Wedbush Securities analyst Michael Pachter has predicted that the big software games this holiday season and the launch of the Wii U won’t be enough to undo the decline in video games sales experienced so far in 2012. Video game sales have dropped by double digits during the first eight months of 2012 when compared to the same time frame in 2011.
“We expect October – December to be relatively flat, and expect a return to negative territory again next year, at least until the launch of a next-generation console from Microsoft or Sony,” said Pachter. “A new console cycle is likely to reverse the negative sales trends of the last several years, with next-generation consoles expected from each of the three manufacturers over the next 18 months.
“Nintendo will launch the Wii U on November 18, and, while neither Sony nor Microsoft has yet announced new hardware, we expect a PS4 no later than November 2013, and a next Xbox no later than March 2014,” Pachter continued.
“Competition from social and mobile games hurt packaged goods sales over the last three years, but should serve to expand the market for console games over the long run, although it appears that the addressable market for handheld games will continue to erode,” Pachter added.
“We expect the publishers to address the “problem” of free online multiplayer with evolving business models, adding increased opportunities to purchase virtual items, creating subscription-only serialized content, and adding premium subscription layers to the free offerings currently provided.”
Pachter feels that the next generation will take off faster than in any other previous generation, even if there is only a “modest improvement” over the current generation. “We believe that the publishers plan an unprecedented number of new games for launch in the first two years of the next generation, providing relief from the gamer fatigue we’ve seen over the last three years,” he said.