Pachter Baffled At Aprils NPD Sales

It is clear for all to see that Aprils NPD sales were very low compared to what we are used to. Sales were not only low for one console but for all of them. Micheal Pachter of Wedbush Morgan cannot fathom any answers as to why this is however with there not being many major releases in April maybe he is right in saying people could be holding off for the big releases coming in May.

Similarly people could have been holding off buying a Wii while waiting for the black console release. Who knows, but it will be interersting to see if Mays sales bounce back.

“The April sales results are baffling to us. The dollar sales level of $399 million is the lowest since May 2007, when this generation was barely underway, and is the weakest April result since 2005, when console software sales totaled only $6 billion for the full year. The sequential decline of 54% is the greatest in the 11 years that we have been tracking monthly data (except for December-January declines), dwarfing the previous record of 42% set in March-April 2002. For the first 13 weeks of 2010, video game software sales averaged just under $162 million; for the four weeks of April, they averaged just under $100 million.

It’s easy to blame the lineup, which was quite light (Ubisoft’s Splinter Cell Conviction was the only AAA title, and it was an Xbox 360 exclusive), but the results suggest something is terribly wrong. Unfortunately, we are at a loss to identify precisely what was wrong, given relatively robust sales for the three months prior, decent weather, an improving economy, and a deep catalog of recently released titles. We do not believe that core gamers suddenly shifted allegiance to Facebook or iPhone games in April, nor do we believe that Call of Duty Modern Warfare 2 online play increased dramatically during April. As we cannot explain the reasons for the shortfall, we can only conclude that April was a fluke, with many core gamers enjoying recently purchased games and looking forward to new releases coming out in May.

The May lineup is indeed stacked in favor of dramatic growth, with Red Dead Redemption, Super Mario Galaxy 2, Alan Wake, Prince of Persia, Lost Planet 2, Blur, SKATE 3, Iron Man 2, LEGO Harry Potter, UFC, and Shrek 4. We think that this lineup is quite appealing to a broad audience, with one Xbox 360 exclusive, one Wii exclusive, two hardcore shooters, two adventure games, one racing game, two action sports game, and three movie licenses. In other words, May has something for everybody.

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 don’t think that the shift is occurring 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 monetize the value created by online play, led by Activision. We anticipate that Activision will find a way to monetize the 1.75 billion hours of Call of Duty Modern Warfare 2 online play on the Xbox 360 in the first five months following the game’s release. This game play suggests that as many as 12 million gamers (PS3 and Xbox 360 combined) played online for an AVERAGE of 10 hours per week for the five months since the game’s launch. It is obvious to us, and likely equally obvious to Activision, that these gamers are spending a lot of time that was monetized only through the original purchase. In the future, we think that Activision will find a way to charge for some portion of online game play, and if successful, we think that other publishers will follow suit.” Micheal Pachter, Wedbush Morgan

Thanks Industrygamers