Light at the end of the tunnel for 2012 game retail, says analyst

Baird Equity Research said in a new report that retail sales of console video games will shift to a gain in momentum from next month, thanks to a focus on established franchises. Analyst Colin Sebastian said that, although he believes March NPD data -- releasing later today -- will show console game sales declining by 25 percent year-over-year, a number of key game releases are due to launch exclusively in physical format over the next 12 months, providing momentum for video game retail. In particular, Sebastian highlighted new titles in franchises such as Max Payne, Diablo, BioShock, FIFA, Call of Duty, Skylanders, GTA and Assassins Creed as catalysts for improving sales in the core gamer market. "Retail sales of console video games has shifted towards higher-end properties and established franchises, while second tier and casual games found a path of less resistance to consumers via social and mobile platforms," he explained. The shift from physical to digital is happening "less rapidly with games than other forms of media," he suggested. He noted that, although he does not anticipate that retailers such as GameStop will see store sales growth as a result of this change in momentum, there's still the possibility for GameStop to meet its estimates and generate "significant cash flow." Sebastian also turned his attention to the next generation of video game consoles, stating that it is "unlikely" that either Microsoft or Sony's next-gen consoles will exclude disk drives or completely prevent used game sales. He noted that there are still "inefficiencies" with downloading full console games, while core gamers value the trade-in market too much to so rapidly shift away from it. He also made the point that putting these initiatives into action "would provide an opening for competition."