Consumer Nation

Happy Holidays in Store for Videogame Industry

While there's little doubt the videogame industry will once again end the year with negative growth, publishers are certainly positioning themselves to go out with a good fight this holiday season.

Battlefield 3

The lineup of major franchises releasing games in the fourth quarter is unparalleled this year and could be a boon for both players and game makers — and, ultimately, investors.

The December quarter is the most important to the videogame industry. It represents about 46 percent of annual software units sold, with the vast majority of that occurring in November and December. And many analysts are optimistic about this year's outlook.

"It looks very strong," says Billy Pidgeon, senior analyst of M2 Research. "People who are looking for hardcore games have plenty of choices and there's a good slate of must-have games this holiday season — and that's going to spur other sales, like hardware and more online sales of the add-ons."

The biggest battle is once again between Electronic Arts and Activision-Blizzard , who will once again face off in the action shooter arena. Last year, Activision's latest installment of the "Call of Duty" series soundly defeated EA's "Medal of Honor." This year, it's more of a race.

EA's "Battlefield 3" soared in its first week, selling 5 million copies and earning solid reviews. That's not likely to slow momentum for "Call of Duty: Modern Warfare 3," but it's a solid enough performance to show there's a definite future in the "Battlefield" franchise, and that perhaps Wall Street's initial sales estimates for the game were too low.

With hardware price cuts to Nintendo's Wii and Sony's PlayStation 3 this year, the holiday season could also usher in a new wave of players. (Microsoft has said it doesn't plan to cut the price of the Xbox 360, but as PS3 worldwide sales numbers edge closer to the 360, the company could change its mind.)

If so, they're coming at a golden age in this generation – with several critically acclaimed titles hitting shelves this year, including Warner Bros.’s "Batman: Arkham City," Ubisoft's "Assassin's Creed: Revelations" and Bethesda's "The Elder Scrolls V: Skyrim").

There are also plenty of family friendly titles on the way. Microsoft plans to once again aggressively push its Kinect peripheral, letting players enjoy games without the need for a controller. Sony is being less forward with the PlayStation Move, but will offer a handful of new titles as well.

For Nintendo, the Wii will take what's likely to be its final bow with the release of "The Legend of Zelda: Skyward Sword." Though the company has said it plans to continue selling the system after the launch of the Wii U next year, any game development from the company will be focused on the new machine. (Independent publishers, though, may continue to make lots of family friendly games for Wii, given its huge installed base.)

Sony's looking for "Uncharted 3: Drake's Deception" to lead sales. The hit franchise, which is, in many ways, the rightful heir to Indiana Jones' fedora, has earned stellar reviews and has been a leading franchise for the company.

Microsoft, meanwhile, is courting core gamers with the last installment in the current "Gears of War" trilogy and a reworking of "Halo: Combat Evolved," to celebrate the franchise's 10th anniversary. (The Master Chief will return in a new title next year.)

The big risk in this blockbuster-palooza holiday period is that the avalanche of titles will bury some games that normally would be hits. Games like Warner's "The Lord of the Rings: War in the North" simply don't have the marketing budgets to keep up with the $100 million EA spent on "Battlefield 3."

"There will be a good amount of high quality games for the holidays, but I don't think the overall demand for traditional videogames is any higher than it was six months ago," says Colin Sebastian of R.W. Baird. "You'll see a ramp up in sales, but it's still a sluggish market overall....Marketing budgets definitely help in this environment. EA and Activision have a lot of [marketing] muscle [and] smaller publishers, regardless of the quality of their games, are going to struggle. There has to be word of mouth or some other variable to get those games on the same level."  

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