Shrinking release slates fuelling U.S. retail video game market decline - analysts
The U.S. retail video game decline is simply down to a severe lack of game releases compared to previous years, analysts have said, as publishers continue to aggressively slash title output.
Data from the NPD Group this week
showed that video game sales at U.S. retail suffered a significant drop in April, adding to the industry's continuing declines at retail over the last several months.
Cowen and Company analyst Doug Creutz noted that the year-over-year decline is not surprising, given that only nine new titles were released at retail during April, compared to 28 new releases in April 2011. This echoes a similar situation seen in January, when six new titles were released compared to 16 new titles year-over-year.
"The lack of depth in the release slate is significantly impacting overall sales," he added. "While smaller titles may not individually contribute significant sales, in aggregate they do have a meaningful impact. Crucially, the major publishers have geared their expense structures for more limited release slates.
"Thus, while the lower overall sales figures are a negative for game retailers and hardware manufacturers (who collect software royalties), we believe the U.S. publishers can continue to grow earnings despite declining industry sales. We believe that reduced industry competition is likely to be a positive for incumbent publishers when the next hardware cycle begins."
Michael Olson and Andrew Connor, analysts from PiperJaffray, noted that the top 10 games during April generated revenues that totaled less than half of the revenues taken from the top 10 games during April 2011. In particular, the duo said that six of the top 10 best-selling games during April 2011 outsold this April's top selling game, Prototype 2