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US: September numbers show more decline

Ben Parfitt

The total value of the US games market hit $1.22bn in September, down from the $1.32bn seen in the same period the year before.

Hardware was the largest victim, with revenue down 19 per cent year-on-year at $383m. Console software was down six per cent at $614m while unit sales decreased seven per cent.

Numbers from Michael Pachter suggest that Wii console sales totalled 254k, an annual drop of 45 per cent. PS3 sales were down 37 per cent at 312k (though last September Sony cut the price of the console, meaning comparables would always be tough) while Xbox 360 sold 484k – a year-on-year gain of 37 per cent.

“We are beyond being surprised by lacklustre software sales. Monthly declines in year-over-year sales have become the norm, with declines in 16 of the last 19 months,” Wedbush Morgan’s Michael Pachter stated, before going on to question whether the market will ever recover to former levels.

“Of course, investors should be concerned about declines, and should question when, if ever, sales will rebound. We do not think that the declines are as much a function of the recession or of shifts in consumer behaviour as they are attributable to a renewed focus on HD gaming; in our view, the Wii’s malaise is most likely attributable to the rapid increase in household penetration of HD televisions, with new HDTV owners anxious to embark upon an HD gaming experience.”

“In our view, the era of standard definition gaming is rapidly coming to an end, and Nintendo may have missed the opportunity to revitalise its large installed base of consumers by offering them an HD version of the Wii before Sony and Microsoft encroach with motion control schemes of their own.”

However, it’s not all bad news for Nintendo.

“Nintendo is far from dead,” Pachter adds. “The company has phenomenal software, and continues to enjoy a price advantage over Sony and Microsoft. Its 3DS, scheduled for release in the spring, is likely to remain sold out for at least a year (and likely for two), and we expect the device to reinvigorate the market and to drive significant software sales growth.

“In 2011, we expect another year of very easy comparisons, and believe that even if the long-term growth trend for the industry is a modest 3%, we will see some growth next year.”

In addition, Pachter doesn’t envisage an uplift in the handheld market until the 3DS arrives next year: “We believe the iPod Touch is cannibalizing dedicated game handheld hardware sales, and expect weakness in handhelds to persist until the 2011 introduction of the Nintendo 3DS.”

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Tags: Nintendo , decline , video games , market , hd , wii , us , american

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