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Analyst: StarCraft II Launch Could Boost 'Sluggish' Industry Software

Lazard Capital Markets' Colin Sebastian says StarCraft II could sell 4.5 million in its debut quarter and 6.5 million units during 2010 overall -- a boost for an industry with "sluggish" conventional game sales and foreign exchange rate challenges.
Blizzard's StarCraft II sees its long-anticipated global launch today, and estimates from industry analysts on the title's potential keep coming in: Lazard Capital Markets' Colin Sebastian now predicts the game, for which he says preorders were "strong", could sell 4.5 million in its debut quarter and 6.5 million units during 2010 overall. And the industry will be glad of the injection, says the analyst, who sees continuing "sluggish" conventional U.S. retail console and PC game sales -- down 8 percent year-to-date. Although the most common metric for industry health, NPD retail sales numbers, notably excludes PC titles, Sebastian says software sales will need to see at least a 3 percent gain over the remainder of the year if the industry hopes to show a flat or even slightly down comparison to 2009, Sebastian warns. But June results shouldn't bring any nasty surprises, and may even beat expectations, the analyst suggests, despite an offsetting effect on publisher's revenues from a strong dollar. According to Sebastian, publishers Electronic Arts and Activision could see a $50-$100 million impact on their revenues for the full year thanks to the exchange rate. Although the strong quarter results for Activision will come when it reports StarCraft II's launch quarter at the end of September, the publisher's other titles seem to be doing well, too: Sebastian cites channel checks that show Transformers: War For Cybertron, which launched June 22, is seeing "decent" sales, while he describes sales of Blur, Singularity and the newest Shrek tie-in as "generally modest." EA may be a little more successful in its second quarter than most analysts expected, too -- Sebastian sees "slightly better" pre-order numbers than forecast for the August 10 release of Madden NFL 11. "Nonetheless, we remain somewhat cautious with respect to product momentum and the health of some core franchises (e.g., Need for Speed)," Sebastian notes. As for THQ, it's already lowered its own quarterly estimates due to the underperforming UFC: Undisputed 2010. After the title's May 2009 predecessor was something of a surprise hit, shipping about 3.5 million units by early 2010, the company expected similar success for the sequel. That apparently failed to materialize, but discounting at retail has "stimulated sales to some degree" for the newer title. Sebastian is also optimistic about the potential of THQ's early 2011 games, including Homefront and Warhammer 40,000: Space Marine.

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