Despite 2010 Declines, Analysts Optimistic For Strong Holiday Software Sales

U.S. retail video game software sales were down 14 percent during the month of August to $403.5 million, NPD Group said this week, but analysts are optimistic that a strong holiday software lineup can lead to growth in the coming months. Bungie and Microsoft's Xbox 360 sci-fi shooter Halo Reach, launching September 14, will boost software sales for the month, and the September 17 release of PlayStation Move could also prompt a rise during the month, analysts said. Cowen analyst Doug Creutz said he expects Halo Reach to sell 3.6 million units in September alone, alongside a "modest" software sales boost from the Move. "We continue to expect [calendar 2010's] total video game software sales to finish roughly flat with [calendar 2009]." Total U.S. video game console sales (hardware, peripherals and software) were $19.66 billion in 2009, an 8 percent year-on-year decline, while software sales made up $9.91 billion of that total. August 2010 was the sixth month of software sales declines for the U.S. video game retail industry. Wedbush analyst Michael Pachter noted a relatively difficult comparison with September 2009, due to strong sales of music games, but he expects Halo Reach can "more than offset" any revenue declines in the music category. He said, "We believe September will mark the beginning of a sustainable rebound in software sales, as the game lineup in October (Medal of Honor, Fallout New Vegas and Fable III) and November (Call of Duty: Black Ops) is strong. We expect hardware sales over the next few months to moderate (and possibly decline) as we [come to the] anniversary [of] price cuts from last year." Lazard analyst Colin Sebastian also noted potential strength in the months ahead as console sales continue to maintain decent momentum. "We note that ongoing solid sales of console hardware suggests an opportunity for improving software sales moving toward the key holiday selling season," he said. "We project improving growth trends for monthly software data in September/October."