Analysts expect October sales rebound

By Brendan Sinclair, GameSpotPosted Nov 11, 2008 11:38 am PT

Last month's US software revenues projected up 20-30 percent; Guitar Hero World Tour, Fallout 3, Fable II among key releases.

September saw a rare sales slump for the gaming industry, given that the month had no AAA blockbusters to fill the sizable shoes of Master Chief. After all, the Xbox 360 hit Halo 3 sold 3.3 million copies domestically and helped push September 2007 US retail game-software sales to more than $656 million.

By contrast, this September's biggest performer was Star Wars: Force Unleashed, with the three biggest console versions of the multiplatform action game combining for 1.16 million copies. Analysts believe that October's US retail sales figures--set to be released Thursday by the industry-tracking NPD Group--will be a different story, but they're split on how different.

Electronic Entertainment Design and Research analyst Jesse Divnich was the most bullish of the usual prognosticators, predicting that October software sales will be reported at $700 million. That would represent a 36 percent jump over the previous October's take of $514 million, when the best-sellers included Halo 3 (again), as well as Guitar Hero III: Legends of Rock, which sold a combined 1.4 million units across platforms in its first week.

Specific games that Divnich pegged as hot sellers included Fable II, Guitar Hero World Tour, Wii Fit, and Fallout 3. As for the root cause of the projected spike, Divnich said it was attributable to a greater volume of new releases during the month (230 compared to last year's 189, by his count). Another factor he pointed to was an abundance of discounts and sales as retailers tried to clear out older inventory to make more room for the holiday's hot new releases.

Pacific Crest Securities' Evan Wilson was slightly less bullish, projecting a 36 percent year-over-year jump in software sales to $670 million. Among his expected best-selling games of the month were Fallout 3, Fable II, Guitar Hero World Tour, FIFA 09, and Dead Space.

"While our checks clearly show that the industry did not grow to its potential in October, we believe sell-through may come in above dire expectations," Wilson told investors. "We understand that we could look foolish calling such strong growth, but we believe that the large number of releases in October have prevented a disastrous month for sales."

Coming in on the reserved end of analysts, Lazard Capital Markets' Colin Sebastian projected sales growth of 20-25 percent, whereas Wedbush Morgan Securities' Michael Pachter settled on an increased software tally of 20 percent, to about $620 million.

Despite game publishers' recent stock woes and word of layoffs at Electronic Arts and closures at THQ, there was an agreement that the industry is still somewhat recession-resistant.

"We will begin to worry about the effects of the economy on the video game industry when we begin to see a decline in demand for some of the highest-priced items in our industry," Divnich wrote. "Those being hardware, Wii Fit, and the Guitar Hero: World Tour complete band kits. Fortunately, we see no signs of any of those items slowing down at retail. This is not to say that we are entirely 'recession proof' as an industry, but given the large influx in new gamers entering the market as well as the overall growth of the next-generation systems, it will be tough to pinpoint how much the current economic situation will influence industry sales."

27 Comments

  • tudyniuz

    Posted Nov 12, 2008 10:12 am PT

    there are so many new games which just came out,I'm not surprised by this

  • RedneckJazz

    Posted Nov 12, 2008 9:23 am PT

    The industry analysts and business 'experts' are jackasses. They always have an opinion, but are chickens#|t to make actual predictions and stake their reps on it. Like sportscasters. Favre is washed up, wait no he's not, wait, yes he is. No wait... The stocks are down due to high gas prices. Wait, the stocks are down due to low gas prices.
    Good thing gamers aren't like that.

  • blackace

    Posted Nov 12, 2008 9:05 am PT

    All those people who got layed off and are at home have nothing better to do then play games and watch T.V. This is probably why the gaming and DVD/Blu-Ray industries are seeing sale increases.

  • EndlessGame

    Posted Nov 12, 2008 9:04 am PT

    Funny how a difference of $30 million doesn't change the 36%.

    ("software sales will be reported at $700 million. That would represent a 36 percent jump over the previous October's take of $514 million," and "projecting a 36 percent year-over-year jump in software sales to $670 million.")

