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Focus Is on EA, Sony as Oct. Video Game Sales Loom

After being severely disappointed in September, the video game industry is warily eyeing October’s retail sales numbers.

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Chris Garrett | Workbook Stock | Getty Images

Analysts are calling for yet another decline compared to the 2009 numbers when the data is released Tuesday afternoon, roughly two hours after the market closes. Michael Pachter, managing director of Wedbush Securities, predicts software sales will drop 3 percent compared to last year, coming in at $555 million.

But for once, software sales might not be the sole focus of investors and industry onlookers. The oft-ignored “accessories” category – which is usually driven by gift cards for online services and third-party game controllers – is starting to gain traction after the NPD Group elected to include motion controllers from Microsoft and Sony

among the items.

Kinect, which launched in early November and sold 1 million units in its first 10 days on store shelves, won’t be included in this month’s figures, but the industry will start to get some sense of the traction Sony is finding with the PlayStation Move.

Exactly how significant that traction is might be hard to determine immediately, though. Last month, the NPD Group, which compiles the sales data, altered the amount of information it publicly reports and now rarely calls out hardware sales data.

Investors will also be curious to see how Electronic Arts’ “Medal of Honor” performs. The game, one of the company’s biggest of the year, was sandwiched between the September launch of Microsoft’s “Halo: Reach” and the November launch of Activision’s “Call of Duty: Black Ops,” which set entertainment industry records, with sales of $360 million on its first day.

If “Medal of Honor” is caught in the blast zone of those two mega franchises and proves to be a sales disappointment, it could have repercussions on EA’s stock Wednesday.

Among video game hardware, Pachter expects the Xbox 360 will continue to see sales increases, as Microsoft rides the wave of an August redesign of the system and continued interest in “Halo: Reach”. However, he says, both Sony and Nintendo will see sales of their hardware fall 17 and 60 percent respectively.

The record launch of “Black Ops” and Kinect quickly becoming one of this year’s “must have” holiday items might seem to signal good times ahead for the industry. On the whole, that could be true (at least compared to the rest of 2010), but it won’t help with retail sales comparisons. Last November saw the launch of the blockbuster “Modern Warfare 2” and price drops from Sony and Nintendo fueled consumer hardware purchases.

“We don’t expect the down trend in sales we’ve seen all year to reverse for the balance of the year,” says Pachter. “The end of the year must depend upon a solid release schedule to drive year over-year growth. The games coming out are outstanding, but in comparison to last year, they are not significantly better.”

That’s likely to keep investors on the sidelines. But retail sales today make up just 60 percent of the video game industry. There’s also used games, game rentals, subscriptions, digital full game downloads, social network games, downloadable content, and mobile game apps.

For the first six months of 2010, those additional categories boasted sales of between $2.6 and $2.9 billion, estimates NPD. Retail software sales, meanwhile, stand at $3.7 billion.