Software sales rebound in September, PS3 may top hardware - Analysts

Wedbush Morgan's Pachter, EEDAR's Divnich project double-digit game growth last month, say Sony has most to gain from price cut.


It has been six full months since the so-called "recession-resistant" gaming industry has posted anything other than double-digit year-over-year software sales declines in the US at retail. However, the industry may finally be ready to emerge from its funk, as a pair of prominent game-industry analysts both project double-digit sales growth during September.

Has the PS3's day come?
Has the PS3's day come?

The NPD Group is expected to release its monthly US retail sales recap next Thursday, and Wedbush Morgan Securities analyst Michael Pachter issued an industry note to investors today forecasting $750 million in software revenue for the month. That figure is a solid 21 percent above September 2008, which saw software sales of $618 million.

With Microsoft pegging Halo 3: ODST's September sales at 2.5 million, Pachter said The Beatles: Rock Band sold 1.3 million units in the US, outpacing Guitar Hero 5's 700,000 units. US retail sales of Madden NFL 10 hit 600,000 for the month, Pachter believes, with other projections including Marvel: Ultimate Alliance 2 at 450,000 and Need for Speed: Shift selling 250,000.

Pachter believes that the recent hardware price cuts for the Xbox 360, PlayStation 3, and Wii will sustain sales growth through the end of the year. Namely, the prolific analyst said that Sony has the most to gain from its introduction of the $299 PS3 Slim.

"We believe that the recent round of price cuts may benefit the PS3 the most in coming months, given that unit sales last year were only 1.5 million for the September-December 2008 period," Pachter wrote. "The Xbox 360 has outsold the PS3 for the past 13 months, likely due to a higher perceived value proposition. … We think that the PS3 will outsell the Xbox 360 in September, and may continue to do so for the rest of the year."

Laying out those figures, Pachter projected that PS3 sales would spike 76 percent year-over-year to 410,000, with Wii sales slipping 45 percent to 390,000. Microsoft's system, he believes, will see sales grow a marginal 1 percent to 350,000 units, though Pachter believes the publisher has a number of options to regain ground, should Sony's system begin to pull away.

"Microsoft has the ability to lower price yet again, but we anticipate the introduction of a more feature-packed Xbox 360 in early 2010 (likely with a 250GB hard drive) at the same $299 price point; we think that Microsoft will cut price only if it begins to lose significant market share to Sony," he said.

Electronic Entertainment Design and Research analyst Jesse Divnich offered a more cautious take on September software sales, projecting a 16 percent year-over-year climb to $715 million. However, Divnich noted that the double-digit growth isn't likely to continue through the remainder of the year. October software, he said, should creep up by a high single-digit margin, with low double-digits and single-digit growth following in November and December.

Offering an anticipated breakdown of results, Divnich forecast Halo 3: ODST sales to be 1.8 million, some 700,000 units below Microsoft's aforementioned count. Wii Sports Resort followed with 500,000 units, Divnich projected, with The Beatles: Rock Band on the Wii and Xbox 360 combining for 675,000 units. Divnich's other top-sellers included Marvel: Ultimate Alliance 2 (X360 - 300,000), Madden NFL 10 (X360 - 275,000), and Batman: Arkham Asylum (X360, PS3 - 250,000, 250,000).

Divnich also took a crack at hardware sales, projecting, like Pachter, that Sony's system will top the chart with 400,000 units. Wii sales were estimated to be 375,000 units, holding a slight lead over the Xbox 360's projected 370,000 units.

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