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[Nirolak]

It seems that Michael Pachter has weighed in with some theories on the recent decline in retail videogame sales.

Analyst says May was “stacked in favour of dramatic growth”; Nintendo decline is “remarkable”; Digital ascendancy is upon us

“We expect investors to remain spooked by the May results, as they are beginning to reinforce the notion that the video game industry is in a state of persistent secular decline.”

That’s the somewhat startling assessment of famed games analyst Michael Pachter in light of further declines in the US market in both April and May.

“The May line-up was indeed stacked in favour of dramatic growth, but despite May’s easy percentage and dollar comparisons and long-anticipated debuts for a handful of games, it became clear that several of May’s games performed well below expectations as the month progressed,” he stated in his official reaction.

In particular, Pachter singled out Nintendo for the fact that software sales continue to dwindle despite its growing install base.

“Wii software sales were down 29 per cent year-over-year and DS software sales were down 13 per cent, while PS3 software sales were up 58 per cent and Xbox 360 software sales were up 29 per cent,” he added.

“We think this is remarkable, given growth in the Wii hardware installed base of 44 per cent and growth in the DS installed base of 33 per cent over the last 12 months. In our view, this indicates that Nintendo’s customers either are not finding enough software to satisfy their needs, or need less software than the typical Sony or Microsoft customer.”

That’s not to say that Nintendo was the only offender. Pachter also laments the fact that a number of key titles – Alan Wake, Prince of Persia, Blur, Shrek, Lost Planet 2, Iron Man 2 and Skate 3 all sold fewer than 200,000 units.

The conclusion Pachter draws from the continued slump in the US market is a dark one. He thinks that the games industry isn’t just in the downward part of the current cycle – he reckons it’s facing a permanent decline.

“We expect investors to remain spooked by the May results, as they are beginning to reinforce the notion that the video game industry is in a state of persistent secular decline,” he warns. “We think it is inevitable that there will be a shift in delivery of video games away from packaged products and toward digital downloads, but we don’t expect the shift to manifest itself in a material way in 2010.

“Rather, we believe that the publishers and developers of games have created more robust multiplayer content in recent years that has resulted in core gamers playing the same games for much longer, on average, than they did in the past, leading to lower sales of new games.

“We expect the publishers to monetise the value created by online play, led by Activision. We continue to expect Activision to find a way to monetize the 1.75bn hours of Call of Duty Modern Warfare 2 online play on the Xbox 360 in the first five months following the game’s release.

“We expect investors to stay on the sidelines until they see evidence of a sustainable rebound in sales. The modest rebound in May is likely to be insufficient to convince anyone of sustainability, and we do not expect share prices to begin to rebound until later this summer.

“The central thesis behind investment malaise is that the packaged goods business is in a state of decline, and that packaged products will continue to compete with alternative interactive entertainment experiences such as Facebook games and iPhone games.”

Source: http://www.mcvuk.com/news/39854/Pachter-Industry-in-permanent-decline

I was curious what people thought of his multiplayer harming retail sales theory in particular. It does sound surprisingly reasonable to me.

 

[Vinci]

Soothsayer

 

[Beer Monkey]

“We expect the publishers to monetise the value created by online play, led by Activision. We continue to expect Activision to find a way to monetize the 1.75bn hours of Call of Duty Modern Warfare 2 online play on the Xbox 360 in the first five months following the game’s release.

I expect to stop buying CoD/MW games.

 

[levious]

not a bad point, I've played Madden far more than in the past. Also I'm still playing Uncharted 2 and Red Dead well past completing the single player.

But yes, like beer monkey, I won't pay extra for it.

 

[stuminus3]

Uh oh. Better get that Wii HD out, Nintendo! It's your only hope! :lol

 

[JumpJeff84]

Can't speak to multiplayer myself, since I'm really only a single-player guy. I will say that since buying Red Dead Redemption on release date the only thing I've purchased gaming-wise is Joe Danger on PSN. Waiting until I finish Red Dead before I buy anything else. I know that if I don't finish it now, I might not go back to it.

