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Analysts Mixed On Holiday Outlook
Analysts Mixed On Holiday Outlook Exclusive
November 9, 2011 | By Chris Morris

Gamers might be celebrating a horn of gaming plenty this holiday season, but it's still up in the air if retailers will be cheering along.

The fourth quarter of 2011 has one of the most impressive lineups of titles in years. And it's off to what seems to be a good start. Gears of War 3 sold 3 million copies in its first week. Battlefield 3 hit 5 million in that time. And the launch of Modern Warfare 3 will top that.

Making any sort of hard prediction about holiday sales trends before Black Friday is a fool's game and Wall Street analysts who cover the video game industry say that's especially true this year.

Certainly, there will be some tremendous hits, and some surprises. (Few people expected Batman: Arkham City to be in the running for the #3 spot when it was announced.) On the whole, though, most are mixed about how the industry will do by the time we ring in the new year.

"It's a strong release slate, that's very clear," says Colin Sebastian of R.W. Baird. "There will be a good amount of high quality games for the holidays, but I don't think the overall demand for traditional video games is any different than it was six months ago. Seasonally it is, so you'll see a ramp up in sales, but it's still a sluggish market overall."

Billy Pidgeon, senior analyst of M2 Research, is a bit more optimistic.

"It looks very strong," he says. "People who are looking for hardcore games have plenty of choices, and there's a good slate of must-have games this holiday season and that's going to spur other sales, like hardware and more online sales of the add-ons."

The core gamer is the demographic to watch this year. With so many good titles out and so many offering rich online experiences, hooking players for longer amounts of time people won't have time or inclination to buy them all.

In particular, analysts wonder how big a crater the one-two punch of Battlefield 3 and Modern Warfare 3 will leave.

"The number one question in my mind is how much business is left after Battlefield 3 and Call of Duty come and soak up $1.5 billion in sales," says John Taylor of Arcadia. "How much is left for secondary and tertiary titles?"

Barring something truly unforeseen, the year's #1 and #2 top selling slots are sewed up. It's just a matter of what will the other numbers be. The battle for number three seems like a possible three-way fight, with Arkham City, Skyrim, and Assassin's Creed: Revelations duking it out for bragging rights.

After that, notes Taylor, "there are a lot of meaningless numbers".

Pidgeon again takes a more hopeful tone, acknowledging that some titles are bound to be de-emphasized by the dueling shooters, but when the final numbers come in, the bottom lines of the publishers behind them won't look as bad as some fear.

"I think what you're going to have is a lot of blockbusters, but a good slate of other AAA stuff that doesn't rack up huge numbers for each one, but adds up to tens of millions," he says.

This year, more than ever, marketing matters for games. And that, unfortunately, does not bode well for titles, even critically acclaimed ones, that don't have a solid TV budget.

"Marketing budgets definitely help in this environment," says Sebastian. "EA and Activision have a lot of [marketing] muscle [and] smaller publishers, regardless of the quality of their games, are going to struggle. There has to be word of mouth or some other variable to get those games on the same level."

On the hardware front, no one is too optimistic. Many expect the Wii and DS to see a boost, since they're the cheapest on the market and the 3DS will see a lift thanks to assumed retail bundles and promotions. Many fear the surge will be short lived, though the gaming equivalent of a dead cat bounce.

Even Kinect, which tore up sales charts last year, seems vulnerable. With only a handful of gotta-have titles for the peripheral (the most notable of which is a sequel to last year's must have title), it's going to be tough to grow that business.

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Harry Fields
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This is the first Holiday season where I honestly had to re-evaluate my gaming budget. It's been some time since there was a lineup this spectacular. I still wish some titles would've waited a while to come out to get their dues financially, but whatever doesn't get bought for Christmas will make for a helluva deal in Q2 2012 =).

Ben Lippincott
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I'm somewhat surprised that Skyward Sword isn't being mentioned here. If even a quarter of all Wii owners pick up the game that's a good 22 million in sales. Though I suppose that'd be a pretty high expectation since the series does about 4 million on average.

Russell Carroll
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Link's Training Ground - the game that came with the Wii Zapper sold better than Twilight Princess, which may indicate that Zelda doesn't appeal as broadly as we might think.

Also, North America sales, which is what these analysts are talking about, are 36.5 million for the Wii, at least half of those went to people to play WiiFit, a group I doubt will consider Link's latest.

So if you had 25% attach rate to the 18 million left, yeah, you might see 4 million units. My honest appraisal though is that you'll see closer to 1/2 that amount -- no matter how many 10s the game gets from reviewers.

I hope to be wrong in that regard, but regardless am very much looking forward to picking up my copy and gold remote ;).

Harry Fields
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It could be that Twilight Princess was a last minute port and missing of the core elements that makes Zelda, well, Zelda. Looks like SS is the Zelda we've all been waiting for since 98. I don't suspect it'll push 10 million units this year, but it will surely push a lot over the next year. That's kinda' how Nintendo rolls.

Ben Lippincott
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Mr. Carroll, where did you get that figure? Every site I've been able to find ranks Twilight Princess, even just in America, outselling Link's Crossbow training by around 200,000 units here if we're talking just the Wii and overall outselling the game by double (7 million worldwide).

The closeness when looked at I suspect comes from the lower price and the attached peripheral. Secondly, Twilight Princess is one of the best selling games of the series. But as mentioned by Mr. Fields, Nintendo's games tend to have legs for their sales. New Super Mario Brother's Wii was on the top ten sales for nearly an entire year after release.

I'm certainly not implying that Skyward Sword will crush these other big name titles by holiday, but I am fairly certain that it will be the long term seller that Nintendo is looking to close the Wii's life cycle. I'd even wager that it'll outsell Skyrim by this time next year.

Here's a few sources to corroborate some of what I'm suggesting.

Robert Boyd
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Nobody should ever post sales "data" - you might as well just make up the figures.

Russell Carroll
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The vgchartz numbers aren't reputable. The sales numbers I pull from are Nintendo's own results as reported to investors. They list their best selling games with each report, but only recent high selling games, so you'd need an older than this year report, and I believe they pull down the latest with the new ones, so it would probably take some digging to find older ones that showed this.

oh...and here are the numbers from September of this year thanks to Nintendo Power:

Link's Crossbow Training 3.47

Legend of Zelda: Twilight Princess 2.82

(that's NA only, but from the investor reports was similar in each region)

Again, nothing I would want brag about, those numbers make me sad, but they speak a story that is true no matter what I may personally think of it.

Regardless here is to 4-10 million Skyward Sword copies, though I expect it will be closer to 2, and that Just Dance 3 will be the best selling Wii game this year (3-5 million units).

This new Zelda, from all reports, certainly seems very worthy of everyone's time :).

Bryson Whiteman
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Just want to make the point that Crossbow Training was a $20 game bundled with an accessory. By no means a full $50 Zelda game like Twilight Princess, which had sales split across Wii AND Gamecube.

Daniel Martinez
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Is Zelda the only reputable game which was overlooked?