Awful April game sales baffle analysts

Webush's Michael Pachter wonders if "something is terribly wrong"; EEDAR's Jesse Divnich optimistic, but says slump puts incredible pressure on E3 Natal, Move, 3DS showings.


Tom Clancy's Splinter Cell: Conviction
Milo (working title)
Start the Party!

Yesterday the industry-tracking NPD Group released its sales figures for the month of April, showing that US retail gaming revenues tumbled 26 percent year-over-year for the month, far underperforming even the most pessimistic of Wall Street predictions. The response from analysts was swift and tinted with more urgency than usual.

With April sales slipping, a strong E3 showing for new hardware is even more important than usual.
With April sales slipping, a strong E3 showing for new hardware is even more important than usual.

In a note to investors, Wedbush's Michael Pachter called the results "baffling," adding they left him speechless. Undeterred, the analyst delved deeper into what the sales mean for the industry.

"It's easy to blame the lineup, which was quite light (Ubisoft’s Splinter Cell: Conviction was the only AAA title, and it was an Xbox 360 exclusive), but the results suggest something is terribly wrong," Pachter said.

He continued, "Unfortunately, we are at a loss to identify precisely what was wrong, given relatively robust sales for the three months prior, decent weather, an improving economy, and a deep catalog of recently released titles…As we cannot explain the reasons for the shortfall, we can only conclude that April was a fluke, with many core gamers enjoying recently purchased games and looking forward to new releases coming out in May."

Electronic Entertainment Design and Research's Jesse Divnich acknowledged the numbers could be described as depressing, but he emphasized "the future remains bright for the industry."

"However, this does put an extraordinary amount of pressure at this year's E3 event to demonstrate that these new technologies can rekindle excitement among mainstream and core consumers," Divnich said. "If these technologies fail to generate the excitement and anticipation needed for medium term sales performance improvements, this may accelerate the completion of this current hardware cycle."

For 2010, Divnich expects gaming software sales to be roughly equivalent to 2009, with hardware and accessory sales slipping 4 percent year-over-year. However, he said if Move, Natal, and Nintendo's 3DS don't show well at the Electronic Entertainment Expo, software sales for the year could slide into negative territory.

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