Retail sales now in their sixth month of decline

11 Comments by Ross Miller Mar 13th 2006 4:00PM
Filed under: Business

US console sales continue their nose dive since September; according to the research from Michael Pachter, "total U.S. console software sales for February were $340 million, down 13% [emphasis added] compared to last year and lower than our $350 million estimate (down 11%)." Here is a further breakdown for the number-lovers out there:

Current generation software sales (PS2, Xbox, and GCN) were down 35.5% ($135 million), which was steeper than the estimated 33% ($125 million) decline.
Unit sales of current generation software continues to decline at an accelerated pace. The dropping prices of current-gen software will exacerbate the declining trend.

Next generation software sales, however, were in line with estimates, and sales were up $95 million.
March will be a potentially difficult month, as Xbox 360s are not expected to be widely available until next month. Also, year-to-year comparisons will prove ugly since last March's sales were up 31% due to the PSP's March 2005 launch.

March predictions: sales down "at least 20% or more this year, bringing year-to-date software sales down at least 14%."

In nature, a bear will stock up on food before hibernation, in order to endure the long period of lull when food would be scarce. The games industry practices the same hibernation trends in a variety of degrees: seasonally, industry sales tend to improve in the wintertime, except for once every four years when all the publishers have to endure a long transition period where sales suffer. With all the news reported on next-generation consoles, we are contributing to the consumer consensus to save their money until the PS3 and Revolution launches, but any publisher that survives the lull will be rewarded with a huge sales spike come time for those consoles to launch. But for now, all they can do is rest and endure.

(Page 1) Reader Comments

Asz: Mar 13th 2006; 4:27PM

Yes, sales are in decline, what the hell do you expect? Once everyone in the world owns a PS2, there nobody left to sell them to, so sales have nowhere left to go but down. If everyone was expect sales to keep rising in the 6th year of this generation (on ANY platform) then they really need some new analysts. I don't believe that everyone is saving up for next gen consoles, which is hurting the sales of current gen consoles. If there are games worth buying, people will buy them. Likewise, I haven't seen much worth buying for months now.

m3mnoch: Mar 13th 2006; 4:29PM

yes, down.

but there will be a miraculous bump for the summer. 360's will be in stores. 360 games (i'm looking at you g.r.a.w.!) will be in stores. it'll be post e3.

the typical summer lull will accidentally turn into a summer boom. the summer boom will beget a crazy huge holiday season. (the other two consoles) nobody'll even remember the drought.

attention analysts: everything is fine. the industry isn't dying. it's just shuffling it's cash flow schedule around a bit.

m3mnoch.

Shad Genki: Mar 13th 2006; 4:32PM

Azz, they're talking about software sales. Soft wares.

On a related topic... Thanks, Pirate Bay! There's a nice article on Wired about TPB for those of you who are fans.

Sorry, but I've already posted my views on overpriced vg software and what I think of pirated games. Most of them aren't worth my money anyway, but I buy the ones I play for more than 8 hours - so that means I actually own 10 Xbox titles, even tho I have 40 or so.

Xbox Fanboy: Mar 13th 2006; 4:32PM

Well, only Xbox ultra-Fanboys are getting their 360's but all the rest (60 million people) are waiting the PS3 and Revolution.

ymmv: Mar 13th 2006; 4:51PM

I think once the Xbox 360 becomes widely available software sales will pick up. I got mine in November and I've bought six titles so far (plus two XBLA games - and a HD LCD tv!). I'm *very* pleased with the 360 so far, and things will only get better.

Jim N: Mar 13th 2006; 5:09PM

M3monch I do not think that summer is going to a crazy huge summer. I think it will be a normal summer, there just are not that many killer apps coming out this summer, but I guess the term Killer App is a subjective term. But I do agree with you that the industry is not dying by any means, I think that gaming is probably at its highest point yet and does not showing any sign of going on the downward slope anytime soon.

Personally I think that game developers need to rethink their corporate stragies. All these Xbox 360 titles that are coming out at $59.99 I think is kind of high priced. And the first gen game still at $49.99. Although I noticed Rainbow Six is coming out at $29.99 which I think is really great. Honestly I understand that it costs more to develop these games but lets face it they also have a few new sources of cash. Games are more and more selling advertising in them. There was just a post last week about Dodge having billboards inside G.R.A.W., Tiger Woods must make so much money in merchandising that it is crazy with all the different clubs, clothes, balls, and courses, and has anyone happen to notice the Burger King ads in Fight Night. Also now on Xbox Live at least they are selling pictures, and themes, and maps, and other downloadable content. They have specific merchandise such as controlers, face plates. I wonder since the console companies seem to be able to sell their consoles at a loss, why can the game design companies also sell their products at a loss and then make it up with electronic merchandising (IE expanded content, and other things online)?

fush: Mar 13th 2006; 5:46PM

Hmm, I think you guys are underestimating the effect that the direction of the industry has taken on the everyday gamers who only buy games occasionally. I went into a Borders the other day to find them selling off their entire stock of games at 75% off. Fact is, people aren't buying as many games as they used to. The reasons for this are up for debate, but this is not seasonal, I assure you.

refinedsugar: Mar 13th 2006; 7:12PM

"March will be a potentially difficult month, as Xbox 360s are not expected to be widely available until next month."

Speaking for North America, the supply problem isn't as drastic as it once was. If you are diligent scoring a 360 in the month of March shouldn't be difficult. January & Febuary? Oh sure, but the supply problem has eased up in my eyes quite a bit since then.

As for falling sales, I assume they primarily mean games - although last gen console sales at this point must be at an all time low. Did the 360 coming out have something to do with this flux in the market? For sure. As for piracy, I love how douche bags always try to justify their actions. Shad Genki, if a game doesn't give you more than 8 hours of gameplay that's not an excuse to pirate it. You're just a cheap ass douche. God forbid you have an actual job and expect people to pay for goods or services to pay your wages.

MrMastodonFarm: Mar 13th 2006; 8:07PM

I feel that if anything can break the current slump, it's the DS lite, and possibly the Revolution. Not because they are necessarily going to have the best games, or really be all that "Revolutionary" but because they will cause many "new" people to look at the videogame industry. I put say "new" because I feel many of these people will remember the NES or possibly the Super Nintendo, but that is the last gaming system that they owned. Or maybe they are an older adult who enjoyed to play Tetris on a classic GameBoy. Either way, Nintendo has the ability to reintroduce these people to videogames, and ideally after they purchase a DS lite or Revolution they buy a PS3 or 360. That's how the industry will grow- not through better graphics, not through sex or violence, but by simple, accessible fun.

striderhayasa: Mar 13th 2006; 9:30PM

I too think that the summer will be a normal summer for gaming. The sales spike will be fall/christmas of this year. I for one, am not feeling the 59.99 price tags for games. I'm an adult and work a good job and I find it hard to justify spend 60+ dollars on games. How do the developers expect to convince Billy's mom to spend the cash on her 10 year old?

Shad Genki: Mar 14th 2006; 8:35AM

It's gonna be....

http://www.impawards.com/1986/posters/one_crazy_summer.jpg

Nah, I don't think so... Just having the 360 in stores isn't gonna do anything. There's still no killer app. Once PS3 and Rev come out later this year, there will be a boom, but not before. I'm sorry, I really wanted to get a 360, but I just have a bad taste in my mouth about it. Nothing gets me excited enough to drop that kinda ca$h.

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