US game software sales to decline 5% in 2009 - Analyst

Wedbush Morgan's Michael Pachter revises projections downward on declining Wii sales, but predicts double-digit recovery in 2010.

Even after the economy went south last year, gaming analysts like Wedbush Morgan Securities' Michael Pachter remained optimistic, saying the "recession resistant" industry would see 2009's full-year game sales hit record highs. By mid-2009, Pachter--like some of his colleagues--had toned down his "double-digit" software sales growth prediction to a more modest 5 percent.

Pachter's revision was attributed partly to lowered expectations for Wii hardware and software sales.

But with the year drawing to a close and sales continuing to underwhelm, the analyst has soured on the idea of full-year growth for software entirely. Pachter released a note to investors today warning that he now expects total 2009 game software sales at US retailers to decline 5 percent from 2008's level.

"Through September, U.S. video game software sales are down 12 percent compared with last year," Pachter wrote in a note to investors, "and although we expect a rebound over the final three months of the year, it is clear that annual sales will be down…The biggest contributor to our lower forecast is a downward revision to our Wii hardware and software sales expectations. While it is likely that Wii sales will rebound as a result of the recent price reduction, we think it is prudent to forecast conservatively."

Despite the gloomier near-term projection, Pachter reiterated his faith in the industry's longer-term prospects.

"In our view, the decline in 2009 occurred as consumers experienced 'console fatigue' in the middle part of the year, and we think that the recent hardware price cuts and a better release slate will drive double-digit growth in 2010," Pachter said, adding, "The combination of a solid release schedule and easy comparisons (March through August software sales averaged down 21 percent), leave us quite optimistic that the industry will record double-digit sales growth each of the first eight months in 2010." (Emphasis in original.)

72 Comments

  • residentzombie2

    Posted Nov 2, 2009 11:45 am PT

    No retailer is 'recession proof.' When people are worried about losing their jobs or don't have a job, 0% of their income will go towards purchasing video games. The Wii should not be any inticator to how well developers and publishers will do. People who buy the Wii (are for the most part) casual gamers and don't buy much software for their hardware. Plus all the casual gamers have had 2 full years to buy the Wii. The Wii's big run is over and it will fall in unit sales more than the PS3 and the 360 over the next few years. Trust me people, America is not going to be recovering anytime soon. Other nations may recover soon, but America will continue to lag and we will experience massive inflation soon due to all the quantitative easing practices the private for profit Federal Reserve central bank did. CIT bankruptcy may be the straw. Prepare for hard financial times soon, very soon.

  • buckybuckster

    Posted Nov 1, 2009 12:14 pm PT

    In this economy, it could have been worse, so a single digit loss is a keeper. Both the 360 and PS3 have an excellent slate of titles that will arrive before Christmas, as well into the 1st QTR. of 2010. While the Wii's only major player to close out 2009 seems to be New Super Mario Bros. In order for the Wii to stop its current slide, that sort of reliance on one title will have to change by the time Holiday '10 comes around.

  • nsibbs

    Posted Oct 31, 2009 11:55 am PT

    Ya... Games will always run this planet :/ we make billions for our contrys so this is false haha

  • THE_Crowe

    Posted Oct 31, 2009 11:08 am PT

    i dont think people will ever stop buying games becausethey are fun! And with people with no jobs, what else are they going to do?

    the wii sales are declining becuz people are realizing that the wii isnt as fun as an xbox 360 or ps3
    (im going to buy one still deciding on which, leaning towards 360)

  • LosDaddie

    Posted Oct 29, 2009 12:27 pm PT

    The industry is still very strong and lucrative.

    An industry does not need growth every year to be healthy.

  • blackace

    Posted Oct 29, 2009 8:49 am PT

    Modern Warfare 2 is going to sell 2 million on day one. Until this recession ends, companies stop exporting our jobs and people finally find work, sales are going to be down across the board. i don't expect this holiday to be a fruitful one, that's for sure.

  • joynul

    Posted Oct 29, 2009 8:01 am PT

    oh well ther is only so many games people can buy

  • SkidRow18

    Posted Oct 29, 2009 7:55 am PT

    Pachter strikes again....

  • gangster480

    Posted Oct 29, 2009 7:37 am PT

    modern warfare 2 will correct this.

  • SchumiF1

    Posted Oct 29, 2009 7:18 am PT

    Wow, this is some "good" news, considering almost every other industry is really up the creek.

  • Talus057

    Posted Oct 29, 2009 7:12 am PT

    Most of the games I would like to buy never leave Japan. That and their expectations are way off. They have this whole demographic in their head that just doesn't exist outside of their imagination. They cater to their group of gamers and then scratch their heads at why nobody else is buying their games. Remember the story of how Final Fantasy was first created? That guy who was trying to prove something about his buddies underestimations? He was right, and he still is today. I find it a bit more than somewhat absurd tbqh.
    Stop being so cliquey. Stop marketing strictly to children. Stop distancing yourselves from entire generations. Stop trying to change favorites with new ideas that nobody likes or wants.
    I mean I could keep going, maybe they should just hire me.

    ....Nah.

