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Analysts: Tough Comps, Not Economy, To Prompt April NPD Decline

Expect April's NPD results to reveal a 17 percent industry decline for the second month in a row, say analysts, citing tough year-over-year comparisons to GTA IV and Mario Kart Wii's releases.
Expect April's NPD results to reveal a 17 percent industry decline for the second month in a row, say analysts, citing tough year-over-year comparisons to the month in which Grand Theft Auto IV and Mario Kart Wii released in 2008. "We believe that April’s low sales are mostly the result of a weaker release schedule and is not likely an indication that the industry is contracting," says EEDAR analyst Jesse Divnich. "Notwithstanding that sales will likely be tracking down 5 percent through April, we believe that the decline is more attributable to difficult year-over-year comparisons (which improve after July) than to overall weakness in the economy," agrees Wedbush Morgan's Michael Pachter. The last time the industry declined two consecutive months was in February 2006, notes Divnich -- and without the DSi, he says, hardware sales would have been down by over 27 percent. April 2009 is expected to show almost twice as many software titles that sell over 100,000 units, Divnich adds -- 21 this year as compared to 11 last year. By contrast, last April had the two aforementioned titles break one million units, while this April isn't expected to have any. "We continue to believe that the video game software sector remains highly recession-resistant," says Pachter, "but expect more modest gains in 2009 due to a weak start and continuing difficult year-over-year comparisons." "If April sales exceed $550M, we believe it is a positive sign for the industry and an indication that sales may remain robust for the rest of the calendar year," adds Divnich. But he warns: "Sales below $510M would be an indication that consumer spending in the video game sector is beginning to contract over last year and could impact sales in the summer months."

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