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Analysts: December 2009 Strong, But Down Year Over Year

Even with hardware sales increases, new revenue streams and good performance for key titles, most analysts agree that U.S. console retail sales will show December 2009 down over 2008, due to tough comparisons.
When the NPD Group releases its U.S. console retail sale numbers for December 2009 this Thursday, the game industry will know exactly how it did in a challenging holiday season amid widespread speculation on the health of the market. Even with all signs positive -- likely hardware sales increases, new revenue streams and good performance for key titles -- most analysts agree the industry's likely to show December down over the previous year on tough comparisons. "With the close of the holiday shopping period, our channel checks indicated generally stable video game hardware and software sales through the end of December — still reflecting the challenging consumer environment, but with signs of life primarily at the high and low ends of the product spectrum," says Lazard's Colin Sebastian, who predicts December down 5-10 percent year over year. Says Wedbush's Michael Pachter, specifying: "We estimate sell-through of 3,200,000 Wii hardware units (up 49 percent from last year), 1,350,000 Xbox 360 units (down 6 percent from last year), and 1,400,000 PS3 consoles (up 93 percent year-over-year)." He also notes: "Nintendo has already reported that over 3,000,000 Wii and 2,200,000 DS were sold in December, and our estimates reflect modestly higher sales for each console." It won't likely turn out to have been as weak a holiday as analysts had feared based on November's results. "After the November NPD report, we had been of the view that December sales could be down low-to-mid teens," says Cowen Group's Doug Creutz. The analyst adds: "We believe that sales trends improved somewhat in December, driven in part by extremely strong console hardware sales." Nintendo and Sony have already announced that sales for the Wii and PS3 were up roughly 40 percent and 150 percent year over year, respectively, Creutz points out, adding that many retailers have run their own in-store promotions -- like Wal-Mart's aggressive discounting on Wii.

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