 

[Aeris130]

Multiplayer needed for replayability. But multiplayer prolongs replayability.

 

["God's Beard!"]

Super Street Fightah Fo, son.

 

[Plinko]

This may be why we're seeing Nintendo pull out the stops bringing back popular franchises this year.

 

[ahoyhoy]

Multiplayer needed for replayability. But multiplayer prolongs replayability.

MICROTRANSACTIONS

YEA BOI!

 

[Rew]

Monetizing online play will yes, be another stream of revenue, but it will not stop the decline, but in fact it will just further compound the problem this industry is facing in the long run.

This industry needs a fundamental attitude change that starts treating the consumer with some respect or it will continue to decline. Want to see an increase in sales, start pricing games appropriately. Not every game needs to come out at $50 or $60. Create smaller games with smaller budgets, and price them accordingly. Stop all the microtransaction bullshit. Create DLC that enhances a game and makes the user want to hold onto your product. Add value, don't go for a quick cash grab.

There are a ton of things the industry could do to help itself. Finding more ways to gouge the consumer will not fix their problems though.

 

[Mr. B Natural]

Seems logical enough.

For once.

 

[arstal]

Monetizing online play will yes, be another stream of revenue, but it will not stop the decline, but in fact it will just further compound the problem this industry is facing in the long run.

This industry needs a fundamental attitude change that starts treating the consumer with some respect or it will continue to decline. Want to see an increase in sales, start pricing games appropriately. Not every game needs to come out at $50 or $60. Create smaller games with smaller budgets, and price them accordingly. Stop all the microtransaction bullshit. Create DLC that enhances a game and makes the user want to hold onto your product. Add value, don't go for a quick cash grab.

There are a ton of things the industry could do to help itself. Finding more ways to gouge the consumer will not fix their problems though.

The companies that are already doing this will be the ones that profit.

Fact is, when you increase the price of games , be it thru retail or DLC, income effect states people will buy fewer games- which means they'll play them longer.

Especially in a soft economy. This is just basic economics here.

 

[Dedication Through Light]

Its in a state of secular decline. Theres just not enough good games to buy anymore on the Wii, lol.

I will say that its massively addicting to lose just how much money we spend on DLC and on digital games, lol.

 

[Nirolak]

Monetizing online play will yes, be another stream of revenue, but it will not stop the decline, but in fact it will just further compound the problem this industry is facing in the long run.

This industry needs a fundamental attitude change that starts treating the consumer with some respect or it will continue to decline. Want to see an increase in sales, start pricing games appropriately. Not every game needs to come out at $50 or $60. Create smaller games with smaller budgets, and price them accordingly. Stop all the microtransaction bullshit. Create DLC that enhances a game and makes the user want to hold onto your product. Add value, don't go for a quick cash grab.

There are a ton of things the industry could do to help itself. Finding more ways to gouge the consumer will not fix their problems though.

Technically when you take all the stuff like Facebook, iPhone, MMO subscriptions, and free2play titles into account, the industry is actually still experiencing healthy growth.

The only thing that's really in turmoil right now is retail game sales for titles that aren't the absolute best of the best.

Of course, since that's what gets most of the industry's focus, it is an especially thorny issue.

 

[Darklord]

Sales are declining because originality and chance taking has declined. Developers are just copying other developers. How many more Modern Warfare games do we need? Or sci-fi FPS'ers? Or Zombie games? What will we be playing in 10 years after every war, past, present and future has been milked to death?

It's also because the sequels are coming out too fast. Normally it would take 3-4 years, then 2 years now it's becoming as short as 1 year or even less! When you flood the market, you start to hurt it. The sequels are getting piss poor innovation too. Fucking Halo, CoD and Gears are all the same. Oh wow they added in a new mode and a couple of weapons and a new enemies. Who gives a shit? Sequels should be treated like Half-life, Elder Scrolls or Doom and not pumping them out every year.
Rather than doing that though companies are just throwing shit at the console hopng something will stick. "OMG MOTION CONTROL REVOLUTION 3D HEAD TRACKING FOR ONLY $200 + $4000 TV WOOOW". I still think gaming will end up in a rut similar to the 1983 crash where people just stopped buying games and it will take a huge generation leap to get it going again.

