Analysts: Software Slide In 2009, Price Cuts Probable

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The NPD will soon publish its first-half report for 2009 but before the numbers come in, both Jesse Divnich of Electronic Entertainment Design and Research and Michael Pachter of Wedbush Morgan Securities have issued their predictions.

First, Divnich believes we'll see a 20% decrease - down to $697 million - in year-over-year software sales while Pachter's prediction is similar; he believes it'll be down 23% to $670 million. As a direct result, Divnich says EEDAR will be "lowering full-year software growth estimates for 2009 from 7% to 5%," although Pachter reiterates his belief that the industry is "highly recession-resistant." Both analysts agree that Activision's Prototype will be the leader in June sales, and Divnich pointed out something interesting in regards to the inevitable Prototype/inFamous comparison:

"Infamous is currently on track to sell 35 percent more than Prototype for the PS3 in North America. Lifetime sales could outpace Infamous over Prototype by as much as 50 percent due to the longer sales curve exclusive titles receive. Due to near identical gameplay and quality scores, the Infamous vs. Prototype case study presents interesting data to publishers when considering the sales bump a title could receive by choosing exclusivity over a multiplatform release."

That's intriguing, isn't it? There's always something worth talking about when an exclusive is compared to a multiplatform title, especially when there are solid arguments for both. Anyway, Pachter went on to discuss the greater potential for price cuts in light of these impending results, and he even believes the Wii may have to see a price drop later this year. Said Pachter:

"We think that the console manufacturers will therefore be forced to consider a price cut before year-end, with Sony cutting the PS3's price by October 1. Further, we do not think that Nintendo's hardware forecast figures are achievable without a price cut, and we expect one around the same time as the PS3 price cut. It is likely both manufacturers will cut by $50, with Sony making up any lack of increased demand with a software bundle. We expect Microsoft to follow suit, giving us confidence that US software sales will grow later in the year."

Every time we see another analyst talk about a PS3 price cut, they essentially refer to it as an inevitability. We certainly think it'll be coming at some point, but the biggest rumor now involves the PS3 Slim; if it exists, will it also represent the long-awaited price reduction? Only time will tell...

7/13/2009 Ben Dutka

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