Pachter Claims Industry is Suffering from Price Fatigue
Though industry analyst Michael Pachter isn’t known for his accurate predictions of monthly console sales, what he is good at is analyzing the industry as a whole and figuring out where it’s headed. And with last month’s NPD data coming out disappointing for every home console, Pachter was compelled to inform us why this is happening and how long the industry’s declining sales performance will last.
“We are most troubled by the decline in sales of the three major consoles. On a year-over-year basis in June, combined console sales were down 30%, with consoles down 41% and handhelds down 17%.”
The weak sales figures that have occured during the past four months are expected to continue on for at least another month, if not longer. While some claim that a weak software lineup compared to last year is to blame, Pachter is quick to shut down these excuses.
“We don’t think that a weak software lineup is enough to explain what happened, and can only conclude that consumers aren’t sufficiently interested in buying consoles to drive sales higher each month.
We attribute this lack of interest to price fatigue, and note that the Wii has gone longer than any console in history without a cut of its launch price, while the PS3 has gone more than 18 months without a cut. As there has not been a console price cut so far this month, we expect a similar result in July.”
The problem of course may not be the prices of home consoles, but the fact that consumers are now particularly careful about their purchasing habits. And regardless if a console is priced at $400 or $200, it’s still a hefty chunk of cash. As we’ve seen before, shaving down your MSRP doesn’t necessarily lead to huge gains in hardware sales. The effects are usually small, and temporary.
For now, it may be best for the industry to wait out the storm and make software and services the big draw of purchasing a game console, not the asking price.