Analysts predict June gloom for US game market

Wedbush's Pachter expects 8% decline; Lazard's Sebastian forecasts 15% drop; Red Dead Redemption, Super Mario Galaxy 2 pegged as top sellers.

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Prior to NPD's delayed report on non-PC US game sales for May, analysts were bullish on the month. Many thought it would see improved sales, thanks to the releases of such blockbusters as Super Mario Galaxy 2, UFC Undisputed 2010, and Red Dead Redemption.

Analysts predict Red Dead Redemption will ride high again on the June NPD charts.
Analysts predict Red Dead Redemption will ride high again on the June NPD charts.

They were wrong.

The week before last, NPD reported that sales of combined software, hardware, and accessories sales actually declined 5 percent during the month compared to May 2009. As a result, analysts issued dreary after-action reports, with Wedbush's Michael Pachter going so far as to say the domestic game industry may be in a permanent decline.

With June's numbers expected Thursday afternoon, analysts are now taking a more conservative tack. "We forecast software sales of $575 million, down 8 percent compared to last year's $627 million," said Pachter in a note released today. "Despite improved June hardware sales of Xbox 360 and PS3, we expect June software sales to be down due to a difficult dollar comparison, a disappointing May (up only 4 percent despite a strong release slate), and a lackluster release slate."

Pachter attributes the hardware increase to the introduction of the new 250GB Xbox 360, which launched in mid-June. He also pegged Red Dead Redemption and Super Mario Galaxy 2--two of May's top titles--to be amongst the highest selling games in June.

Lazard Capital Group's Colin Sebastian was even more pessimistic, auguring an overall decline of 15 percent. "Beyond ongoing sluggish game sales, the primary reason for the decline in sales is the lack of significant new releases during the month. While catalog sales of Red Dead Redemption remain healthy, according to our retail checks, we believe that sales were a bit soft for newer releases, including Blur and Tiger Woods [PGA TOUR 11]."

That said, Sebastian predicted software sales would be up by 15 percent, and that hardware sales would be "stable" year-over-year. "Our checks also suggest somewhat improving availability of PS3 hardware, while the new 360 Slim and steady sales of Nintendo's Wii should generate flat to slightly higher hardware sales versus May. We do not expect a significant increase in handheld unit sales until the launch of the Nintendo 3DS (we expect Q4 in Japan and Q1-2011 in North America)."

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