 

[NEOPARADIGM]

Always in the back of my mind ... the idea that the better games get, the less reason gamers have to buy more games. The shooter and sports genres in particular come to mind.

Honestly, when games like "Madden 16" and "Killzone 4" drop, how much better can these games actually get? In the hypothetical circumstance where a game truly achieved end-all-be-all status for its genre, pay to play would indeed become a necessity.

 

[ChryZ]

SSF4 is pretty much cock blocking me from buying new shit.

 

[Shahadan]

Its in a state of secular decline. Theres just not enough good games to buy anymore on the Wii, lol.

I will say that its massively addicting to lose just how much money we spend on DLC and on digital games, lol.

Could you please fucking stop saying lol at least in one of your posts?

 

[Vinci]

Always in the back of my mind ... the idea that the better games get, the less reason gamers have to buy more games. The shooter and sports genres in particular come to mind.

Honestly, when games like "Madden 16" and "Killzone 4" drop, how much better can these games actually get? In the hypothetical circumstance where a game truly achieved end-all-be-all status for its genre, pay to play would indeed become a necessity.

No game will ever the end-all-be-all of its genre. Not ever. Technology progresses, new interfaces arise, standards change.

EDIT: Okay, well, maybe Tetris - but that's a very unique case.

 

[REV 09]

I don't think the industry is declining as much as New release retail sales are declining. In addition, the industry doesn't yet have a way to track the sales of digital downloads, and NPD only covers a portion of retail sales.

MP doesn't keep me from buying additional titles. In fact, i usually only buy titles with substantial replayability, part of which is multiplayer....or Alan Wake's future episodes.

I would like for CoD to start a subscription service so that other titles will get more playtime, such as BFBC2 and Gears.

 

[Nirolak]

EDIT: Okay, well, maybe Tetris - but that's a very unique case.

The guy who made Tetris is actually still working on a new version of it: http://kotaku.com/5575060/multiplayer-tetris-is-ten-years-in-the-making-and-counting

 

[RJT]

And this, my friends, is one of the reasons for PC gaming decline. People were playing Starcraft, Warcraft 3, Counterstrike, Quake 3, UT, etc., for years and weren't buying new games.

 

[NEOPARADIGM]

No game will ever the end-all-be-all of its genre. Not ever. Technology progresses, new interfaces arise, standards change.

EDIT: Okay, well, maybe Tetris - but that's a very unique case.

I just mean the idea that gamers buy, say, six shooters per year, and buy the latest sports game every year, at some point that one shooter will hit the proverbial ceiling and be "all I need," and I think the same applies to sports games. A lot of guys I know have already stopped buying sports games annually because they're not dissatisfied with the game from the previous year, etc.

I certainly hear what you're saying - you're obviously correct - just making the point that as games get better, the less need for a huge library, which translates to fewer sales overall.

 

[Dedication Through Light]

And this, my friends, is one of the reasons for PC gaming decline. People were playing Starcraft, Warcraft 3, Counterstrike, Quake 3, UT, etc., for years and weren't buying new games.

I thought it would be on the increase in recent times thanks in part to steam and all those daily deals they have on there, lol. It has so many deals that I cant imagine people dont sit there and just click away to buy the stuff, lol. I know Ive come close to falling victim to it.

 

[Nirolak]

I thought it would be on the increase in recent times thanks in part to steam and all those daily deals they have on there, lol. It has so many deals that I cant imagine people dont sit there and just click away to buy the stuff, lol. I know Ive come close to falling victim to it.

It is on the increase, but that has almost everything to do with MMOs, Facebook, and free2play games and very little to with Steam.

