Analysts predict record December

Industry watchers project last month's US retail sales tally was up between 20-28 percent over previous year's record December total; Guitar Hero pegged as accounting for 9.5 percent of <i>annual</i> sales.

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By all accounts, 2007 was the biggest year yet in the US gaming industry. Before the lucrative December sales period had even started, the industry's full-year retail revenues were already up 5 percent over the entirety of 2006, which was previously the best US retail sales year the industry had ever experienced. With the industry-tracking NPD Group set to reveal its December US retail sales figures later this week, a handful of analysts have released investors' notes with their software sales expectations for the 2007 capper.

Lazard Capital Markets' Colin Sebastian offered the least optimistic sales prediction, saying he expects software sales up between 20 percent and 25 percent from 2006's $1.7 billion December take. Pacific Crest Securities' Evan Wilson was a little more optimistic with a 26 percent growth projection, while Wedbush Morgan Securities' Michael Pachter went a little bit higher with expectations of 28 percent. Despite being more bullish than his peers, Pachter still said there was plenty of potential upside to his estimate.

"This was an exceedingly difficult month to forecast, given that November sales of $1.3 billion were so phenomenal," Wilson said. "Historically, December has never yielded results lower than [twice] the results in November (at least since 2000), and we are prepared to be spectacularly wrong with our forecast should the historical pattern hold this month."

The deluge of big-name titles toward the end of the year was not lost on Wilson, with the abundance of highly anticipated titles creating problems for one another.

"Enough products were slated on a growing number of platforms that a lack of shelf space prevented the success of some games," Wilson said. "A few significant games like Call of Duty 4, Guitar Hero III and Rock Band ended up taking a disproportionate share of sales. Publishers also had to navigate lengthy reorder times for third-party Nintendo platform games and the decline of PS2 software sales. "

Wilson's note focused on a number of year-long trends in 2007, and gave some expectations for 2008. Calling the continued success of the Wii and DS "the clearest reason" for last year's record results, Wilson said Nintendo had carved its way back into the software sales race, with games on its systems accounting for 33 percent of software sales, up from less than 25 percent in 2006. Wilson also listed a number of surprise hits that emerged during 2007, specifically new intellectual properties like Mass Effect, BioShock, Assassin's Creed, and Rock Band. While Harmonix's latest rhythm game was a surprise hit, Wilson singled out its previous franchise, Guitar Hero, as a cultural phenomenon that emerged in 2007.

"We estimate that Guitar Hero will represent 9.5 percent of total software sales this year," Wilson wrote. "This will be by far the biggest game of the year and compares with 5.2 percent for Madden in 2006, which was the biggest franchise that year."

As for full-year 2008 projections, Sebastian and Wilson both suggested that the industry would again grow, although not at the same pace as it did in 2007. Noting that the industry's own generational growth cycle seems to impact sales more than the general state of the economy, Sebastian said he expects sales growth of 10-15 percent for the year, driven by anticipated games like Grand Theft Auto IV, Spore, and Metal Gear Solid 4. Wilson pegged 2008 growth at a little under 12 percent, saying that the PlayStation 2 sales are going to taper off much more quickly and the coming year's release lineup looks significantly weaker than last year's, Grand Theft Auto IV excepted.

Discussion

71 comments
chromium42
chromium42

Wow...Madden knocked off of the perennial franchise leaderboard by none other than Guitar Hero. Bizarre indeed, but welcomed.

bombfanatic
bombfanatic

COD4 the best game. no duh it sold more than normal games do

_Piranha_
_Piranha_

BioShock !!! perfect super game !!!

Conor_220
Conor_220

"Let's see GTAIV and MGS4 on Wii! " Yeah thats a joke, how about you play some pong on your wii hardware.

quincy0191
quincy0191

Let's see GTAIV and MGS4 on Wii! Snake is in Brawl, and GTAIV already went to 360, so c'mon! Wii has the biggest userbase! Yeah, 2008 will have double or triple the sales of 2007. And that'll probably just be Brawl.

theKSMM
theKSMM

I didn't anticipate such tremendous growth in the gaming sector this year. Then again, with $60 games and $400 consoles becoming the norm, it's no surprise that revenues are up.

Ozzie234
Ozzie234

GTAIV will be the game of the year, and its main platform will be the 360.

