Analysts: Software stays strong in January

Pachter, Divnich, and Wilson project US game revenue will climb 6-12% despite rough economy; Wii Fit said to be on track for month's best-ever performance.

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December 2008 capped off a stellar year for the US gaming industry, adding $5.29 billion in hardware, software, and accessory sales to the already soaring $21.3 billion total-year haul. With the 19 percent year-over-year sales growth in 2008 a thing of the past, analysts are now wondering how the game industry will fare in the face of a deepening recession without the ever-lucrative holiday shopping season at its back.

Healthy living, healthy sales.
Healthy living, healthy sales.

The first indicator of the industry's performance will come later this week, when the NPD Group releases its January recap of the US game industry's performance at retail. Wedbush Morgan Securities analyst Michael Pachter believes the industry's recession resistance will continue into the New Year. He predicts domestic software sales will grow 12 percent for the month to $690 million.

According to Pachter, top performers in January include Activision's Guitar Hero World Tour and Call of Duty: World at War, Microsoft's Gears of War 2, MTV Games' Rock Band 2, and Nintendo's Wii Fit.

Electronic Entertainment Design and Research analyst Jesse Divnich was particularly enthused about Wii Fit. Divnich believes Nintendo has opened the floodgates on the Wii Balance Board-bundled title, which was already the number-three best-seller of 2008 with 4.53 million units. He predicts the fitness trainer will sell 700,000 copies on the month, a figure that would set a new record for the most single-SKU sales in January.

On the whole, Divnich concurs with Pachter's prediction that software will see a 12 percent year-over-year climb, rising to approximately $685 million. Interestingly, Divnich foresees Nintendo's popular Wii and DS enjoying around half of the total console and handheld software sales for the month.

Pacific Crest Securities' Evan Wilson broke ranks with Divnich and Pachter, projecting more modest gains of $650 million in US software sales, a 6 percent rise. Wilson believes the top-selling titles on the month will be EA's Lord of the Rings: Conquest and Skate 2, as well as continued strong sales of Call of Duty: World at War, Guitar Hero World Tour, Rock Band, Wii Fit, and Wii Play.

Divnich and Pachter also laid out expectations for hardware sales on the month. Waging a more aggressive guess, Divnich anticipates a 58 percent climb in console hardware sales. As has become standard, Wii sales are expected to lead the pack with 740,000 units on the month (a 170 percent year-over-year increase), followed by the Xbox 360 with 300,000 units (a 30 percent increase). Of note, Divnich expects Sony's PlayStation 3 to continue to struggle, projecting sales of the console to slip nearly 22 percent from a year ago to 210,000 units.

Pachter takes a more conservative outlook on hardware sales, projecting a 35 percent year-over-year gain. He expects Wii sales to lead with 550,000 units, followed by the Xbox 360's 275,000 systems and the PS3's 225,000 consoles.

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Avatar image for chrisvandergaag
chrisvandergaag

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Something is not adding up. Am I the only one wondering why sales figures are so rosy, despite reported losses by EA, Microsoft and others, and all the layoffs?

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Avatar image for jrabbit99
jrabbit99

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Wii sales are still going strong!

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_Brennan_

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The only reason Wii fit sells so well is because of all the overweight people in the US trying to find a fun way to get in shape. NOTE: Not trying to offend anyone, that's just my guess as to why the wii fit is selling well. ;)

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thekodaman

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I predict that Analysts are useless, Iamirite?

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the_sorrow_MGS_

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Very exciting...oh wait.

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hunter8man

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Sony better get hopping on a price drop around summertime if things stay as bad as they are with the economy. But I love the fact that us gamers are so devoted to our favorite hobby that nothing will stop us from getting whatever game we want. If anything, maybe these hard economic times will have us see an increase in quality of gameplay over graphics or licensing.

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nintendokid

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Video games consumerism is more recession- than other hobbies/entertainment, not recession-proof. If it were full proof, EA, THQ, Microsoft game studios, Disney Interactive, etc., wouldn't have had to make all those layoffs.

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tidyspidey

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@Trooperdx3117 - the figures they quote are published figures for annual revenues/profits etc for all companies. Any information like this is publicly available for any Public Limited Company or Corporation - it has to be by law. The games industry is known for being "recession proof" - this is why you keep reading about high profits whilst also reading about all the studios closing etc...

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Avatar image for FlashCharge
FlashCharge

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Hard to say what impact the economy will have on gaming industry as 2009 continues the drain on the pocket book. But if they are right the PS3 in hardware sales is not far behind the 360. If Sony can produce some quality games in 2009 and couple that with a price cut, sales may even increase.

