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Game retail weakens as consumers turn to alternative entertainment - analyst

Game retail weakens as consumers turn to alternative entertainment - analyst

May 3, 2012 | By Mike Rose

May 3, 2012 | By Mike Rose
More: Console/PC, Social/Online, Business/Marketing

A new report from analyst firm PiperJaffray projects that the upcoming NPD results for April 2012 will show U.S. video game software sales have declined significantly year-over-year.

With NPD's data for April due to be released on May 10, PiperJaffray's Michael Olson and Andrew Connor also expect video game sales to be down in May year-over-year, due to "thinning sell-through tails," although the decline will be offset by strong sales of Take-Two and Rockstar's Max Payne 3.

"Gamers are exiting the market for alternative forms of entertainment and leisure activities," states the report. "Consumers are increasingly demanding interactive media experiences that are social, mobile and free to play.

"These activities include photo/video sharing and social gaming, all of which are activities that the current consoles and new handhelds do not support effectively." The firm is estimating April NPD video game software sales of $375 million, down 25 percent year-on-year.

EA and BioWare's Mass Effect 3 was the highest-selling game title in the U.S. during April, says the report, followed by Activision's Prototype 2 and Nintendo-published Xenoblade Chronicles.

The analysts point out that Electronic Arts had no new retail titles launching in April, nor does it have titles launching in May, leading to "disappointing" sales during this period -- although they expect EA to report solid Star Wars: The Old Republic subscription numbers during the company's earnings call next week.

The analysts estimate that during April, Activision saw a modest increase in U.S. retail sales sales year-over-year during April, thanks to the launch of Prototype 2. However, the month also saw "weak Modern Warfare 3 demand," say the reports, indicating "a significant shortfall compared to Black Ops in the same period last year."

Forecasting U.S. game retail for May, Olson and Connor believe that Take-Two and Rockstar's Max Payne 3 will outsell Ubisoft's Tom Clancy's Ghost Recon: Future, Dragon's Dogma and Sniper Elite V2 combined. The analyst report focuses on console games, and did not include projections for Blizzard's highly-anticipated May PC release, Diablo III.

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