Steam mostly replaced the retail environment for PC games as opposed to adding onto it. The good note though is that publishers get better margins with Steam and consumers do end up with better prices assuming they live in North America.

 

[avatar299]

Monetizing online play will yes, be another stream of revenue, but it will not stop the decline, but in fact it will just further compound the problem this industry is facing in the long run.

This industry needs a fundamental attitude change that starts treating the consumer with some respect or it will continue to decline. Want to see an increase in sales, start pricing games appropriately. Not every game needs to come out at $50 or $60. Create smaller games with smaller budgets, and price them accordingly. Stop all the microtransaction bullshit. Create DLC that enhances a game and makes the user want to hold onto your product. Add value, don't go for a quick cash grab.

There are a ton of things the industry could do to help itself. Finding more ways to gouge the consumer will not fix their problems though.

Tons of publishers do create smaller games with lower prices and create DLC people want. It's not their fault if you refuse to see that.

 

[Draft]

And this, my friends, is one of the reasons for PC gaming decline. People were playing Starcraft, Warcraft 3, Counterstrike, Quake 3, UT, etc., for years and weren't buying new games.

It's also the reason PC gaming is thriving with smaller games, online only games and free to play but supported by micro transaction games while the consoles die a slow, agonizing death in the aisles of Gamestop.

 

[Boney]

Its in a state of secular decline. Theres just not enough good games to buy anymore on the Wii, lol.

I will say that its massively addicting to lose just how much money we spend on DLC and on digital games, lol.

lolololol

 

[Vinci]

I just mean the idea that gamers buy, say, six shooters per year, and buy the latest sports game every year, at some point that one shooter will hit the proverbial ceiling and be "all I need," and I think the same applies to sports games. A lot of guys I know have already stopped buying sports games annually because they're not dissatisfied with the game from the previous year, etc.

I think you're underestimating exactly how short the attention span is for the average gamer or consumer.

I certainly hear what you're saying - you're obviously correct - just making the point that as games get better, the less need for a huge library, which translates to fewer sales overall.

The problem isn't so much that we're going to hit some quality ceiling, it's that we have too much product coming out for the exact same audience and there's only a finite amount of money that audience has at its disposal. This is why the used market is so big, which is why retail sales on products directed at that audience dive off a cliff after the first month. They simply are being drowned.

 

[Dedication Through Light]

It is on the increase, but that has almost everything to do with MMOs, Facebook, and free2play games and very little to with Steam.

Steam mostly replaced the retail environment for PC games as opposed to adding onto it. The good note though is that publishers get better margins with Steam and consumers do end up with better prices assuming they live in North America.

Oh, well one thing though, I never understood why EA didnt use STEAM, though I guess it explains why the Sims is always the best selling PC game of the year (thats not an MMO). lol I certainly would buy it if it were on steam

 

[RJT]

I thought it would be on the increase in recent times thanks in part to steam and all those daily deals they have on there, lol. It has so many deals that I cant imagine people dont sit there and just click away to buy the stuff, lol. I know Ive come close to falling victim to it.

I'm talking about the shift to consoles that happened during the PS2 era. Note that the games I mentioned are all released before 2005.

It's also the reason PC gaming is thriving with smaller games, online only games and free to play but supported by micro transaction games while the consoles die a slow, agonizing death in the aisles of Gamestop.

No complaining there, I love me some PC gaming

 

[Genesis Knight]

Personally I didn't buy any of that stuff because I know my time and wallet are going to be raped in the fall.

 

[supermackem]

They already charge for cod online its called xbox live gold. Noway will this fly with two subs for a big chunk of the cod fanbase as they are younger kids.

 

[Evlar]

If there's anything that will murder new game sales it's "monetizing multiplayer". I'm not predicting a peasants revolt: people will still buy blockbuster games like CoD in virtually the same numbers if the only change is pay-to-play multiplayer (dependent on the price, of course).

