Analysts parse December boon

Wilson, Pachter, and Divnich say the Simpsons and TimeShift underperformed, Guitar Hero III and Rock Band rolled, and HD DVD is dead.

Comments

Related
Guitar Hero III: Legends of Rock
Follow
Rock Band
Follow
The Simpsons Game
Follow

It didn't take a fancy analyst title to foresee December being a massive month at retail for the gaming industry. Reporting on the traditionally biggest money-making month of the year yesterday, industry stat trackers the NPD Group revealed that December sales hit a staggering $4.82 billion for the five-week period ended January 5. The nearly $5 billion month led the industry to $17.94 billion in hardware, software, and accessory sales for 2007, a 43 percent spike over 2006's comparatively paltry $12.53 billion.

Today, industry analysts have issued their reactions to the monumental sales, as well as offered up a few predictions for the upcoming year. With Activision claiming two of the top three slots in monthly sales, as well as three of the top 10 slots in yearly sales, Pacific Crest Securities analyst Evan Wilson notes that the publisher has officially become the largest publisher of console and handheld games in the US, garnering 17.7 percent of the market share compared to Electronic Arts' 17.3 percent.

Activision alone accounted for $477.2 million for December, versus EA's $456.6 million, said Wilson. Nevertheless, EA had a better-than-expected December, according to Wilson, with Rock Band outperforming expectations at 740,000 units sold for the month, a number that was bolstered by its recently revealed 2.5 million track downloads since the game's November launch. Rock Band's sales helped alleviate lower-than-expected sales of The Simpsons Game, which Wilson states were at 501,000 for the month.

Wedbush Morgan Securities analyst Michael Pachter noted that in addition to better-than-expected overall sales for both current-generation and legacy platforms, December sales were boosted by an on-average 18 percent increase in selling price, which stood at $38.36. Pachter noted that one cause for this was the extraordinary popularity of rhythm games Guitar Hero III and Rock Band, which carry MSRP tags of $90/$100 and $169, respectively, for their hardware-bundled SKUs.

Addressing the console race, Pachter noted that although PlayStation 3 sales didn't quite hit expectations--selling 798,000 for the month, compared to the Wii's 1.35 million and the Xbox 360's 1.26 million--Sony should begin to reap benefits from recent Blu-ray victories over rival Toshiba's HD DVD video-playback standard. "We think that the Blu-ray format will prevail over the rival HD DVD format, and think that Sony will emphasize that point in PS3 advertising later this year, ultimately driving sales higher," said Pachter.

However, as it stands now, the PS3's installed base seems to be incapable of supporting more than one game of the same genre released in proximity, according to prediction market the simExchange's Jesse Divnich. "This was proven true as both posted even lower than expected sales, with Half-Life 2: Orange Box only selling 56,600 units while Timeshift only selling 25,000 units," said Divnich. "We do expect this to be a short-term phenomenon as the PS3's install base continues to grow and becomes capable of supporting more than one title in the same genre in the future."

Divnich also weighed in on how the prediction market foresees Nintendo, Sony, and Microsoft proceeding into the New Year. "Exclusive video game software and future hardware price cuts will be the primary catalyst for closing the sales gap between [the PS3] and the Xbox 360," said Divnich. "This would mean that the Wii should continue to attempt to solve its hardware constraint issues. The Xbox 360 should continue to focus on its Xbox Live Market place, its software selection, and exclusives. The PS3's best opportunity is to continue to cut hardware prices and advertise heavily on its software exclusives."

Despite the forecast, Evan Wilson notes that 2008 will face a tough comparison year-over-year, but the industry should still see double-digit gains as the year unfolds. "As we look to 2008, we forecast 11.5 percent industry growth, predicated on a preliminary look at the already-announced title lineup versus 2007 titles and our assumptions for catalog growth."

Got a news tip or want to contact us directly? Email news@gamespot.com

  •   View Comments (0)
    Join the conversation
    There are no comments about this story