Analyst: Game industry March-ing through recession
Lazard Capital's Colin Sebastian predicts US game software sales rose 35 percent last month with strong debuts from Smash Bros, Rainbow Six, and Army of Two.
With consumer confidence at a 16-year low and many economists talking recession, many wondered if March would be the month that the game industry finally felt the effects of a slowing US economy. That won't be the case, Colin Sebastian believes. Today, the Lazard Capital Markets analyst's March NPD preview claimed that game software sales once again defied the US' economic malaise.
In a note to investors, Sebastian says he believes gaming software sales in the US saw growth of 35 percent year-over-year in March. By comparison, March 2007 software sales saw double-digit growth over the same period of time in 2006, hiking 15 percent to $574 million.
Sebastian believes new releases, such as Nintendo's Super Smash Bros. Brawl, Ubisoft's Rainbow Six Vegas 2, and EA's Army of Two all made strong debuts. Nintendo and Ubisoft have confirmed as much with their own internal numbers, with Brawl's sales pegged at 1.4 million units in its opening week and Vegas 2 hitting the 2 million milestone two weeks after its launch.
Strong debuts weren't the only factor in March's boom, however. Sebastian noted that catalog sales of Call of Duty 4 and Rock Band remained steady, and improving PlayStation 3 sales were also a boost. The Easter holiday arriving in March, as opposed to April from the year before, as well as "earlier spring breaks," also positively impacted sales, according to Sebastian.
Sebastian also said that March's strong performance will be a trend repeated throughout the summer months, thanks to an unusual number of high-profile midyear releases. "We expect ongoing positive growth trends into the summer months with visibility from a solid release lineup on all three console platforms, including GTAIV, Mario Kart & Wii Fit, GT 5: Prologue, Metal Gear Solid 4, and Spore," he said. "While more modest growth rates are likely in [the second half of 2008], we expect healthy sales trends to continue over the balance of the year."
Providing an odds-and-ends look at upcoming events for the industry, Sebastian also said that Nintendo may reveal at an upcoming investor event an intent to ramp up "production and/or shifting of regional unit allocation [of the Wii], particularly with the pending launch in North America of Wii Fit." Lastly, the analyst said that the European Union will conclude its inquiry into the Vivendi-Activision merger on April 16.
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