of a better word...) is in some serious trouble. Why? Simple: creativity and originality are quickly shunted out in favor of marketability and mass-market appeal. Seriously, I defy any one of you to name, say, ten games that you're truly excited about. And I don't mean "interested," I mean excited, as in the jump-on-the-chance-to-fork over-fifty-bucks (or sixty...) kind of excited. If the industry can't pump something out that people are genuinely interested in, you're going to see more of this as gaming slowly dies. The good Mr. Thompson shouldn't be so worried - as long as developers keep on shoving these GTA has-beens down our throats, there won't be a games industry left.

Game13a13y
Game13a13y

i'd blame the gas prices, damnit.

DrakeWindwalker
DrakeWindwalker

Umm... the gaming market isn't like gambling or something. Sales don't go down because poeple are stoping to play them but because there isn't much good to buy...

psychic_zebra
psychic_zebra

"The lack of new Baseball games? I know people buy them, but thats just stupid... A lack of Baseball games is causing the industry grief?" At first, I thought so too. But then I remembered that baseball season started very recently. So, as MLB gets underway, people want baseball games to get in on the action as well.

ghsacidman
ghsacidman

These predictions are so dumb.... And to blame it on baseball games..... People actually buy baseball games? The industry is not going down at all. Why is it that everyone said "Last year the industry went down drastically" yet there were more people buying and playing games? We have games with populations in the millions (World of Warcraft). With 7 million people playing a single game... I'd say every so called analyst is no more an expert on the video game industry then Popeye the sailor man.

Yagami-Iori
Yagami-Iori

Umm... we are at of a generation of gaming systems with developers focusing their time & efforts on the next one with consumers also saving for the next gen, which will truly hit by year's end. Are analyst completely blind to the fact that this is the nature of the video game market?

ExcAREentric
ExcAREentric

Really quite funny, i honeslty don't believe these predictions anymore. Does anyone? I mean honestly they change every month.. The lack of new Baseball games? I know people buy them, but thats just stupid... A lack of Baseball games is causing the industry grief?

xmyles104212
xmyles104212

Less people are buying games. Less people are going to the theatre. Less people are watching tv. Notice the trend??