By Dan Gallagher
Sales of video-game software have been on the decline for six
consecutive months, but analysts expect a return to positive growth
when sales data for September are reported Thursday afternoon.
U.S. game sales in the month of September will be released late
in the day Thursday by the NPD Group. On average, analysts are
expecting software sales to grow about 15% compared with the same
period last year, according to a tally of forecasts by
MarketWatch.
Game sales have been showing declines for the last six months,
as the slumping economy and tough comparisons have made the current
year a difficult one for the industry.
By the end of August, total industry sales were $9.07 billion,
according to NPD data. That's down 14% from sales for the same
period last year.
Analysts widely expect the current year's total sales to come in
flat with last year, but the sector will need to have a strong
holiday-sales period to get to that point. Several of the year's
most anticipated titles, including "Call of Duty: Modern Warfare
2," have yet to hit store shelves.
"Overall, September sales and retail data indicate that the
preholiday season is off to a good start," said Jesse Divnich of
Electronic Entertainment Design and Research, a game
market-research firm, in a report this week. "These results will
bring some much-needed pressure relief to both publishers and
retailers alike amid concerns the economy may still have posed a
threat to holiday-season performance."
Music makes comeback
Among the expected top sellers for September are two of the main
music game franchises - both of which saw big releases during the
month.
"The Beatles: Rock Band" hit stores early in the month, and
analysts anticipate it will be one of the top titles for the
period. The game was produced by Harmonix and Viacom Inc.'s (VIA)
MTV Games, and distributed by Electronic Arts Inc. (ERTS).
Also, the month saw the debut of "Guitar Hero 5," the latest in
the popular franchise owned by Activision Blizzard Inc. (ATVI). The
company ran a promotion in which buyers of the game could get a
free copy of "Guitar Hero: Van Halen" when it hit stores in
December.
Another big seller for the month is expected to be "Need for
Speed Shift" from EA, and "Halo ODST," the latest in the popular
sci-fi franchise that is exclusive to Microsoft Corp.'s (MSFT) Xbox
360.
Console makers are also expected to see a boost to sales, as
they all trimmed back the prices on their devices during the month.
Sony Corp. (SNE) cut back the price on its PlayStation 3 to $299,
while Nintendo (NTDOY) lowered the price of its popular Wii console
by $50 to bring its price tag to $199.
"We think that these cuts materially boosted demand, but think
that the late-September Wii price cut was not enough to prevent
overall unit sales from declining again vs. last year," Michael
Pachter of Wedbush Morgan wrote to clients.
Improved game sales will also raise sentiment around retailers
such as GameStop Corp. (GME) and Amazon.com Inc. (AMZN). In its
last earnings report, Amazon admitted that slowing game sales hurt
its flagship media business.
Doug Creutz of Cowen & Co. said the gains to game publishers
like EA, Activision, Ubisoft, THQ Inc. (THQI) and Take-Two
Interactive Software Inc. (TTWO) could be offset by growing sales
of used games.
"Some of the more bullish estimates for sales - both in
September and through the end of the year - anticipate a
significant lift to software sales from the impact of recent
hardware price cuts," Creutz wrote in a report Monday. "We note
that the significant growth of used games since the last cycle,
along with continued pressures on the consumer, could limit the
lift to new game sales."
-Dan Gallagher; 415-439-6400; AskNewswires@dowjones.com