Online multiplayer driving sales decline

The legions of fans continuing the play the online segments of titles such as Modern Warfare 2, Bad Company 2, Gears of War 2, Halo 3 and FIFA 10 remains the main reason why the global games industry continues to suffer year-on-year sales declines, according to analyst Michael Pachter.

Furthermore, he thinks this decline will continue until publishers discover an effective way to source extra revenue from this continued change in gamer behaviour.

We still believe that the biggest driver of the sales declines over the last 18 months is online multiplayer functionality, with an estimated 25m people playing many titles for hours on end,” he told investors.

Based upon statements made by Microsoft earlier this year, it appears that millions of people are playing multiplayer games online for an average of 10 hours a week, making a serious dent in the time available to play other games.

We remain convinced that the popularity of online multiplayer gaming has caused a decline in overall packaged product sales, and we expect this decline to persist unless the publishers change the multiplayer model.”

And while some continue to doubt it, Pachter is adamant that publishers will soon begin offering optional premium online multiplayer additions to its titles.

This can, of course, take many forms, including doing nothing, adding premium services for a fee, or limiting the quantity of multiplayer content that is provided for free.

While we expect the publishers to continue to offer free multiplayer content that is similar in quality to what is offered today; we expect the publishers to channel their efforts on improvements to multiplayer by offering a premium subscription service, in the hopes of driving an ever- increasing number of customers to a pay service.

Once the publishers settle on a business model for monetizing multiplayer online game play, we expect investors to again favour the sector, and we expect to see multiples expand.”