Analyst: Price Wars Driving UK Game Revenue Down

Widely-reported supermarket game price wars in the U.K. meant the "UK game market suffered materially", declining 18 percent in 2009, according to Janco Partners analyst Mike Hickey.
Widely-publicized retail price warring in the U.K. contributed to an 18-percent decline in overall game market revenue last year from 2008, according to Janco Partners analyst Mike Hickey. Supermarket chains like Tesco dramatically undercut specialist game retailers on key titles like FIFA 10 last year by up to 50 percent, and Hickey said the "UK game market suffered materially" as a result. Game software in particular fell 15 percent, while Janco expects only about about an 11-percent drop in the United States market when NPD reveals year-end numbers this week. Looking into the new year, Hickey said the firm is "cautiously optimistic" about the British market, which "struggles to emerge from the global recession." Recent hardware cuts and the increasing console install bases should make for a somewhat more favorable environment than 2009 saw. Hickey's analysis came by way of a research note on U.K. retail firm Game, for which Hickey maintained a "buy" rating. He expects Game to see roughly flat sales in fiscal 2011, with expected gains in new software of 3 to 5 percent and in used software of 7 to 9 percent counterbalanced by an 8 to 10 percent decline in hardware revenue.

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