July to see US game sales slide 15-16% - Analysts

The industry-tracking NPD Group is expected to release its US retail sales figures for July later this week, and a pair of analysts are predicting another down month for software sales. Wedbush Morgan Securities' Michael Pachter and Electronic Entertainment Design and Research's Jesse Divnich today released their NPD expectations, projecting year-over-year game sales declines of 16 percent and 15 percent, respectively.

In a note to investors, Pachter predicted July software sales of $500 million, down from July 2008's haul of $592 million. Hardware will be even harder hit, the analyst believes, projecting NPD results to show 36 percent fewer Wii, Xbox 360, and PlayStation 3s sold from the prior year period.

Divnich's own prediction of $501 million in software sales wasn't too far off, but the analyst provided more details as to which games would be driving those sales. He expects Wii Sports Resort to top the charts with 495,000 sold, followed by the Xbox 360 and PlayStation 3 editions of NCAA Football 10 from Electronic Arts, with 365,000 and 255,000 sold, respectively. The rest of Divnich's mock top 10 is populated with previously released titles, from EA's Fight Night Round 4 and EA Sports Active to evergreen Nintendo titles like Wii Fit, Wii Mario Kart, and in a return to the charts after a one-month absence, Wii Play.

Despite the near-term pessimism, Divnich believes the remaining months of the year will produce better results than the previous five months. However, in his own note to investors, Divnich still lowered his predictions for the industry's full-year performance.

"After the recent announcements of multiple delays, including BioShock 2, Splinter Cell, and the expected delay of a few other minor titles, EEDAR has downgraded our retail software growth for 2009 down to flat," Divnich said. "These downgrades are not the result of the recession impacting the industry more than EEDAR has anticipated; rather, our downgrade is purely the result of key titles being pushed out of the 2009 calendar year."

Pachter also has hopes for a late-year industry turnaround and suggested it might have already started. He expects August releases like G.I. Joe, Wolfenstein, and Batman: Arkham Asylum to at the very least limit software declines to single-digit percentages for the month, with the real turnaround starting in September. Pachter said a September release slate, including The Beatles: Rock Band, Halo: ODST, Guitar Hero 5, Need for Speed Shift, and Marvel Ultimate Alliance 2 could grow the month's software sales 30 percent over last year.

The analyst also reiterated his expectations for much-discussed price cuts on the Wii and PlayStation 3 and suggested the Xbox 360 could see a boosted value proposition at the same price points. However, Pachter also detailed his expectations for price movement in the portable sector.

"We also think the Nintendo DS will be cut to $99 from $129 with the DSi cut to $149 or lower from $169," Pachter said. "We anticipate the PSP will be cut to $129 from $169 and the PSP Go launch price of $249 to get reduced to $199 by some time in 2010."

Pachter also reiterated 2013 as the debut of the "next generation" of game consoles. The analyst has predicted the current generation will be extended with the help of a backwards compatible "Wii HD" system that will bring Nintendo's console on par technologically with those of Microsoft and Sony. He believes Nintendo will release the high-definition update sometime next year.