Video game consumers may have seen a swath of exciting releases in the past few months, but the launches of BioShock 2, Dante's Inferno
and Heavy Rain
aren't enough to dent challenging industry trends, analysts say.
The return to year over year U.S. retail growth that analysts forecast to begin in 2010 won't arrive with February NPD results that release later this week, analysts say. Weak Wii software, slow catalog sales and the gap left by the contraction of the music genre are expected to lead to a double-digit decline in industry revenues.
Wedbush analyst Michael Pachter sees hardware and software sales down 10 percent, while Lazard's Colin Sebastian is more pessimistic, predicting a 15 percent decline.
In particular, Pachter believes continuing supply constraints -- to which he attributed part of January's 13 percent slump
-- led to a 40 percent decline in Wii hardware sales, while he sees Xbox 360 sales down more modestly at 10 percent year over year.
He predicts the PlayStation 3, however, to continue to benefit from the launch of its $299 Slim model alongside the recent or imminent launches of exclusives like Heavy Rain
and God of War III
. Total hardware sales, according to Pachter, will be down around 31 percent and are unlikely to resume growth until the middle of the year.
Although Sebastian sees promising "green shoots" in a strong start for Battlefield: Bad Company 2
and strong preorders for God of War III
, he hesitates to forecast an immediate software turnaround due to a recent sales trend that sees rapid drop-offs after high-volume launches -- this is the case with BioShock 2
, he believes.
Still, analysts are generally optimistic about the potential for March results to show small year-over-year gains on the software side.