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Analyst:  CoD5  Discount Could Mean Lower 2009 Prices

Analyst: CoD5 Discount Could Mean Lower 2009 Prices Exclusive

December 23, 2008 | By Leigh Alexander

December 23, 2008 | By Leigh Alexander
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Analysts note Activision's discounting one of its holiday blockbusters, Call of Duty: World at War ten dollars to $49. Could this be the beginning of a discounting trend for 2009?

"While the move may be part of an annual promotion, we believe a $10 discount on one of the industry’s top holiday releases highlights the risk of lower software pricing moving into the new year," says Lazard Capital Markets' Colin Sebastian.

CoD5's price cut follows similar reductions on most Guitar Hero: World Tour SKUs, notes Sebastian -- and it's not just Activision, says Sebastian, who's observing "broader price cuts" from Ubisoft and Electronic Arts.

Sebastian, as well as many of his fellow estimates, shaved a bit more off of their estimates for Activision's fourth quarter.

"Although we previously lowered our estimates on December 8 due to slower than expected Guitar Hero sell-through, we believe that more promotional pricing as well as ongoing concerns over the music genre justify further adjustments," he says.

However, while almost all game publishers are seeing estimate reductions from analysts, Activision isn't taking quite the same level of impact, analysts say.

"Despite the lowered estimates, the overall strength in Activision’s core business and continued growth of Blizzard’s business give us great confidence in our... 2009 estimate," added Wedbush Morgan analyst Michael Pachter, who also slightly lowered expectations for Activision today.


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