Analyst expects 15 percent growth in December

Last week, Lazard Capital Markets analyst Colin Sebastian predicted that the industry-tracking NPD Group would reveal December US software sales growth of 5 percent over 2005. Today, one of his colleagues is painting a rosier picture with his own NPD preview.

Wedbush Morgan Securities' Michael Pachter released a note to investors today saying he expects US software sales for the month to total $1.875 billion, a 15 percent jump over December 2005's $1.637 billion take.

In his note, Pachter said that software sales for next-gen systems (which he defines as Xbox 360, PlayStation 3, Wii, DS, and PlayStation Portable) are on the verge of eclipsing sales for current-gen platforms. Pachter expects the new systems to rack up December software sales of $927.5 million, a bit behind the $947.5 million accumulated by the rest of the industry. What's more, Pachter is predicting a changing of the guard, as he says next-gen game sales should overtake those of the current gen beginning in January.

Speaking of the current-gen systems, Pachter's estimates suggest some are retaining their market better than others. He predicts that PS2 software sales will be down only 3 percent from December 2005, while more significant declines are experienced by the Xbox (63 percent) and GameCube (67 percent). Pachter also estimates PSP sales for the month to be down 2 percent from the previous December.

Turning to the newly released PS3 and Wii, Pachter predicts sales of $268 million from the two systems, based upon an assumed tie ratio of 2.5 games per console sold. That's higher than the November tie ratios of 1.8 games per console for the Wii and 1.1 for the PS3 primarily because Pachter suggests more systems that were originally put up for sale on auction sites like eBay are finding their ways into end users' hands.

As far as hardware goes, Pachter reiterated his previous prediction for December Wii sales of 1.3 million systems, but lowered his Xbox 360 estimate (originally 1.5 million systems, a number extrapolated from preliminary NPD data) to 1.2 million units, which he admitted might be a bit too low. Pachter didn't release his December expectations for the PS3 before, but today's note said he expects 600,000 PS3s were sold in December, bringing the system's 2006 tally to 800,000. In its CES keynote address yesterday, Sony said that it had shipped 1 million PS3s in North America by year's end.

As for which games drove the sales, Pachter specified a few expected million-sellers including Call of Duty 3 (1 million), Madden NFL 07 (1.7 million), and Need for Speed Carbon (1.3 million). He also predicted a pair of games falling a little shy of the million mark, including WWE SmackDown! vs. RAW 2007 (800,000 sold) and Guitar Hero II (900,000), which Pachter called supply-constrained. While he didn't offer any numbers for the following games, Pachter also said Gears of War, The Legend of Zelda: Twilight Princess, and Final Fantasy XII were strong sellers. Yesterday at CES, Microsoft announced that Gears had sold over 2.7 million copies to date.