Game Sales Expected to be Flat in September, Bounce Back in October – Lazard

September is facing a very tough comparison with last year when Halo 3 launched, but October has a number of hot releases and sales should reaccelerate then, says Colin Sebastian.

by James Brightman on Tuesday, September 30, 2008

The September video games sales data won't be released by The NPD Group for another couple weeks, but Lazard Capital Markets analyst Colin Sebastian believes that software sales for the month (including PC games) were either flat or even down 10 percent. This is likely due to a tough comparison with last September when Halo 3 stormed retail and boosted overall software sales 47 percent.

For Sebastian, October should be a key month for judging the health of the game industry in the U.S. He's optimistic that strong titles and the continued popularity of the music games should push sales north once again.

"Based on recent investor meetings we hosted with Nintendo and LucasArts, and other industry checks, we believe video game companies remain cautiously optimistic ahead of the key holiday selling season. However, given our expectation for slower growth in September industry sales data, coupled with overall consumer uneasiness, we believe shares in the sector are likely to remain choppy until there is better visibility for holiday sales. Specifically, we believe the performance of an extensive October new software release lineup will provide the next meaningful gauge of the industry's resistance to the broader macroeconomic slowdown. Importantly, when industry sales historically have fallen below expectations (e.g., 2002 and 2004), we believe decelerating trends became clear in the September/October timeframe. At this point, based on the strength of the October lineup, we currently expect a healthy rebound to positive growth in October on a stronger release lineup," he stated.

While the music game genre has been a key contributor to video game sales in 2008, and Sebastian expects them to drive holiday sales as well, he does acknowledge that these titles' higher pricing could perhaps hinder market performance somewhat. "While our checks indicate that interactive entertainment remains one of the stronger categories at retail, we cannot rule out the possibility that high ASP software such as $180 music titles may face some headwinds at retail this holiday," he noted. via GameDaily