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Gaming Sales Slump Due to Online Multiplayer?

September 9, 2010 Written by Mike Hartnett

Wedbush-Morgan Securities analyst, Michael Pachter, is at it again, this time stressing even further that a subscription-based model is needed for online multiplayer favorites like the Call of Duty franchise, and that the video games industry is currently suffering because of players’ affinity for extended online gaming time.

Pachter stated the following:

We still believe that the biggest driver of the sales declines over the last 18 months is online multiplayer functionality, with an estimated 25m people playing many titles for hours on end…

Based upon statements made by Microsoft earlier this year, it appears that millions of people are playing multiplayer games online for an average of 10 hours a week, making a serious dent in the time available to play other games.

We remain convinced that the popularity of online multiplayer gaming has caused a decline in overall packaged product sales, and we expect this decline to persist unless the publishers change the multiplayer model.

This can, of course, take many forms, including doing nothing, adding premium services for a fee, or limiting the quantity of multiplayer content that is provided for free.

While we expect the publishers to continue to offer free multiplayer content that is similar in quality to what is offered today; we expect the publishers to channel their efforts on improvements to multiplayer by offering a premium subscription service, in the hopes of driving an ever- increasing number of customers to a pay service.

Once the publishers settle on a business model for monetizing multiplayer online game play, we expect investors to again favour the sector, and we expect to see multiples expand.

So, according to good ol’ Mr. Pachter, the reason the video games industry is in decline is because we’re actually taking the time to enjoy our games… seems somewhat counterproductive when we look at that as a bad thing, because gamers nowadays are getting tons of game time for their money. Let’s face it, when good games come out, they typically do well. If we can blame anything for the lack of retail game sales, let’s blame this late Summer gaming drought, not gamers for actually taking the time to enjoy their games, instead of rushing out every time a new title is released.

What do you think? Would a subscription-based model for select online titles work, or would this end up crippling the online gaming market? Let us know in the comments below!

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