August US game sales slide 'shocking'

Wedbush's Michael Pachter stunned by 14 percent dip in software revenue; Pacific Crest's Evan Wilson calls September the best chance for industry growth through Q1 2011.


Earlier this week, analysts Michael Pachter and Evan Wilson were split with their expectations for the game industry's August sales figures. Wedbush's Pachter projected that US retail software sales would be down a mild 3 percent, with Pacific Crest's Wilson predicting a more drastic 18 percent decline. The industry-tracking NPD Group released its August sales data yesterday, with a 14 percent software drop more in keeping with Wilson's grim assessment.

Mafia II didn't blow up at retail quite the way Take-Two had hoped.
Mafia II didn't blow up at retail quite the way Take-Two had hoped.

The two analysts reacted to the numbers in separate investors' notes this morning, with Pachter saying the results were "in a word, shocking." Pachter blamed the numbers on poor sales of Wii and DS games and slow starts for Mafia II and Kane and Lynch 2, the latter of which had a performance he dubbed "incredibly weak" after it failed to make the top 10 chart. Wilson focused on tough comparisons to the release slate of August 2009, saying Mafia II sold fewer than half as many copies as Batman: Arkham Asylum, and there was nothing to replace the sales Wii Sports Resort put up in its first full month on shelves.

The gaming hardware market was also gloomy, with Wilson noting that the Wii sold fewer systems last month than at any point since its launch. Pachter put the blame on the portable market, noting that PSP and DS system sales were down a combined 39 percent year-over-year.

"We believe that the iPod Touch is beginning to cannibalize dedicated game handheld hardware sales, and expect weakness in handheld hardware to persist until the introduction of the Nintendo 3DS, likely early next year," Pachter told investors.

Much like they did with their August predictions, Pachter and Wilson are taking opposing views as to whether the industry's glass is half full or half empty for the coming months.

"We believe September will mark the beginning of a sustainable rebound in software sales, as the game lineup in October (Medal of Honor, Fallout New Vegas, and Fable 3) and November (Call of Duty: Black Ops) is strong," Pachter said.

While Wilson acknowledged that Halo: Reach, the launch of the PlayStation Move, and DSi price cuts could push September sales into positive territory, he was less sure of the "sustainable" tag.

"September is the best opportunity for growth since May, and going forward including the holiday season and Q1 2011," Wilson said.

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