Ozzie234
Ozzie234

Having seen the demo on PSN with that Japanese guy taking you through the gameplay and different aspects of MGS4 I must say I was not too impressed. If that's the game that'll unveil the true potential of the PS3, there really was not much to be unveiled at all. But the game will sell like hell anyway because there's simply NOTHING playable on the PS3 yet.

astro64th
astro64th

To phalluman, software means video games in this case. Generally software is anything that you get that plays on your machine. If it's a CD player then software would be the CDs. In this case it's handheld, console and PC video games. And it's great to see the gaming industry doing so incredibly well! I can't wait to see the numbers for 2008 and if they do indeed trump last year.

warsac
warsac

@ManOfTeal Are you out of your mind?!?!? MGS4 will sell a million on release-day, maybe a small exhaggeration

Ash_Korsair
Ash_Korsair

@manofteal if u think mgs4 and gt5 wont sell over one million it shows u dont now jack about videogames. mgs will sell one million in japan alone.

super_slonik
super_slonik

Well... cant wait for Guitar Hero expansions!!

ManOfTeal
ManOfTeal

@Ash_Korsair Only one of those titles you mentioned will sell over a million copies and you can bet that it sure as hell won't be a PS3 exclusive. It'll be GTA IV.....

Get_Shorty
Get_Shorty

Ninja Gaiden 2! Why does everyone forget to mention Ninja Gaiden 2 is coming out this year!? This will be GOTY!

Ash_Korsair
Ash_Korsair

2008: killzone 2 mgs 4 ff13? (hope so) gt5 dmc4 gta4 white knight story lbp or in other words, good year for ps3. it will own

Kenji_Masamune
Kenji_Masamune

@mertron1 actually I based that statement on the PS2 sales numbers only and I am a chump. GTA SA for the PS2 sold as many copies of that 1 single game as halo 1 and 2 combined. GTA SA 14.88 million copies vs Halo 1 6.43 million and halo 2 at 8.45 million. The number 2 selling game of last gen was Gran Turismo 3 at 14.87 million copies. But still the main arguement is that this will be the year of mega selling games for all systems. Even more so than last year.

ctifer1
ctifer1

@Maddaus - "This year will be a competition between Grand Theft Auto 4 and Smash Bros. Brawl for best selling title. " I predict a surprise entry in there: Wii Fit. It's already sold over 1 million in Japan and will probably be an even bigger hit here in the US.

jedinortd_basic
jedinortd_basic

ghoward79 so the economy isn't as bad as mainstream media projects nothing is ever as bad as they make it sound. they thrive off of bad news and ignore good news

ghoward79
ghoward79

so the economy isn't as bad as mainstream media projects

mertron1
mertron1

Kenji_Masamune...what an chump.....previous gta games sold zillions because they came out on every platform known to man...probably even on your mobile phone....halo 1 and 2 only came out on xbox and like a year or two later on pc..yet sold zillions...imagine if it came out on every other gaming platform too....do the math....dont hate...the halo games set new standards in video & online gaming...and will coninue to go from strength to strength....9 million copies sold and counting since september last year...(3months)..on just the one platform... i rest my case.

-HCMF-
-HCMF-

I had to tag this one... "Well Duh"

mertron1
mertron1

why dont they mention the fact that the majority of sales has been through the success of xbox 360 titles...why do they keep trying to hype up a machine like the wii...yes innovative we know because of that wand joystick thing...whatever...yet the majority of games on it will be put down and start picking up dust sooner than later....and after smash bros..what then...exactly. props to nintendo for coming back when most people thought they'd die a quick death. but let's face it their games (although they dont have to be because we know its about playability and let's face it they've played everyone who has a wii expecting next generation graphics)....are'nt on the same level as 360 and ps3...and soon people will see what a great doorstop it makes...as it blends well with their door paint. i dont expect next year to be as big as this year...regardless of another GTA game or metal gear....but who knows...predictions dont mean squat these day's lets just take it as it comes....and hope the quality of titles exceed those of 07'

Maddaus
Maddaus

This year will be a competition between Grand Theft Auto 4 and Smash Bros. Brawl for best selling title. Seeing as GTA 4 won't be exclusive to Playstation; Sony is really screwed. ***Analysts predict a grand total of 7 Playstation3 consoles will be sold in 2008***

indyano
indyano

"A few significant games like Call of Duty 4, Guitar Hero III and Rock Band ended up taking a disproportionate share of sales". I can understand why Call of Duty 4 , I can even let Rock Band sleps, BUT Guitar Hero III, come on man that game should not be mentioned here.

deathscythe999
deathscythe999

Well those predictions may become true.....if everything isn't pushed back like SSB Brawl.