No, the problem is that introducing a pay-to-play scheme for popular games will extend the life of the original box even further, as players' attachments to a game progresses from social connections and the collection of virtual goods, which ties players to free-to-play games, to literal monetary investments. It's the same reason the MMO market stabilizes at a handful of dominant titles: the combination of social factors, in-game goods, and time and money investment by the players give established titles an almost insurmountable advantage in attracting players' interest, and therefore, their money.

 

[supermackem]

If there's anything that will murder new game sales it's "monetizing multiplayer". I'm not predicting a peasants revolt: people will still buy blockbuster games like CoD in virtually the same numbers if the only change is pay-to-play multiplayer (dependent on the price, of course).

No, the problem is that introducing a pay-to-play scheme for popular games will extend the life of the original box even further, as player's attachment to a game progresses from social connections and the collection of virtual goods, which ties players to free-to-play games, to a literal monetary investment. It's the same reason the MMO market stabilizes at a handful of dominant titles: the combination of social factors, in-game goods, and time and money investment give established titles an almost insurmountable advantage in attracting players' interest, and therefore, their money.

I think thats all well and good in a mmorpg what can they possible offer in that vain for an fps. Also a sub to an mmo is all youll need if they some how do this to a console fps youll need a gold sub on top of charging console game prices. I can get wow for £8 would they drop the mp aspect of a mmo fps to that kind of price?.

 

[todahawk]

I'm surprised an analyst hasn't discovered this sooner.
I bought Bad Company 2 on launch and other than RDR I decided to wait on buying Bayonetta, 3D Dot Games heroes and some other titles I really wanted. I'm past 128 hours in online on BC2 and other than messing with the MoH beta and working on RDR I don't feel the need to play anything else.

I bought all of the BC2 DLC so far but there's no way I'd pay MMORPG-like recurring monthly fees.

 

[Vinci]

I think thats all well and good in a mmorpg what can they possible offer in that vain for an fps. Also a sub to an mmo is all youll need if they some how do this to a console fps youll need a gold sub on top of charging console game prices. I can get wow for £8 would they drop the mp aspect of a mmo fps to that kind of price?.

COD online is going to make an obscene amount of money for Activision. They'll provide regular content for it and keep it active for far longer than they currently do. This will, in fact, probably harm other FPS titles enormously.

 

[Tiktaalik]

“Rather, we believe that the publishers and developers of games have created more robust multiplayer content in recent years that has resulted in core gamers playing the same games for much longer, on average, than they did in the past, leading to lower sales of new games.

I suppose but isn't this old news then? Yes MW2 has sold exceptionally well, but there's been other mega selling online games, such as well, MW1. I'm curious if the data for the months just after release show the same affect. If they don't then there may be something else causing an effect.

In a situation where a multiplayer game remains compelling over a long period of time I could certainly see folks not buying as many games and instead simply buying DLC. This would be by AAA game Red Dead still sold great but all those other titles, which were AAA in price but not quality didn't make the cut.

 

[RavenFox]

Hmm good read with much logic. Well Sony seems to be braving the new waters with new material and it's working out fine. Seeing how Miyamoto is thinking time for a new character I have to say he has seen something on the horizon to.

 

[Neuromancer]

Nintendo’s customers either are not finding enough software to satisfy their needs, or need less software than the typical Sony or Microsoft customer.”

I'm going to go out on a limb here and say it's the second one, Michael

 

[ZombieSupaStar]

wonder how long it is till some developer gets it into their head to charge for multiplayer gaming by the hour.


"You've played Call of Duty 38 for 10 hours now, please spend 800 spacebucks for another 10 hour block"


i can soooo see this being attempted.

 

[Dedication Through Light]

I'm going to go out on a limb here and say it's the second one, Michael

lol how would a company solve that problem? The only thing I can think of that would work to tell a consumer that they need more software is to just release a sequel of the game theyve, bought, yearly iterations, for Nintendo titles, lol.

Though I wonder did Wii Fit Plus sell as well as Wii Fit.

