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Analyst Predicts November Sales Increase Of 12%

Most of 2006 has seen significant software sales growth in the U.S., but despite positive predictions for the month of October, total sales were only up less than 1% over October 2005. However, Wedbush Morgan Securities analyst Michael Pachter isn’t fazed by the surprisingly slow month.

The NPD Group should soon release the official numbers for November, but Pachter has already announced his predictions: he told investors this morning that he anticipates game sales to reach $785 million, a 12% increase over November 2005.

The details of his predictions include 23 games selling more than 100,000 copies during the month; among them- Legend of Zelda: Twilight Princess, Final Fantasy XII, Gears of War, Grand Theft Auto: Vice City Stories, Need for Speed: Carbon, Call of Duty 3, Guitar Hero II, and WWE SmackDown! vs. Raw 2007. He also mentioned a “slew” of PS3 and Wii titles to help fuel total software sales, although he didn’t name any specific titles. Pachter wasn’t too enthusiastic about the mediocre Superman Returns, though, as he doesn’t believe it will break the 100k mark.

The analyst went a step further by predicting continued industry growth through March, with the increase of next-gen software sales easily countering the fall-off from older console software sales. However, he does warn of one possible caveat: once the supply of those new consoles begins to reach the demand, Pachter believes hardware sales will taper off quickly.

"In our view, once hardcore gamers have obtained their next-generation consoles, the higher average prices will be an impediment to rapid sell-through, and we expect cycle-to-cycle declines of 10 percent or more to persist through the summer of 2007," Pachter said.

Considering the industry experienced year-over-year sales growth of 20% this past summer, Pachter expects gaming to have a tough time sustaining that level of growth in 2007. Another 20%+ jump is unlikely, but even if it doesn’t happen, the industry should still retain a high level of financial health.

12/5/2006 Ben Dutka

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