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Pachter: U.S. Game Retail 2011 Decline 'Almost A Certainty'

A new analyst note from Michael Pachter of Wedbush Securities suggests that it is "almost a certainty" that 2011 will end up as a third consecutive year of declining software sales for U.S. video game retail.
A new analyst note from Michael Pachter of Wedbush Securities suggests that it is "almost a certainty" that 2011 will end up as a third consecutive year of declining software sales for U.S. video game retail. While Pachter was keen to stress that the month of November ended strongly for software sales, with good Black Friday hardware and software sales, he said that he expects to see declining software sales year-over-year. "Game publisher stocks have performed well for the year, although they pulled back in November, as investors appear to be hopeful that the return to positive territory we saw in September and October is sustainable through year-end and into 2012," he explained. He noted that EA and Activision are set to be the top performing companies this year thanks to the successes of Battlefield 3 and Call of Duty: Modern Warfare 3 respectively, while the likes of Majesco and Ubisoft should also deliver "solid earnings." However, he suggested that THQ is "unlikely" to achieve its fiscal year guidance, due to competition from other games rated higher than its latest Saints Row: The Third release and uDraw Tablet. He also said he is "pessimistic" that Nintendo will do well this festive season, due to "few hit titles and much stronger console competition and promotions." Year-over-year declines for the Nintendo Wii are likely, he noted. Finally, Pachter touched on GameStop, which he said will "fare well during the holidays" as long as it can beat the price competition. He suggested that the company will meet sales and earnings expectations.

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