March another down month for games?

Analyst predicts a slide of 18 percent from March of 2005; actual NPD numbers expected to be released next week.


Once again, it's time to look at the latest US monthly sales numbers, and once again, investors are being told to brace for steep declines. NPD Funworld isn't expected to release its March 2006 sales figures until next week, but Wedbush Morgan Securities analyst Michael Pachter today provided his own industry estimates, along with some insight into what those numbers would mean, if accurate.

Pachter is predicting that March's US game sales will tally up to $445 million, a dropoff of 18 percent from a year ago. It would be the seventh straight month of year-over-year declines for the industry, generally attributed to dramatically slowing sales on software for current-generation systems that is not yet being made up for by sales for the next-generation platforms (including the DS and PSP).

"It appears that 2006 is following a similar pattern to 2000, when the last console transition began," Pachter told investors. "Consumers have slowed purchases of current generation console software while waiting for the opportunity to purchase an incredible next generation console, the Xbox 360, and its associated software."

Pachter expects Kingdom Hearts II, The Elder Scrolls IV: Oblivion, and The Godfather to lead sales for the month, but doesn't expect any of them to touch the $26 million in sales Gran Turismo 4 racked up last March. The $46 million in PSP software sales that accompanied that system's launch last year also made March comparisons difficult.

With Xbox 360 shortages easing, Pachter expects April to be better than March, but doesn't believe sales of next-generation games will be able to offset the rapidly eroding current-gen sales until Sony and Nintendo jump in with their PlayStation 3 and Revolution consoles, respectively.

"We think that the transition has only just begun, and believe that the worst effects of the transition lie ahead," Pachter said. "Although we expect a brief respite from double-digit sales declines in April, when Microsoft is likely to double the supply of Xbox 360 hardware units, we expect a return to software sales declines over the next several months."

Pachter also reiterated his projection that overall US game sales for the year would be down about 3 percent.

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