Analysts Predict Upswing in April Video Game Sales
While April was an awful month for Sony, the Easter Bunny may have brought some good news for the video game industry as a whole.
The NPD Group will report monthly sales figures after the market closes Thursday and analysts expect sales to rebound solidly, with software sales (the industry's most closely tracked number) poised to increase by up to 15 percent over April 2010.
Michael Pachter, an analyst with Wedbush Securities, is forecasting software sales of $460 million versus last April's $399 million. Both the late Easter holiday and a strong slate of software titles are expected to give the industry a boost.
Not all the news is expected to be quite so sunny, though.
The initial launch of the Nintendo 3DS was strong, but quickly fell off, meaning the device is unlikely to have a meaningful impact on sales numbers. (Nintendo had been betting heavily on the handheld system, but the weak launch lineup is being blamed for the stumble. However, analysts note the launch of both a Zelda game and, perhaps, a Mario game this year should help boost the numbers by the holiday.)
While Wii sales are expected to once again decline, they could pick up in May, after Nintendo cut the system's price by $50 just over one week ago as it begins to lay the groundwork for its next generation system. (Details about that will be unveiled at E3, the industry's annual trade show, in June.)
Microsoft's Xbox 360 is likely to once again see sales increases, however. (The system's hardware sales are currently 40 percent ahead of last year.)
Pachter is predicting higher sales numbers for Sony's PlayStation 3, as well, despite the incursion of that company's online network that resulted in the theft of personal information for over 100 million user accounts.
The clearest sign of the impact of Sony's security problems will be visible in game sale rankings. The company released "Socom 4" on April 19 – typically a very strong franchise for the publisher. However, the game is very heavily focused on its multiplayer component – and the PlayStation Network was shut down on the 20th.
Among the new titles expected to lead sales are Valve Software's "Portal 2" (distributed by Electronic Arts) and Warner Bros. Interactive's "Mortal Kombat". A pair of Pokemon games from Nintendo and Ubisoft's "Just Dance" are expected to perform well, also.
The expected April increase could encourage investors, but analysts warn it might be short-lived.
"Going forward, we continue to believe that sales will be down modestly for 2011," says Pachter. "We think that the shift of playing time in favor of multiplayer online (for games like 'Call of Duty,' 'Halo' and 'Battlefield') and co-op (for games like 'Portal 2') divert gamers’ attention and available time away from considering new purchases, and have a deleterious effect on new game sales."
While the April brick and mortar sales might be encouraging, it's important to remember that they represent just 60 percent of the overall revenue in the video game industry. Used games, game rentals, subscriptions, digital full game downloads, social network games, downloadable content and mobile game apps all contribute to the bottom line of publishers – and are a growing force.
NPD is expected to begin adding digital sales information to its reports in the coming months.
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