Pachter: Only new hardware will stop the decline

Analyst claims gamers crave new hardware

Michael Pachter, Wedbush Securities most vocal games industry analyst believes that the decline in games sales seen over the last year will only be reversed by new console hardware.

He believes that even the release of the Wii U in December will not stop the declining games sales and only a full new generation from Sony and Microsoft will stabilise the problem.

Pachter stated, "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. 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."

"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," he continued.

He added, looking into his crystal ball, "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. 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."


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