Pachter: Games industry is ‘in a state of decline’

Due to the recent NPD figures, Pachter responded by saying that the industry is “in a state of persistent secular decline,”.

“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 said

“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 said.

“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.” he added.

“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,”

“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.” he continued

“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