 

[supermackem]

COD online is going to make an obscene amount of money for Activision. They'll provide regular content for it and keep it active for far longer than they currently do. This will, in fact, probably harm other FPS titles enormously.

What can they offer though to an fps, it works on a leveling questing rpg with a massive world i dont know how it will work on a 12 player fps with maps and such. There simply wont be the content that will keep people intrested fuck half the cod player base sticks to one setup and likes one or two of the maps.

 

[Vinci]

lol how would a company solve that problem? The only thing I can think of that would work to tell a consumer that they need more software is to just release a sequel of the game theyve, bought, yearly iterations, for Nintendo titles, lol.

Though I wonder did Wii Fit Plus sell as well as Wii Fit.

It's sold about 10 million less thus far - about 13 million.

What can they offer though to an fps, it works on a leveling questing rpg with a massive world i dont know how it will work on a 12 player fps with maps and such. There simply wont be the content that will keep people intrested fuck half the cod player base sticks to one setup and likes one or two of the maps.

Depends on the monthly price and how extensive the setup is. So long as they don't totally botch it, which is what it would take for it to be unsuccessful, Kotick likely has the right idea in adopting that system for it.

 

[Neuromancer]

lol how would a company solve that problem? The only thing I can think of that would work to tell a consumer that they need more software is to just release a sequel of the game theyve, bought, yearly iterations, for Nintendo titles, lol.

Though I wonder did Wii Fit Plus sell as well as Wii Fit.

I think that's exactly one of Nintendo's 'difficulties' with the Wii. Although I'm not sure how much they care, as long as their hardware keeps selling.

 

[supermackem]

It's sold about 10 million less thus far - about 13 million.



Depends on the monthly price and how extensive the setup is. So long as they don't totally botch it, which is what it would take for it to be unsuccessful, Kotick likely has the right idea in adopting that system for it.

I really cant see it takeing off not this gen and not so soon after people have been happy playing there free cod. They simply will just move over to cod like fps thats free online and someone will more or less rip it off and offer it free. Charging for online fps isnt going to work on consoles imho i really dont see what they can offer content wise to get people to cough up.

 

[pizzapizza64]

I am going to post a few releases from this year that I enjoyed but felt should have been at least $10 less than their respective $50 or $60 price tags. I understand that it costs a lot to make these games (and a few apologists will argue that they are absolutely worth full price), but ultimately $50 or $60 is a lot to ask in a crowded, over-saturated market.

Here are the games:
Alan Wake (perhaps this would have done better as a smaller disc game priced at $30 with a few extra DLC episodes.)

Blur (new IP in a crowded racing game release schedule) The same could be said for Split/Second as well.

Sin & Punishment 2 - This is an awesome game, but it's going go bomb. Maybe a $30 price tag (and some tv ads) would have changed that in a big way.

The list could go on, but I will stop there for now.

 

[Opiate]

I'm surprised how little discussion there is of the Wii/DS in this thread: the Wii and DS are the obvious offenders here, with (what appears to be) persistent and rather rapid downward trends in software.

I've yet to see any real evidence that the PS3/360 are seeing software declines. I'm not saying that such evidence doesn't exist, mind you: I'm suggesting that it isn't apparent. What is apparent, however, is that the Wii is seeing a very rapid decline, particularly for a leading console.

I think we're reaching a point where the notion of the PS3 and 360 significantly outlasting the Wii -- despite their relative lack of success -- may be likely. Either 1) The Wii is a normal console experiencing a traditional 5 year console lifespan, which means the PS3/360 are freak systems that continue to sell strongly well past the 5 year barrier, or 2) The PS3/360 are normal systems, and the Wii is a short lived system that dies off rapidly.

I don't really care which way you put it, but the evidence that we're seeing one of those two situations is mounting.

 

[TheChewyWaffles]

Activision better not heed this man's advice. If they do, it'll be the first time I haven't ponied up for their madden-like iterations of CoD since COD2 came out.