Analyst: Decrease in Sales Due to Online Multiplayer Games

The recent NPD charts revealed that the entertainment software market is continuing to go down, sales plummeting 15 percent in June. Michael Pachter, Wedbush Morgan Securities analyst, has shared his opinion saying that part of the blame goes to Nintendo, which bundles two games now with every console sold, and the many consumers who buy bargain bin titles for their new and cheap Xbox 360.

Speaking to Industry Gamers, Pachter said that the biggest problem was the huge number of consumers who were engaged in online multiplayer games and that did not need to buy any more software to satisfy their needs. “We estimate that a total of 12 million consumers are playing Call of Duty Modern Warfare 2 for an average of 10 hours per week on the two platforms’ respective networks, and the continued enjoyment of this game (...) has sucked the available time away from what otherwise would be spent playing newly purchased games.”

Pachter considers that this market has yet to be monetized accordingly and that a new business model is need if publishers are to survive this shift in the consumers' interest. He commented that, “While the shift has been great for consumers, who are enjoying an unprecedented, and largely free, game experience, it has been devastating for publishers and shareholders, who are seeing sales and profits decline.”

The company that has to devise such a monetization plan is Activision with its highly successful Call of Duty franchise. “We think that it is incumbent upon Activision, with the most popular multiplayer game, to take the first step to address monetization of multiplayer. It is too early to tell whether that will be a monthly subscription, tournament entry fees, microtransaction fees, or a combination of all three, but we expect to see the company take some action by year-end, when Call of Duty Black Ops launches.”

Pachter's intuitions seem to be converging with Bobby Kotick's wishes, who has said many times that an business model similar to World of Warcraft would do wonders in the Call of Duty franchise. Pachter may have hurried when he said that this would start with Black Ops, though, as a recent Twitter post from Treyarch has quelled any rumors about any subscription fee for the next installment in the first person shooter series.