August US game sale slide predicted

Analysts disagree on depth of dip; Wedbush analyst Michael Pachter expects single-digit declines in US retail software sales as Pacific Crest's Evan Wilson projects 18% drop.


Given the industry's prolonged sales struggles this year, the question for analysts isn't, "Are you pessimistic?" It's, "Are you pessimistic enough?" Wedbush's Michael Pachter and Pacific Crest Securities' Evan Wilson today released their August NPD Group sales expectations to investors, offering two divergent--but still dismal--outlooks on the game industry's performance for the month.

Madden reigned in August, but the NPD numbers could still be a cold shower for hopeful industry watchers.
Madden reigned in August, but the NPD numbers could still be a cold shower for hopeful industry watchers.

When the industry-tracking NPD Group releases its August retail sales figures on Thursday, Pachter believes the firm will find software sales were down 6 percent year-over-year to $445 million, with hardware revenues slipping about 3 percent to roughly $289 million. On the other hand, Wilson expects software sales to be down a whopping 18 percent to $385 million.

One of the main reasons for the expected decline on both fronts was the stellar August 2009 debut of Batman: Arkham Asylum. While Electronic Arts already touted a 5 percent bump in sales for Madden NFL 11--likely August's biggest release--Pachter believes that August of 2009's one-two punch of Batman: Arkham Asylum and Wii Sports Resort will prove more than last month's debuts of Mafia II and Kane & Lynch 2: Dog Days can match. While Wilson also pointed to the month's release slate as a primary factor, he did say Mafia II should lead new release sales alongside Madden 11.

Other titles that Pachter singled out as notable performers for last month were Red Dead Redemption, NCAA Football 11, Super Mario Galaxy 2, and Wii Fit Plus. While Nintendo's latest evergreen Wii titles continue contributing to the industry's haul, Pachter said the system's overall software sales were "driving most of the decline" for August, down 30 percent in total.

"While August will likely be another down month, we expect a meaningful rebound in September (due to the release of Halo Reach and the Move controller) and we expect to see evidence of a sustainable rebound in the following months, as the game lineup in October and November is very strong," Pachter said. "We expect modest sales gains in each month to help restore confidence in the sector."

Wilson was less rosy about September's prospects. He acknowledged that the combination of Halo Reach, the Move controller, and Nintendo's recent DS price cuts makes the month "the best opportunity for growth since May," but also noted the industry faces a tough comparison versus September 2009. Halo: ODST sold very well last September, he noted, and the month saw multiple weeks' worth of sales for The Beatles: Rock Band and Guitar Hero 5. This year, there is no Rock Band release in September and Guitar Hero: Warriors of Rock will launch at the very end of the month.

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