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The last five months haven't been so good for the U.S. video game industry, and if the analysts are right we'll soon be adding a sixth month to the list. In advance of the August NPD data (expected this Thursday) Michael Pachter of Wedbush Morgan Securities and Jesse Divnich of EEDAR have both forecast a decline of 14%.
Pachter believes total software sales will come in at $475 million. Sales were likely driven by Electronic Arts’ Madden NFL 10 (PS3, Wii, PS2, 360, PSP) Eidos’ Batman: Arkham Asylum (360, PS3, PC), and Activison’s Wolfenstein (360, PS3, PC), along with continued strong sales of Nintendo’s Wii Sports Resort and Electronic Arts’ Fight Night Round 4.
Hardware sales are expected to drop 24% with the DS still leading the pack selling 490,000 units. Pachter sees the Wii selling 240,000 units, the Xbox 360 selling 205,000 units and the PS3 160,000 units. Of course, the PS3 numbers won't reflect the big price drop and new slim model until the following month.
It's also worth noting that the Wii is expected to see the largest decline at 47%, suggesting once again the need for a price cut. "With the core PS3 and Xbox 360 models priced only $50 higher than the Wii, we expect year-over-year sales of Wii hardware to continue their annual declines until the company either changes its bundle or lowers price. The decrease in Wii unit sales has averaged over 50% vs. last year in the last two months," said Pachter.
Although August looks rough, it should be the last of the consecutive down months finally, Pachter and Divnich agree. "Looking ahead into September, EEDAR’s Analyst Services Division is certain the industry will return to positive comps. In fact, new releases alone will likely account for over $400 million in revenue," said Divnich. "Back catalog (or non-new release revenue) should account for at least $300 million, which would put September up at least 14% over last year. October is currently expected to be flat, with November and December landing in the -5% to +5% range."
"We believe that August will mark the last month of negative double-digit sales declines, and that the inflection point occurred in late August, driven in part by easing comparisons, strong releases late in the month, and hardware price cuts in the last week of the month," said Pachter. "In contrast to July, which suffered from a difficult comparison (+41%), the comparisons to last year are relatively easy in August (+13%) and very easy in September (-6%). Further, the game release schedule improved substantially last month, with expected contribution from G.I. Joe, Wolfenstein and Batman Arkham Asylum. In September, we expect new releases, The Beatles: Rock Band, Halo ODST, Need for Speed: Shift, Guitar Hero 5 and Marvel Ultimate Alliance 2 to drive positive sales growth well into the double-digits. As a result, we believe share prices will recover as investor concerns abate."
The trends are looking even better for 2010 too. "EEDAR expects revenue for the first half of 2010 to be up 14% over 2009. A primary reason for this is the number of key titles being moved out of calendar year 2009 as well as additional AAA titles planned for the first half of 2010 (Red Dead Redemption, Bioshock 2, Max Payne 3, and God of War III)," Divnich noted. |
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