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'Call of Duty' Likely to Rule November Video Game Sales

Thursday, 9 Dec 2010 | 12:08 AM ET

Last November, Activision’s annual “Call of Duty” release ruled the sales charts in a dominant fashion. This year, the story is set to repeat itself.

Call of Duty Black Ops
Source: Activision
Call of Duty Black Ops

“Call of Duty: Black Ops” could lead the video game industry to its second consecutive month of year-over-year retail sales gains. If so, that will be the first time this year the sector has managed to pull off that feat.

Analysts, who were surprised by October’s positive software sales, are expecting another surge in November. Michael Pachter of Wedbush Securities predicts software sales will be up 8 percent in November to $1.52 billion when the numbers are released Thursday afternoon after the market closes. (Sales of game software are the most closely tracked numbers by investors, as it gives the best picture to the industry’s overall health.)

Activision has already set the stage for a big month, announcing in mid-November that “Call of Duty: Black Ops” had generated sales of $650 million in its first five days on shelves – an 18 percent (and $100 million) improvement over last year’s “Modern Warfare 2,” which previously held the record for the highest opening of any entertainment property (including movies and books).

Microsoft, meanwhile, has also given investors hope with its late November proclamation that its Kinect motion control sensor had sold 2.5 million units in just 25 days. (Those numbers will be reflected in the “accessories” category of the numbers from The NPD Group.)

While “Black Ops” will lead the charts, it’s likely not the only hit from November. Ubisoft’s “Assassin’s Creed: Brotherhood” and Sony’s “Gran Turismo 5” are also expected to perform well. And Nintendo may have a hit on its hands with “Donkey Kong Country Returns”.

Once again, the Xbox 360 is expected to be the only console hardware that shows any improvement. Pachter estimates that Wii sales will be down 23 percent year over year, despite a very successful Black Friday for Nintendo, which said it sold 600,000 Wiis in the one-week period surrounding the momentous shopping day.

October’s surprise increase was just the third positive month for retail sales in 2010. Faced with competition from new devices, such as the Apple iPad, social media games and increasing digital downloads, brick and mortar retailers have struggled to maintain their position in the industry. Today, retail sales make up just 60 percent of the overall revenue.

Even if the industry posts strong November sales, analysts caution that the long-awaited turnaround at retail is likely not here. December presents another difficult comparison – and the release schedule for the first few months of 2011 has not swayed many analysts to believe growth is on the horizon.

“It would be too strong … to conclude that the industry is back on track,” says Colin Sebastian of Lazard Capital Markets. “There are a lot of games out there that aren’t selling particularly well. We’re still stuck in this land of haves and have-nots.”

Year-to-date, the video game industry is 8 percent behind 2009’s pace – with software sales down 7 percent. Any chance of positive retail growth for the year has long since passed – and analysts aren’t too optimistic about 2011.

Should next year fail to meet the 2010 numbers, it would be the third consecutive year of negative retail growth – the first time the industry has ever faced that.

Questions? Comments? TechCheck@cnbc.com

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