Carpe_Noctum
Carpe_Noctum

GH3? lol The game is fun, but really .....

Zenfoldor
Zenfoldor

It's amazing how few of you, and how few analyists include SSB:Brawl, Mario Kart, and Wii Fit.

somberfox
somberfox

This is pretty much expected considering how the Wii is enticing so many non-gamers to buy games.

judge__judy
judge__judy

This year will probably sell even more. Considering how the PS3 hasn't sold THAT many units yet it kinda needs to. + 360

AndNorth14
AndNorth14

"Analysts predict sun will rise tomorrow..." Amazing! How DO they do it?

K_M82
K_M82

'Analysts predict record December' if predicting something as obvious as that can make you an analyst then we all can be a better game analyst than all those people. @Evil_Bill_Gates how about Mafia 2, Project Origin, Fallout 3, Bionic Commando, Turok, and loads of other big title.

Kenji_Masamune
Kenji_Masamune

How they can say that 2008 isn't going to be big or bigger than 2007 just boggles the mind. ALL of the major game franchises and those most talked about games are coming out THIS year. GTA is coming out this year (barring lawsuits/shareholders/country wide bans) and that game is sure to sell mega millions (GTA SA is the number 1 selling game of last gen.. almost as much as Halo 1 and 2 combined). This year should easily trump last years numbers.

ThickFreak
ThickFreak

Guitar Hero is pwning it up!! 9.5% of billions of $$$'s. They just need to not screw up GHIV.

Dryker
Dryker

I disagree with the opinion that 2008 has less impactful titles than 2007. They're just analysts playing it safe. They would have most likely have said the same thing this time last year. I would wager that this year is even stronger, if not as heavily advertised, unfortunately. I see a lot of strong new IPs on the horizon ( including remakes of games that are relatively old ), Lost Odyssey, Fallout, Bionic Commando, Dead Space, Brutal Legend, and Dark Sector ( starting to look intriguing ). Not to mention the tried and true, Devil May Cry, Turok ( this one looks good ), Unreal Tournament III, Burnout Paradise, Fable 2, GTA IV, Ninja Gaiden 2, Condemned 2, and Gears of War 2 ( maybe this holiday ). Doesn't look too weak from my point of view.

DeltaSpirit
DeltaSpirit

The way November went with out a gift giving holiday it was a gimme that December was going to do the same with Christmas and all the rest

PandaBear86
PandaBear86

Nintendo DS is a monster when it comes to sales, but it is nice to see PSP doing good as well. The PSP looks like it is failing when you compare it with the DS, but it is still successful in its own right. Its great to see some competition in the handheld market, instead of seeing it 95% dominated by one company since 1989. Way to go PSP!

Redhairboy491
Redhairboy491

Im with JPH, i think they should give more perks to one console only games that sold well, considering the fact that there just that. A average game thats well advertised that sells on wii, 360, pc, and ps3 will, odds say, sell more than a good game on one console.

emmel05
emmel05

when the movie industry grew, movies got better. same will go for the gaming industry. and look at the age of the movie industry compared to the gaming industry... i'm personally really excited for the future of gaming a lot after seeing this news .

_JPH_
_JPH_

Halo 3 should represent a good amount of percentage sales since it sold over 8 million copies till now. And it is on 1 console only, unlike Guitar Hero 3 or another games on multi consoles.

gin_rummy89
gin_rummy89

I hope the video game industry shrinks, I don't want to see video games turn into the movie industry... it seems that that's were we're heading though.

okassar
okassar

Forget not having enough shelf space.My recommendation(this is what I did and I think it's a good idea), buy Call of Duty 4,if you didn't get Halo 3 yet, go ahead, get GHIII unless you're good enough with GHII,and RENT the rest, first thing rented be Assassin's Creed,then Mass Effect,and,if you have alot of time on your hand,rent BioShock(I borrowed from friend because it takes like 20 hours but your choice).2007 was indeed great but we're to busy playing to care.

vass86
vass86

"god just shut up with the damn record breaking sales no one cares" ... i care. i find it interesting how the industry is doing

akiwak
akiwak

I predict that a lot of games were sold! I also predict that a lot of games will be sold! DMC4, Burnout, MGS4 YEAH!!!!