Analyst: _Halo Reach _ Sales Bode Well For Core Gamer Market

Lagging U.S. video game software retail sales have made investors nervous about core gamers' buying habits, but Halo Reach's strong debut this week reflects a "healthy core gamer market" going into the holiday, one analyst says. Lazard analyst Colin Sebastian said that the $200 million in day-one sales of Microsoft and Bungie's Halo Reach "bodes well for holiday core titles," including Activision's high-profile November release, Call of Duty: Black Ops. Sebastian reiterated his "buy" rating on Activision stock following the news of its competitor's core gamer success. Several video game stocks were down early Thursday afternoon. But there is concern that with Halo Reach, a game with a single-player campaign and long-lasting online multiplayer modes, could eat into the share of some holiday releases, namely Black Ops, Sebastian said. He contended, "we believe, conversely, that the Halo strength is more indicative of a healthy core gamer market" and that Halo Reach's success "bodes well for holiday core titles." Stronger recent sales of Xbox 360 and PlayStation 3 hardware also are a precursor to an increase in software sales going forward, the analyst said, adding that he expects Black Ops to "meet or beat" Lazard's holiday sales estimates for the title. U.S. video game software retail sales have been down six months so far this this year, although not consecutively. U.S. retail video game software sales were down 14 percent during the month of August to $403.5 million, according to NPD Group, but analysts are optimistic that a strong holiday software lineup can lead to growth in the coming months.