Analyst Predicts Doom & Gloom for Holiday Retail Sales

| 8 Oct 2012 20:05

Analyst Michael Pachter believes that even the arrival of the Wii U won't be enough to restore declining game sales.

Winter is coming, and with it comes the holiday sales that will provide a much-anticipated boost to the economy. Unfortunately, analyst Michael Pachter is predicting that this year might not be as lucrative for the games industry as publishers are hoping. Thanks to a prolonged console generation, retail game sales have been slowly dropping across the board, and even the arrival of the Wii U may not be enough to fix the problem. Pachter believes that the only thing that could reverse the downward sales trend is a new console cycle, which won't really be into full swing until at least next year.

"We expect October - December to be relatively flat, and expect a return to negative territory again next year, at least until the launch of a next-generation console from Microsoft or Sony," Pachter said. "A new console cycle is likely to reverse the negative sales trends of the last several years, with next-generation consoles expected from each of the three manufacturers over the next 18 months. Nintendo will launch the Wii U on November 18, and, while neither Sony nor Microsoft has yet announced new hardware, we expect a PS4 no later than November 2013, and a next Xbox no later than March 2014."

It's not all bad news however. Pachter is also predicting that the new console generation, whenever it arrives, will be heralded with a massive library of new titles. "We believe that the publishers plan an unprecedented number of new games for launch in the first two years of the next generation, providing relief from the gamer fatigue we've seen over the last three years," he said. In other words, while game sales could be sparse this year, subsequent years will more than make up for it. Whether these games will be good enough to warrant the wait remains to be seen.

While a new generation wouldn't necessarily represent a technological leap forward, Pachter thinks it would benefit hardware and software sales in the long run. The new consoles may even provide an opportunity for publishers to finally respond to competition from mobile markets. "Competition from social and mobile games hurt packaged goods sales over the last three years," Pachter explained. "We expect the publishers to address the "problem" of free online multiplayer with evolving business models, adding increased opportunities to purchase virtual items, creating subscription-only serialized content, and adding premium subscription layers to the free offerings currently provided."

Source: Games Industry International

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