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Analysts Predict March NPD Rebound, Console Price Cuts In September

Analysts Predict March NPD Rebound, Console Price Cuts In September

April 12, 2010 | By Kris Graft

April 12, 2010 | By Kris Graft
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Ahead of March 2010's U.S. game industry sales figures compiled by the NPD Group, due out this Thursday, analysts said March should be a rebound month for the industry, as one analyst predicted a September price cut for Xbox 360 and PS3.

Wedbush analyst Michael Pachter said he expects retail video game console software sales to rise 6 percent year-on-year to $840 million. He said top-selling March titles included Electronic Arts' Battlefield: Bad Company 2, Nintendo's Pokemon HeartGold and SoulSilver, Sony's God of War III and Square Enix's Final Fantasy XIII.

On the hardware front, Pachter forecast that Wii sales were down 10 percent year-on-year to 540,000 unts in March, with Xbox 360 rising 37 percent to 450,000 units and PlayStation 3 rising 98 percent to 430,000 units.

March is an easier year-over-year comparison than January and February this year -- March 2009 saw total industry sales (software, hardware and accessories) fall 17 percent during the month. January and February 2009 saw sales rise 13 and 10 percent, respectively.

Pachter also expects Microsoft and Sony to cut the price of Xbox 360 and PS3 "around September." He added, "At a minimum, we anticipate the introduction of a more feature-packed Xbox 360 as the standard SKU in late 2010 (likely with a 250Gb hard drive) at the same $299 price point, and think that Microsoft will cut price before the fall only if it begins to lose significant market share to Sony."

He continued, "It is far more likely that we will see a slim version of the Xbox 360 with a 250 Gb hard drive and with Project Natal bundled into the box while maintaining the $299 price point, especially if Sony does not lower the price of the PS3 by the time Natal and Sonys Move controllers launch in the fall."

Colin Sebastian with Lazard Capital Markets expects U.S. retail console software sales to be flat to up 5 percent in March. Sebastian added, "Wii inventories a bit better, PS3 still in short supply. One of the ironies in the video game industry is the short supply of console hardware -- Wii and PS3 -- even as sluggish sales trends persist at retail.

"While Wii supplies are improving, according to our checks, we believe that the PS3 may remain in short supply through the summer, as Sony underestimated demand and also may be preparing for internal hardware upgrades," he said.

Analyst Doug Creutz with Cowen said he expects console and handheld software to rise 9 percent year-on-year, "the first year-on-year increase since September and only the second in the last 12 months, he said.

Creutz added that April NPD sales will decline, but expects "very strong double-digit industry growth in May and June."


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