Holiday Central

Video game companies hope for a bountiful holiday

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There are two stories to follow this holiday season in the gaming world: Hardware and software.

With the high-profile launch of two new gaming systems and a slew of new games still to come, the video-game industry is hoping Santa brings it a turnaround this year. U.S. consumer spending on video games at brick-and-mortar retail stores has fallen nearly 30 percent in the past three years. In 2010, the industry took in $18.6 billion on sales of hardware, software and accessories, according to the NPD Group. In 2012, that number had slipped to $13.26 billion.

(Read more: 10 must-have video games this holiday season)

As for consumers, many are just hoping to get their hands on an Xbox One or PlayStation 4. The launch of new consoles from Sony and Microsoft is eagerly awaited by players, but neither system has had an especially smooth ride to retail this year. That shouldn't have any noticeable impact on demand, though. Both the PS4 and Xbox One are expected to be hot sellers this year—so hot, in fact, that finding one could be a challenge.

"Our checks indicate there is consumer demand well in excess of supply," said Colin Sebastian, an analyst at R.W. Baird.

The odds of getting one on their respective launch days are low at this point, unless you're willing to camp out. Best Buy, Wal-Mart and other big box retailers will host midnight launch events at multiple locations.

(Read more: The video game industry may be on its way back)

Black Friday will see stores well-stocked, but that will mean fighting the early morning (or, in some cases, early Thanksgiving evening) crowds. Some retailers—like Wal-Mart—are occasionally opening up pre-orders for deliveries with guaranteed ship dates before Christmas, though that's a hit-and-miss strategy.

For many consumers intent of getting a new console but unwilling to camp out as new batches arrive in stores, the best option is to sign up for notifications about online availability. Many retailers, including GameStop, offer this on their websites. Also, ZooAlert and can let you know the minute online orders open up. (Either way, act fast once you hear about it. They'll likely sell out fast.)

Who's got game? TTWO, ATVI or EA?
Who's got game? TTWO, ATVI or EA?

By year's end, Sebastian estimates total Xbox One and PS4 shipments worldwide will range between 5 million to 6 million. Though some analysts have predicted the PS4 will be the top seller, he expects the Xbox One will have equal—or even higher—sales by the end of the launch window.

While some gamers like to claim that console companies deliberately hold back inventory during the holidays to create buzz, analysts dismiss that as mere conspiracy theories.

"You want to have shortages for the holidays, but not at the expense of losing a couple million units of sales," said Eric Handler, senior equity analyst at MKM Partners.

Video-game hardware, of course, is just a tool. Ultimately, it's all about the games—and the vast majority of video-game sales occur in November and December.

"Grand Theft Auto V" from Take-Two Interactive Software seems a shoe-in to be the year's best-selling title. Within three days, it had sales of $1 billion. And in its first six weeks, the game outsold the lifetime totals of its predecessor, and it will continue to drive sales through the holiday season.

(Read more: New 'Grand Theft Auto' outrages critics again)

Activision's "Call of Duty," which has held that top-seller position for the past five years, should provide another boost with this year's installment "Call of Duty: Ghosts." Pre-orders are lower than last year, but analysts say they expect a longer rollout.

"I would not be surprised if some purchase intentions are delayed as people wait for the new consoles to hit retail and they'll buy it when they get the new consoles," Handler said. "But 'Call of Duty' is one of those titles that—if you're a regular player—you have to buy sooner rather than later because it has almost become an eSport. You don't want to fall behind your friends with online play."

Electronic Arts, meanwhile, has high hopes for "Battlefield 4." The last game in the series sold more than 20 million units—and this year's installment is getting raves for its top-tier graphics. While a current generation version was released last month, Edward Williams of BMO Capital Markets said he expects the real push to start when next-generation versions of the game become available (concurrent with the system launches from Microsoft and Sony).

(Read more: Crowds go crazy for midnight video game launch)

"We expect those versions to showcase where EA wants to take the property," he said.

Also, for the first time in four years, EA is expected to ship an NBA games. While that's unlikely to have a significant impact on the company's earnings, it should be a good barometer as to how much market share Take-Two has taken in the category with the exclusivity its "NBA2K" franchise has seen since 2010.

Ubisoft, meanwhile, should see strong returns as well on "Assassin's Creed IV: Black Flag," but not all of the news is good for the company.

The last-minute delay of "Watch Dogs," which many observers had pegged as the title most likely to succeed among the next-generation-launch offerings, forced Ubisoft to adjust its financial forecasts. Rather than generating income between $148 million to $168 million, the publisher now expects to record a loss of between $54 million to $94.5 million.

Holiday 2013 has a broader impact beyond quarterly earnings, though. It lays the groundwork for the next several years in the industry—and could put an end to the sales slump gaming has been struggling with since 2009.

"Although current-gen hardware and software may see some general weakness in the tail-end of this console cycle, we expect the arrival of the PS4 and Xbox One to usher in a new wave of console gaming that should lead to sustained growth for traditional publishers over the next several years," Williams said.

By Chris Morris, Special to