  • xbox360mslover

    Posted Oct 29, 2009 5:11 am PT

    cool

  • danjammer69

    Posted Oct 28, 2009 11:24 pm PT

    5% drop is not nearly as bad a hit as other industries are experiencing.

    It is great to see how us gamers have such an impact on the US and global economy. We actually matter, who would have thunk it?!

  • -Canas-

    Posted Oct 28, 2009 10:36 pm PT

    5% drop is actually like, pretty good consideringggggg. uhhh...

    well you know

  • ColonelX24

    Posted Oct 28, 2009 9:51 pm PT

    I am not surprised, I haven't bought many games this year, maybe that's cause I had a Wii...

  • monson21502

    Posted Oct 28, 2009 9:47 pm PT

    they need to put Mr pachter in video games. like in the next mario when you fall into a hole. he will be at the bottom of it. telling us to jumo over it next time. thats how stupid he sounds on these threads lol

  • Sweendrix

    Posted Oct 28, 2009 9:11 pm PT

    Does this analyst realize that Modern Warfare 2 is coming out soon?

  • HerbalVideogame

    Posted Oct 28, 2009 8:49 pm PT

    Bargain bins anyone? Anyone? Bargain bins? Frrryyyy? Something something economics. D-O-O Economics. Voo-Doo Economics.

  • sharpshooter188

    Posted Oct 28, 2009 7:30 pm PT

    I got fired late last year. only reason i bought FEAR 2. RE5, and SF4 was because i had a tax refund. No job = No cash to buy fun stuff. Can i have the little violin now plz?

  • Tauu

    Posted Oct 28, 2009 6:35 pm PT

    Don't worry Michael Pachter, you may have been wrong this time but you are still the man!! Yeeeaaahh!!!

  • Polaris_x1A4

    Posted Oct 28, 2009 6:20 pm PT

    Considering the Wii has hardly any worthy titles...

  • hatieshorrer

    Posted Oct 28, 2009 6:17 pm PT

    The current generation consoles started with a huge bang with almost every major series having a release in 2006-2008 (Yes I know that final fantasy hasnt had a release for the primary series but I said ALMOST) Now it feels like there isnt much to look forward to. Im not particularly interested in the nth version of Halo3.

  • Waldkrieger

    Posted Oct 28, 2009 6:06 pm PT

    I'm curious why Gamespot wastes so much time with these analyst posts. Who cares!! They have no effect on anything and only waste money and time. I'll keep buying games just the same.

  • green_dominator

    Posted Oct 28, 2009 5:42 pm PT

    No crap sales are gonna be down this year, look at all the games that are releasing next year.....
    There is many good games coming up on all systems by years end but the best is coming next year, Modern Warfare 2 is going to be the one to slay sales figures......

    I still think these analysts need to have a nice tall glass of "Shut The Hell Up", Everything they report is worse than a weatherman's report.......

  • Paul_GameFury

    Posted Oct 28, 2009 4:03 pm PT

    As soon as I saw the word 'Analyst' in the title, I realized I could competely disregard the rest of the article's information.

  • Sepewrath

    Posted Oct 28, 2009 3:52 pm PT

    @monson21502

    Its probably because they have big sale franchises due out next year like Galaxy 2 and Other M which will actually appeal to Japanese gamers more than the Prime series. There is also the possibilty of Zelda saying the Wii, alongside 3rd party software like Monster Hunter Tri, NMH2, RS2 etc its not hard to expect Nintendo to see big sales next year. The same with things like FFXIII coming out the PS3 and 360, GOW 3, Bioshock 2, basically a number of the delayed games form this year coupled with next years on time offerings will make it a big year software wise in sales.

    Anyway it must be fun to be an analyst, you can make any guess you want, and when your clearly wrong, come back and say what is now the obvious outcome. But because sales are keep dropping, I expect to see some great Black Friday weekend deals, to try and move merchandise.

  • clabaursaurus

    Posted Oct 28, 2009 3:47 pm PT

    Honestly i cant believe this guy gets paid to do this for a living! This is what i imagine his thought process was like: "Hmm, half of the games people really wanted to play in q4 09 were delayed- that means lesser sales this year, higher than normal sales in the first quarter of 2010" Wow that must have taken weeks to come up with logic like that.......

  • moeman636

    Posted Oct 28, 2009 3:46 pm PT

    5% isn't too bad. I was expecting a double digit decline. I think the game industry should take this as a gift if this prediction is true. Especially since other industries, I am sure, are way worse off.

  • SopranosFan

    Posted Oct 28, 2009 3:33 pm PT

    I believe the last full priced retail game I bought was Resident Evil 5 and then Madden 10. I bought about 4-5 around Christmas of last year. I can't remember many games since Christmas of last year that I just had to have, I wouldn't even classify Madden 10 as a must have I just like football. I believe the release for the spring this year is pretty solid with a couple of must haves for me like God of War 3, Bioshock 2, and Final Fantasy 13. I am also looking forward to with a little bit of caution Red Dead Redemption, Alan Wake, Tom Clancy's Splinter Cell and Singularity. And all those games are supposed to come out between Christmas and summer.

