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Analysts: November Landslide For Wii And  Gears 2 ,  Sony Lags Behind?
Analysts: November Landslide For Wii And Gears 2, Sony Lags Behind? Exclusive
December 8, 2008 | By Leigh Alexander

December 8, 2008 | By Leigh Alexander
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More: Console/PC, Exclusive



Analysts expect a sales bump for November NPD -- but as this month sees only two days of sales post-Thanksgiving as opposed to last year's nine, the comparison year-over-year will be challenging.

EEDAR's currently predicting a 3 percent year over year increase to $1.34 billion, while Wedbush Morgan's Michael Pachter expects 7 percent growth to about $1.4 billion.

EEDAR also says there were 11 percent more new releases this November than in last year's -- 210 new games, to be exact, versus 2007's 188. Of these, says EEDAR's Jesse Divnich, 47 will have beaten the 100,000 unit mark in the month.

The Month's Hits -- And Misses

Perhaps predictably, the top sellers are expected to be Gears of War 2 -- which Pachter says may have sold as many as 3 million units in the month -- Call of Duty: World at War, Left 4 Dead and Resistance 2. EEDAR's Divnich also includes Animal Crossing: City Folk among the surprise hits, pegging over 200,000 units sold for the title.

Divnich joins Lazard's Colin Sebastian in asserting that EA's Mirror's Edge and Need For Speed: Undercover are likely to come in on the weak end.

"We believe that low quality scores and low replay value are to blame for Mirror’s Edge’s poor sales," says Divnich of the title, which nonetheless maintains a fairly respectable Metacritic score of 78.

"However, If EA can improve quality and release a sequel during a less congested time-period (off-holiday)," he adds, "we believe that Mirror’s Edge 2 could achieve some market success."

The Music Game 'Fad'?

The jury seems to be out on how the music game genre is performing. Divnich sees sales for Guitar Hero: World Tour down 50 percent series over series, retailers have seen "softness" in the music genre, and Lazard's Sebastian recently said that weakening for Rock Band 2 will impact EA.

"It is pretty clear that the series has already reached its peak among the mass-market audience," says Divnich.

Recently, though, Cowen Group's Doug Creutz credited the game's lackluster sales to sharp supply constraints, and GameStop CEO Dan DeMatteo supported the assertion that the game is still selling out gangbusters. To contrast, Divnich believes that the fact the game is selling below retail price on eBay indicates a supply-demand equilibrium.

Wedbush Morgan's Pachter agrees that sales for World Tour are down by half, but estimates the game will still lead sales for Activision Blizzard with 900,000 life-to-date and 500,000 life-to-date for the full band kit.

The Hardware Side

The Christmas season is always kind to the Wii, marketed as a holiday must-have and already topping Black Friday lists. Nintendo recently asserted it sold 800,000 Wiis on the Thanksgiving weekend alone -- as much as Pachter estimates the recently price-chopped Xbox 360 sold in the entire month of November.

Wii could show to have sold 1.4 million units or more in the month, analysts agree, with the PS3 grievously lagging compared to the other two at 400,000.

It seems this is likely to be the first holiday season where Wii sales aren't significantly crippled by supply constraints, the analysts say -- Pachter sees Wii supplies "increased significantly" in November.

"Due to the calendar shift, we think that gift-giving of consoles was somewhat muted, and we expect overall console and handheld hardware sales to decline by 5 percent in units year-over-year," says Pachter.

"However, we expect next generation home console unit sales to increase by 17 percent, reinforcing our confidence in robust software sales growth next year."

Handhelds Take A Hit, But DS Thrives

Finally, as far as portable hardware goes, EEDAR's Divnich expects the DS to perform strongly at about 1.3 million units, down 11 percent because of the shorter shopping month -- but foresees a bigger 25 percent slump for the PSP to 425,000 units.

"The Sony PSP is the only next-generation home/portable system that is expected to produce negative year-over-year software growth," says Divnich. Coupled with his prediction of double-digit year over year decline for both PSP and PS3 hardware sales, it seems likely that Sony has the biggest struggle ahead of the Big Three when it's time to make the most of pre-holiday numbers.

Still 'Recession-Resistant?'

"We do not believe that the video game consumer has yet been impacted by the looming recession," says Pachter, who believes that hardware growth indicates a healthy consumer.

"We do not expect this to occur; rather, we think that as Nintendo increases Wii supply further, Sony markets Blu-ray, and Microsoft rolls out its 'New Xbox Experience', hardware sales will show year-over-year increases for the last two months of the year."

In that case, says Pachter, investors should be relieved somewhat of their concerns about game industry health amid the recession, and he expects the double-digit unit growth trend to continue through December, concurrently driving software sales well into next year.

Unfortunately, though, with Wii supply up and Xbox 360 supplies down alongside the shortened shopping season on November's calendar this year, Pachter suggests that the impact of all the month's good news may be "masked" -- in other words, investors may not react with the enthusiasm analysts seem to believe is warranted.


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