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Analysts: August To See Last NPD Monthly Decline Of 2009

Analysts expect yet another month of declines in the U.S. retail game market, but Wedbush's Pachter predicts the industry will see year-over-year growth for the rest of 2009 starting in September, with the Wii's price dropping by November.
NPD sales figures will see yet another month of year-over-year declines in the U.S. retail console game market, according to estimates by Wedbush Morgan's Michael Pachter, but the analyst expects that the industry will see year-over-year growth starting in September through the remainder of 2009. EEDAR's Jesse Divnich agrees, predicting the six-month rash of declines will end after August. Both analysts expect to see $472 to $475 million in retail sales -- about a 14 percent year-over-year drop -- when August NPD data is released later this week. Much of the justification for expected improvement come September is down to comparisons with 2008. "The August comparison with last year (+13%) is far easier than the 57% average for the five preceding months, and we expect this month’s sales decline will be the last we see for the remainder of 2009," Pachter explained in an analyst note. He added: "In contrast to July, which suffered from a difficult comparison (+41%), the comparisons to last year are relatively easy in August (+13%) and very easy in September (-6%)." The analysts see a stronger release schedule in the back half of 2009, with titles like The Beatles: Rock Band, Halo 3: ODST, Guitar Hero 5, and Need for Speed: Shift kicking off the fall season. On the hardware side, Pachter expects a big decrease in Wii sales, down 47 percent to 240,000 from last year, as well as a 14 percent decrease in PlayStation 3 sales to 160,000, while Xbox 360 is up a slight 5 percent to 205,000 units. The overall hardware market is expected to be down 24 percent year over year. EEDAR's projections are similar, but the firm sees an even bigger PlayStation 3 drop, slipping 24 percent to 140,000 units. Of course, come September's results, the PlayStation 3's price cut will be reflected in retail sales, at which point Pachter says the system's sales should "grow substantially." The Wedbush analyst believes Nintendo must similarly institute a price cut on its home console to reach its own goals: "We do not think that Nintendo’s Wii hardware forecast is achievable without a price cut, and as long as the Wii remains at its November 2006 launch price of $249.99, we expect continued year-over-year declines for that console’s sales," he wrote." As such, the firm believes the company will drop the system's price "no later than November."

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