Pachter: Industry is suffering from price fatigue

Wedbush Morgan analyst, Michael Pachter, has weighed in on the June NPDs and feels that the industry is suffering from price fatigue.

"It appears to us that the weak results in March through June signify a weak trend that will continue at least one more month. It is easy to defend the poor results by pointing to a generally lackluster release schedule (especially in April), and to an inordinately successful release schedule last year.

"Compounding this is the continuing drag from the economy, the fact that Wiis are in plentiful supply (meaning that consumers no longer feel compelled to rush out and buy one whenever available), and a likely trend of the Wii audience to be more casual and more seasonal in purchase habits.

"Interestingly, the immensely successful DSi, with 1.7 million units sold in its first three months of release, could not drive a positive bump in DS software sales (-28% June year-overyear). We are most troubled by the decline in sales of the three major consoles. On a year-over-year basis in June, combined console sales were down 30%, with consoles down 41% and handhelds down 17%.

"We don’t think that a weak software lineup is enough to explain what happened, and can only conclude that consumers aren’t sufficiently interested in buying consoles to drive sales higher each month.

"We attribute this lack of interest to price fatigue, and note that the Wii has gone longer than any console in history without a cut of its launch price, while the PS3 has gone more than 18 months without a cut. As there has not been a console price cut so far this month, we expect a similar result in July."

Thanks, GoNintendo.