Gaming set to grow through August 2010 - Analyst

Wedbush Morgan's Michael Pachter predicts that after potentially disappointing October results, "double-digit gains will be the norm" until the back half of next year.

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The industry-tracking NPD Group yesterday released its US retail sales figures for September, and the numbers--while positive for the first time in six months--didn't live up to expectations. Today, Wedbush Morgan Securities' Michael Pachter released a note to investors, echoing a fellow analyst's warning about the current month's sales while painting a rosier longer-term picture of the industry.

Guitar Hero 5 and The Beatles: Rock Band may have disappointed in their retail debuts, but Pachter expects game sales to turn it up next month.
Guitar Hero 5 and The Beatles: Rock Band may have disappointed in their retail debuts, but Pachter expects game sales to turn it up next month.

"We think that very solid hardware sales will continue in October, but expect the month to show a slight year-over-year decline, meaning that investors will likely have to be patient until the November sales data is released to see a substantial rebound in growth," Pachter said. "From November forward, we think that double-digit gains will be the norm, at least through August 2010."

In assessing what went wrong with his estimates for the September sales--which were up 5 percent when Pachter had predicted 21 percent--the analyst pointed to the music genre specifically. He had predicted the Guitar Hero and Rock Band franchises to bring in $220 million for the month with new releases like The Beatles: Rock Band and Guitar Hero 5. However, Pachter said the NPD Group's figures showed the brands generating just $115 million combined.

"What's striking is the low overall dollar figure for the two games, which were out for almost the entire month," he told GameSpot. "[The Beatles: Rock Band and Guitar Hero 5] combined fell short of $100 million, and I had forecast $210 million."

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