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Analysts Forecast Double-Digit Drop In May Software Sales

Analysts Forecast Double-Digit Drop In May Software Sales

June 8, 2009 | By Kris Graft

June 8, 2009 | By Kris Graft
More: Console/PC

Ahead of data from research firm NPD Group, games analysts are forecasting year-on-year double-digit declines for the month of May, as last year's Grand Theft Auto IV and Wii Fit make for a tough comparison.

Jesse Divnich with Electronic Entertainment Design and Research (EEDAR) said in a Monday note that he expects software sales to reach $457 million for the month, a 15 percent decrease from a year ago.

He wrote, "The lack of a sales increase was primarily driven by the next-generation home and portable software titles. Unit sales are likely to decrease by 5 percent over last year with a 10 percent decrease in the average selling price (ASP). EEDAR believes the weak retail environment is to blame for the year-over-year decrease in ASPs."

Divnich also said that EA appears to be "cashing in on the fitness fad" with May's EA Sports Active exer-game. "Currently, EEDAR expects EA Sports Active sales to come in at 275,000 units, nearly tripling the first month sales of My Fitness Coach (UbiSoft) back in the holiday month of December 2008."

At E3 last week, EA said that EA Sports Active has sold over 600,000 units to date globally.

Also notable is the performance of two THQ titles, UFC 2009: Undisputed, released in May, and Red Faction: Guerrilla, released in June. Both titles have shown strong initial performance -- a good sign for THQ, which is in the midst of restructuring and is hoping for better fortunes following a fiscal 2009 that saw $431 million in losses and a 600-person workforce cut.

"Most analysts have agreed that THQ would need two successful hits in 2009 to remain profitable and it looks as if this has been achieved with UFC and Red Faction," Divnich said.

One high-profile May title, X-Men Legends: Wolverine, Activision's movie-based game, "is expected to produce sales at 400,000 units in the USA" after five weeks of availability, Divnich said. The analyst said the sales fell short of his expectations, blaming a low review average of 74 percent.

"A higher quality score, above 83, would have opened the title up to a broader audience of gamers who may not be extreme fans of the X-Men brand, but instead enjoy high quality action based video games."

Michael Pachter with Wedbush Morgan expects U.S. May retail sales to decline by 17 percent to $450 million. "May presents another month of difficult comparisons (which resulted in March’s decline of 17 percent and April’s decline of 23 percent). Last year’s launch of Nintendo’s Wii Fit and sales of Take-Two’s Grand Theft Auto IV contributed $141 million and 26 percent of May 2008 total sales, posing another difficult comparison."

Pachter expects X-Men Origins: Wolverine, Punch Out!!, UFC 2009: Undisputed and Infamous to be May's top performers.

He added, "On the hardware side, we expect a significant decline in unit sales of the new DSi, which launched on April 5 (selling 886,000 units in its first month). At E3, Nintendo announced that over one million DSi units have sold to date in the U.S. implying a huge drop off in sales for May. Nintendo also said 400,000 units of the DS were sold over April/May, implying that only 200,000 units of the regular DS sold in May."

Wedbush and EEDAR expect the following for console sales during May:

(Platform, Wedbush Forecast, EEDAR Forecast)

Wii: 300K, 340K
PS3: 100K, 120K
360: 140K, 150K
PS2: 130K, 111K
PSP: 90K, 100K
DS: 440K, 430K

NPD's U.S. retail sales figures are slated to release on Thursday, June 11.

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