Michael Pachter has weighed-in on the NPD figures released last night, and says that the industry decline can be attributed to a shortage of Nintendo hardware.
“It seems that monthly software sales declines will never end, with January marking the 10th month of sales declines in the last 11,” he said. “It was disconcerting that after relatively solid results of -3% and -7% in November and December, January saw a return to double-digit declines, and the magnitude of the decline in the face of a solid software lineup gives us pause.
“We attribute a portion of the large decline to lackluster sales of Nintendo hardware, which we think were caused by supply shortages. Nintendo’s monthly hardware sales have been quite volatile, with outrageously high figures in December for the DS (3.3 million, up 9% year-over-year) and Wii (3.8 million, up 77%) followed by outrageously low figures in January (down 17% and down 77%, respectively). The combined decline in Wii and DS hardware was over 300,000 units, suggesting that the two Nintendo platforms contributed to a year-over-year decline of around $30 million in software sales overall.”
Wii software sales fell $49 million compared to January 2009 and Wii was the only console to see a YoY decline. Xbox 360 hardware was up 8 percent and PS3 hardware was up 36 percent and Wii fell 31 percent.
Despite the math, Pachter feels the industry can regain some momentum in 2010, but at the same time he is not optimistic, saying that it could take a bit longer than that.
“We had expected January sales to come in only modestly lower, and the magnitude of the decline suggests to us that February will present another down sales month,” he said. “We previously had high hopes for the February release schedule, but lower than expected review scores for the two key games released in the month (BioShock 2 and Dante’s Inferno) make us less confident that February sales will rebound to positive territory.
“However, we think that the release schedule in March, with Battlefield: Bad Company 2, Final Fantasy XIII and God of War III is sufficiently strong to drive sales back into the plus column.
“In April, comparisons become much easier, and we think that hardware sales will drive year-over-year software sales growth into the double-digits.”