Next generation video games start to shine in holiday 2014

While there's an understandable excitement that surrounds the launch of new video game hardware, the real fun usually doesn't start until a year or so after the systems hit store shelves.

Last year's launch of the Xbox One and PlayStation 4, if we're being honest with ourselves, didn't have an especially stellar lineup of games. But the story's much different as 2014's holiday season gets underway—and that's good news for players.


People walk past a billboard advertising the latest installment of 'Call of Duty' video game near Times Square in New York on November 6, 2014.
Jewel Samad | AFP | Getty Images
People walk past a billboard advertising the latest installment of 'Call of Duty' video game near Times Square in New York on November 6, 2014.

Whether it's good news for game publishers, though, is a different question.

While sales of new video game hardware from Microsoft and Sony are outpacing those of their predecessors, game software sales haven't been keeping up. In the first three quarters of the year, software sales were almost 20 percent off of the 2013 totals in that same time frame.

And there's some concern about whether the industry's go-to big guns will be able to make up that ground.

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"Call of Duty: Advanced Warfare," for example, is a perennial best-seller in the industry, but some analysts are slightly bearing on this year's installmentcalled "Advanced Warfare."

Colin Sebastian of R.W. Baird & Co predicts the game will sell between 18-20 million unitssaying he expects it to ultimately be flat to down 10 percent compared with last year's "Call of Duty: Ghosts."

Sterne Agee analyst Arvind Bhatia says he expects fourth quarter shipments of the game to be down 15 percent versus 2013.

Activision, for its part, says its own tracking shows purchase intent well above what it saw last year.

Part of the reason for that is as players save up to purchase new consoles, they hold back on buying games for their Xbox 360 and PlayStation 3 (which is part of the reason game sales are down this year).

"Console transitions are hard to manage for companies like ours," says Eric Hirshberg, CEO of Activision Publishing. "But if you have to have a set of problems, I'd rather have those problems be that adoption is going faster than expected and (older) software is dropping faster than expected, because that points to the future."

While both the Xbox One and PS4 are selling well compared with their predecessors, Sony's console has pulled ahead. Microsoft, though, has slashed the price on the Xbox One this holiday season to $350, a $150 drop since the system's launch last Novemberand one that undercuts the PS4 by $50.

To further increase interest in the system, Microsoft is offering "Halo: The Master Chief Collection," a compilation of four "Halo" games, including versions of "Halo: Combat Evolved" and "Halo 2" with updated graphics and remastered interstitial cut scenes.

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"Halo" isn't the only classic game getting a facelift for the next generation. Sony remastered 2013's "Tomb Raider" and "The Last of Us" earlier this year. And Take-Two Interactive Software will release an updated version of "Grand Theft Auto V" for both systems on Nov. 18.

Other titles to look for this holiday include Ubisoft's "Assassin's Creed: Unity" and "Far Cry 4," "Super Smash Bros. Wii U" from Nintendo and Electronic Arts' "Dragon Age Inquistion". And previously released games, like "Destiny," from the creators of "Halo," are also expected to be hot sellers.

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It's a rich lineupand it's one that has publishing executives excited about the months to come.

"It looks very sound so far," says Strauss Zelnick, CEO of Take-Two Interactive. "So far everything is performing in line or better than expectations. I think the market is in a good place. ... I think the wind is at our back as an industry. We, and a couple key competitors, are positioned very, very well."