Pachter talks industry decline, how digital gaming and multiplayer are to blame.

You may recall that just last month, Michael Pachter, everyone’s favorite industry analyst, was a bit perplexed by the low sales numbers that April put out. You may also recall that he chose to shrug it off and call it a “fluke.” Well, with May’s numbers are in, and it looks like his tune has changed a bit, as he’s now calling it a “persistent secular decline.”

In the month of May, a few choice games that should have sold quite well— Alan Wake, Prince of Persia, Blur, Shrek, Lost Planet 2, Iron Man 2, and Skate 3— didn’t. In fact, none of them even sold more than 200,000 units.

Adding to that, software sales on the Wii are down 29 percent from last May, while the DS numbers dropped 13 percent. Looking at this, Pachter actually suspects the Nintendo drops are a leading cause of the overall decline since their consoles are more prominent than either the Xbox 360 or Playstation 3 (And despite both of them showing increased software sales).

He remarks: “We think this is remarkable, given growth in the Wii hardware installed base of 44 per cent and growth in the DS installed base of 33 per cent over the last 12 months. In our view, this indicates that Nintendo’s customers either are not finding enough software to satisfy their needs, or need less software than the typical Sony or Microsoft customer.”

So what does all this mean? Pachter predicts that investors are going to continue to be “spooked” by more proof of the said decline. He also suspects a couple other reasons, like digital gaming, and lasting multiplayer experiences. He states that it’s “inevitable” that digitally-downloaded games will replace store-bought packaged goods, but he also doesn’t see that change happening this year.

“Rather, we believe that the publishers and developers of games have created more robust multiplayer content in recent years that has resulted in core gamers playing the same games for much longer, on average, than they did in the past, leading to lower sales of new games.”

So because everyone is too addicted to Modern Warfare 2 to buy anything new (Good luck, Medal of Honor!), we’re likely going to see more ways of monetizing on those games. Expect more expensive map packs then, maybe some new weapons, game modes, etc. to be available for all the hot multiplayer action on the horizon.

But it’s not all gloom and doom. While May wasn’t a good month, and has investors putting a little less in, it was better than April. Pachter says that they will probably join back onto the bandwagon when a “sustainable” rebound hits, which he doesn’t see happening until late summer. Better than never, I suppose.

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