    Still, it'll be nice if the industry rebounds. I like good news.

  • BontraXenderKyl

    Posted Nov 12, 2008 6:21 am PT

    Wait for December then.

  • taxman25

    Posted Nov 12, 2008 5:35 am PT

    I expect an increase in the October/November sales due to the # of big releases. In a 6 week period you have Fable II,Fallout III, Little Big Planet,
    Call of Duty World At War, Resistance II,Gears of War II, & Tomb Raider Underworld among others.

  • TheoleDominion

    Posted Nov 11, 2008 11:33 pm PT

    With the past several months of high gas prices and everything else. People were staying home more which probably helps the gaming industry more. Home entertainment as at a premium right now.

  • LysanderNaFaile

    Posted Nov 11, 2008 8:34 pm PT

    A big slump may actually help the industry out in the longer term. It means that companys which turn out poorer to medicore products are going to go to the wall whilst those developers who have maintained a solid reputation are going to thrive.

    This ladies and gents is a cull: let the strong, innovative, creative and resourseful survive. Oh and maybe EA as well.

  • MSE369

    Posted Nov 11, 2008 8:34 pm PT

    LittleBIGPlanet was HUGE Too!!
    no mention of that ?
    no surprise..

  • Ra-Devil

    Posted Nov 11, 2008 7:54 pm PT

    Yeah... when Left 4 Dead comes out... I'm buying it... on the spot.. just played the demo, and it was the first time a game was pure enjoyment and entertainment for me. There was no tedeous nature to the game, there was no dislikes I had with it, and generally, I'm really hard on games.

    Left 4 Dead: If you're not looking forward to it, you haven't tried it yet. Demo on Steam and Xbox Live. Hells to the Yeah.

  • TheProdigyIV

    Posted Nov 11, 2008 6:16 pm PT

    MERCS 2 WAS BIG! Lmao

  • rok_diablo

    Posted Nov 11, 2008 5:31 pm PT

    LOL.....it's the "consumers" who have to make up their minds.

  • zintarr

    Posted Nov 11, 2008 5:02 pm PT

    I love how lost these analyst are. The industry is up...no, its down...wait, its up. Make up your minds!

  • J-man45

    Posted Nov 11, 2008 4:39 pm PT

    yeah, go Guitar Hero.

  • goatheadman1

    Posted Nov 11, 2008 4:11 pm PT

    october and november is when the good ones are coming out

  • Fareru

    Posted Nov 11, 2008 4:03 pm PT

    A boom is what the industry needs right now. It'll be good to stimulate the game markets, especially now. I may not have the money to buy all the games at once, as some people are complaining, but I can wait a week or two for a new cheque so I can buy another game later. No big deal really.

  • raahsnavj

    Posted Nov 11, 2008 2:31 pm PT

    I see no reason why people are mad that all the 'great' games come out at the same time. This is actually the perfect storm. It allows smart gamers to pick up the ones they want most at near release and then the others after a $10 drop or more by the time you get to it.

    The only people that lose out with all the games coming out at one time are the people foolish enough to buy too many games to actually play in a reasonable time frame.

  • irongobbo

    Posted Nov 11, 2008 2:12 pm PT

    i am sooo disapointed that all these games came out at the same thime!!! I do not have $$$ for all of them!!! I got Fallout 3 on PC rightnow, and i couldnt imagine the time i would need to play all of them at one time. But ill get them, just time to fill up space between the next game, since nothing is coming out on wii anymore that is worth buying

  • breakitapart

    Posted Nov 11, 2008 1:39 pm PT

    Fable 2, Gers of War 2, Fallout 3- all great on my 360. Resistance 2 actually got me playing my PS3 again...whew! Good thing I was saving for all of these great games since April.

  • Makaatsu

    Posted Nov 11, 2008 1:37 pm PT

    well according to VGC the 360 outsold the PS3 by about 200k or so. 2 months after the price cut it seems to still be doing well so will be interesting to see what numbers October had for both software and hardware.

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