Analysts predict sales declines for 2005 and 2006

In its latest video game industry overview released today, analyst firm Piper Jaffray has predicted few surprises for the calendar years of 2005 and 2006. With new consoles expected to arrive, the 2005-2006 period is considered to be one of transition, characterized by sales declines and slowing growth. Piper Jaffray does, however, predict that video game stocks could move up by as much as 10 percent as 2004 progresses.

Piper Jaffray goes on to suggest that the companies with the greatest potential for upside surprises right now are Atari and Activision. Atari because of the success it is enjoying with Driver 3, and Activision because of its Shrek 2 and Spider-Man 2 movie tie-ins. Specialty retailers, the report claims, have the potential to outperform near-term financial expectations thanks to solid sales of the Shrek, Spider-Man, and Harry Potter franchises during the traditionally slow summer months.