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Avatar image for Generalmojo
Generalmojo

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ok.....(moves onto next article)

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Trooperdx3117

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Seriously where do these guys get these figures, there is a recession on and a lot of people don't have jobs, most people will only be spending their money on essential goods rather than games

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andrew_ribbons

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Also the Wii Fit doesn't actually make you fitter. It can built muscle and endurance, but if doesn't burn as much fat as a good brisk jog, and the jog is cheaper X3

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Avatar image for andrew_ribbons
andrew_ribbons

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"Looks like sony better drop that ps3 price asap, because this economic downturn will continue to lean consumers towards whats cheaper..not necessarily better. Same for microsoft!" Several things wrong with this. Firstly, the PS3 does poorly because it's more expensive but for games it's most definitely not better than the 360, and i'm yet to be convinced it's graphical and computing power "prowess" are any better either. Secondly, if your initial statement were to be believed, then it would be Microsoft's console on top since the 360 is cheaper than the Wii, and here in England that includes the 60GB Pro edition, which is £20 cheaper than a standard Wii. Just because Nintendo has made a habit of selling bathroom scales and mini-games dressed as full games, does not mean it's the better console. There's nothing to be proud of in selling to housewives and pensioners, where games are concerned at least. There's just nothing interesting in Nintendo's games selection to me because of all this casual game focus.

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Avatar image for pure_impact
pure_impact

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Looks like sony better drop that ps3 price asap, because this economic downturn will continue to lean consumers towards whats cheaper..not necessarily better. Same for microsoft! The big N will continue to rake in the dough this year..god help sony and microsoft if the wii has ANY kind of a price drop this year, lol!

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Avatar image for Great_Ragnarok
Great_Ragnarok

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agreed RE5 is overrated! but moving on to topic, I think developers should cut the price of gaming. I mean its seriously difficult to justify 50$-60$ price for most games. cut the price to 30$-40$ and I'm certain they will see an increase in profit. affordability is key.

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Avatar image for YoussefS
YoussefS

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Rofl RE5 OVERRATED!!! i swear i played the demo and it is sh*t i mean the movement is slow and whats up with them not allowing players to run and shoot or move and shoot why do u have to hold still yes u heard it from me first it is lame. Fear 2 is better but RE5 being over hyped no one is going to give it a bad review.

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financeranger

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snore

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Krusnikzero2

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good to hear

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ItsEvolution

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You had me up until "Xbox Ownz!". Lame.

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supermanmega

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the only reason the wii sells so many is because its cheap, kid friendly games, and is suppose to be active with the wii remotes...its fun at first but everybody i have ever talked to got bored of there wii in a month and sold it. Xbox Ownz!

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deathcell731

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yessss

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DonTonyDeluca

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game sales are defenitly going to be hot this month, halo wars, fear 2, RE5, just to name a few, plus the super popular Wii Fit and rythem games as stated above. I dont agree with Wilson though with LOTR Conquest being a top seller though, that was a bad choice. Games are definetly going to lead the market during these hard times. Strange how we hear about layoffs all the time but companies have to adapt to the changes and cut down and manage better i guess

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glez13

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LOL everyone buys wii play just for the extra wii-mote.

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Avatar image for Pete5506
Pete5506

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its good to see that gaming is still going some what stronge

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ezikiell

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Will the Wii sell over one million consoles for the third month straight? I would be impressed if it did, but I expected that it will sell less than that. Even for something that costs about $90, Wii Fit selling this well is impressive.

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Avatar image for xXl_IMoRTaL_lXx
xXl_IMoRTaL_lXx

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cool.

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wiifan001

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I too would love to have a job that involved me end up always wrong and still receive a lot of money! It doesn't take a professional analyst to know that the Wii will sell the more than the 360 which will sell more than the PS3.

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Avatar image for Vainamoinen82
Vainamoinen82

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*Sigh* These guys are so optimistic about damn near everything except for my beloved PS3... I hope that they're wrong. With LBP getting a lot of critical acclaim, MSG4 winning Gamespot's GOTY, and all the hype and early praise for Killzone 2, I would have thought that more people would be interested in buying a PS3. Anyways, I hope the gaming industry can hang in there, if not, thrive in these hard economic times.

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Red_Dawn345

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How could lord of the rings conquest sell well this month, Its one of the worst games so far this year!

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Avatar image for deactivated-5f0932068c331
deactivated-5f0932068c331

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In these hard economic times people watch what they spend their money on. People will avoid crap. Wii has such a wide variety of games from Wii fit to CoD:WaW that it will continue to dominate the console market. Just look at the companies that are struggling and ask yourself why... software/hardware sales are UP ... so the economy isn't an excuse.

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Avatar image for raahsnavj
raahsnavj

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I know I didn't buy a game in January... I figured I still had all my Christmas games to wrap up... Despite hoping I could make it through February too though, I bet I end up getting a couple of games this month...

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Avatar image for nintendoboy16
nintendoboy16

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You'd better be telling the truth, Analysts. Because you guys always come up with crap to talk about.

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thelastguy

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Sony needs a price drop soon And for those who say Sony will close down the PlayStation divison or the company as a whole, are completely over reacting. Every company goes through hard times.

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SoNin360

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Meh anyone still playing thier Wii Fit..? projecting the wii to sell more than the 360 and the ps3, and the 360 selling more than the ps3 is nothing new, no nothing surprising me here.

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kkevguy47k

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sony is so huge they sell such a wide variety of electronics hardware and software. the gaming section of sony probably wasnt one of the biggest losses. if it was a loss that is, they have sold tons of psps and a good amount of software(for the amount of ps3s)

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09231991

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Cool, this shows that gaming will live on and grow stronger even in an economic crisis.

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Tenjikuronin

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The condition of the current economy doesn't bode well for Sony....

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