Analysts expect summer surge in NPD figures

Predictions for July US software sales suggest year-over-year growth between 30-60 percent; Xbox 360 anticipated to beat PS3 in hardware sales thanks to recent price cut.


Last year saw record gaming sales at US retailers, but 2008 is on pace to crush those numbers. Heading into the back half of the year, the industry has already posted six straight months of double-digit software sales growth, and analysts are unified in expecting a seventh later this week when the NPD Group releases its US retail sales figures for July.

Lazard Capital Markets' Colin Sebastian was the most conservative of the usual NPD-prognosticating suspects, suggesting US software sales would only be up 30-35 percent over July 2007's take of $419 million. Wedbush Morgan Securities' Michael Pachter and EEDAR's Jesse Divnich were in virtual agreement, predicting 44 percent and 43 percent, respectively. Topping all comers was Pacific Crest Securities' Evan Wilson, who suggested US retailers sold $670 million in games last month, a 60 percent jump year-over-year.

"We have consistently underestimated growth this year," Pachter said in a note to investors, adding that "the video game software sector remains highly recession-resistant." To account for that ongoing underestimation, Pachter said he will be raising his full-year growth projection for the industry later this month. In April, the analyst projected a 19 percent growth spurt for full-year software sales.

Wilson has already raised his full-year tally from 20 percent to 25 percent. He said Wii software and music-based games have been the biggest factors in the industry's growth this year, but expects growth to slow later in the year as the industry faces increasingly difficult year-over-year comparisons.

On the hardware side, Divnich and Pachter expect the Xbox 360 to retake the Wii runner-up sales crown from the PlayStation 3 this month, based on a spike in sales after Microsoft dropped the price of the discontinued 20GB Xbox 360 model to $299 from $349. Pachter, Sebastian, and Wilson said Microsoft would benefit from cutting the price of the hard-drive-equipped Xbox 360 to $299 permanently, as has been rumored. (Wilson did not address hardware price points in his note.)

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