  • monson21502

    Posted Oct 28, 2009 3:10 pm PT

    does this guy know anything about gaming? how can he say that wii will be better off next year??? when both 360 and ps3 will motion controls next year for just a few bucks more then a wii. im not the smartest guy in the world. but even i see nintendo has their work cut out for them next year.

  • sprinter6

    Posted Oct 28, 2009 2:27 pm PT

    I don't understand the point of this, do the not realize that next month is November? Look at how many huge titles are coming out next month? Modern Warfare 2 anyone? Maybe Wii sales will be suffering...

  • enzyme36

    Posted Oct 28, 2009 2:20 pm PT

    and next year is FF13 and SSF4... id imagine next yrs contribution will be similar lol

  • enzyme36

    Posted Oct 28, 2009 2:19 pm PT

    Street Fighter 4... Demons Souls.... 2 games basically can carry me through this year.... therefore I know my contribution to the industry declined this year

  • RLJSlick

    Posted Oct 28, 2009 2:16 pm PT

    I agree with Silentme, this hasn't been a good year for games, but the big issue is that the price of games are just too high. It's hard it justify $60 for a game. I went from buy a game once a month or so to buying a game only when something really good comes out. I think I bought maybe 6 or 7 games this year. Game development is expensive but if the game is just too expensive to buy, fans just won't buy it. It's that simple.

  • DJKrayz_basic

    Posted Oct 28, 2009 2:15 pm PT

    doesnt matter.. still been a good year for gamers... lots of good games came out this year... im sure everyone can agree with that...

  • bloodyrooster

    Posted Oct 28, 2009 2:03 pm PT

    After having a consistency of being wrong all the time, you think gamespot would stop posting these.

  • Darkmoone1

    Posted Oct 28, 2009 1:58 pm PT

    THIS guy!?! Really GS, you need to stop giving this guy front pages because I don't think anyone cares what he says anymore.

  • Silentme

    Posted Oct 28, 2009 1:51 pm PT

    Its not been as good of a year for games, meanign they havent been as good up till now this year. Good games coming soon though so im nto to sure how much will be sold or how much has been accounted for already from presales. Im not an anylist though so I cant say for sure but better games= better sales and when game slike End war that look great and then end up not being so great are what we have to deal with, we rent and dont buy....

  • mariostar0001

    Posted Oct 28, 2009 1:33 pm PT

    Patcher again? A name I actually have heard enough to remember is a name repeated too much. Video games will likely not fall, the best titles are appearing at the years end. They've done it for years, it hasn't failed. And the Wii isn't the only system, PS3 and XBOX 360 actually sell too. This guy better get real.

  • Joker328

    Posted Oct 28, 2009 1:32 pm PT

    I agree with ZedX-14Pilot. Gamespot loves this guy, but he was way off on the numbers this year. He was predicting huge industry growth and the NPD numbers that just came out said that growth this quarter was minimal and sales are way down for the year. Why should we believe him now when he says next year will see double-digit growth? What is so great about next year's games compared to this year? Guitar Hero 5 and Beatles Rock Band were supposed to be huge, but weren't. If you can't grow with MW2 and AC2 coming out for the holidays, what will be so much better in 2010?

  • shawise

    Posted Oct 28, 2009 1:30 pm PT

    @Dr-venkman
    yeah i'll agree with you on the expected decline you can only sale a single person so many consoles, They will have to bring better software to the forefront, I don't want to start labeling people but these so called casual gamers that nintendo's been very successful at attracting may buy what 2-3 maybe four games a year aren't going to cut it they'll have to bring those so called hard core gamers into the fold who may buy 6 to 7 games a year "these are estimates" in order to remain competitive with the other systems. For the record i'm not a so called hater I intend on purchasing myself a Wii system this year hopefully and i say hopefully because i'm in a position where as i can wait for the right bundle or color to surface. I've got to admit that black Wii is slick and it will match nicely with the other two. On a slightly different note they need to cut it out with all those controller attachments....what is it 75 - 90 dollars for a complete controller BAHHH!

  • nintendoboy16

    Posted Oct 28, 2009 1:27 pm PT

    Michael Pachter never quits, does he?

  • janderdarkmoon

    Posted Oct 28, 2009 1:21 pm PT

    Until they start adding in download-only titles into these "calculations" I wouldn't give them much credence. With games like Braid, Castle Crashers, Zombie Pack add-ons, the steam network, etc., there are just too many game purchases not included in this report.

  • Ultramarinus

    Posted Oct 28, 2009 1:21 pm PT

    Well, the year was pretty dry except for a very limited number of titles until now. Considering that the industry can crank out tons of uninspired sequels and clones of stuff from 90's more than ever, they shouldn't blame the economic crisis.

  • TevoxZi

    Posted Oct 28, 2009 1:21 pm PT

    NAWAF005 wrote:

    maybe a GameSphere

    @NAWAF005
    Really reminded me of South Park.

  • NAWAF005

    Posted Oct 28, 2009 1:17 pm PT

    Nintendo please release a new console pleeeeeeeeeeease !
    maybe a GameSphere

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