Wedbush: Wii to Outsell PS3 Significantly In January

Wedbush Morgan's Michael Pachter has predicted a 'conservative' 32% rise in game sales for January's upcoming NPD U.S. charts to $475 million, believing next-gen software may contribute more than current-gen for this first time this month. Ahead of NPD's monthly sales data expected at market close of Thursday, Feburary 15th, Pachter breaks down the $475 million in sales to $250 million contributed by 'new' platforms, here meaning PS3, Wii, 360, PSP and DS, up 144 percent from the prior year's $148 million, and the remaining $225 million from 'current generation' sales, down $31 million over January of 2006. Furthermore, Pachter's forecast predicts PS3 sales of 300,000 units, and 500,000 Wii units sold, at a tie ratio of 1.5 games per unit, specifically stating that this January could be the first month where next-generation software sales overtake the current generation. On the software side, Wedbush Morgan expects January's strongest sellers to continue to be Microsoft's Gears of War, Activision's Guitar Hero II, The Legend of Zelda: Twilight Princess for the Wii and GameCube, and Electronic Arts’ Madden NFL 07. Pachter notes that there was only one major new release for the month of January, Blizzard's Burning Crusade expansion for World of Warcraft, with other software sales continuing to be driven by pre-holiday releases. Looking specifically at current-generation systems, Pachter expects that the current strength of the PS2 both in hardware and software sales will continue through at least March, and expects only 'modest year-over-year declines' for the platform for the first half of 2007. As for the other current generation systems, due to January 2007's five-week sales versus 2006's four-week, Pachter expects only modest declines for GBA, GameCube and Xbox software, with as much as 40 percent declines in sales expected to come in with February's results, all but evaporating by 2008 for the GameCube and Xbox. Concluding, Pachter says that while the extra sales week might skew comparisons with the prior year, most publishers will continue to "deliver solid results" through March, and that January sales results will "reinforce investor confidence that the industry is on solid footing," with investor uncertainty "driven by anecdotal evidence of poor PS3 hardware sales, accompanied by speculation about the motives behind Microsoft’s decision to reduce its Xbox 360 manufacturing forecast." "We think that PS3 sales will recover once consumers are made aware of the supply situation, and think that investors may be positively surprised by the hardware sales figures in January," said Pachter. He added, "We have seen little advertising at the Sony level for the device, and no advertising from retailers. We expect advertising to begin soon, and think that consumers will be drawn to stores in greater numbers as software is released for the PS3. We also expect Blu-ray to drive sales to movie fans, as more Blu-ray film content is released." Finally, he adds, "Should sales of PS3 and Wii hardware exceed our forecast, there may be upside to our estimates. In addition, should tie ratios on the next generation consoles be greater than the 1.5 units we have modeled, January sell-through could be substantially above our forecast."