Analyst: Sony, Microsoft Consoles Expected to Thrive

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The following is an excerpt from a report compiled by Michael Pachter of Wedbush Securities.

In December, none of the covered publishers reported results.

Last week, Wedbush Securities introduced its video game industry growth model through 2016, and made the model available to clients. The model has our hardware and software sales forecast for 2014-2016, as well as historical data from 1994-2013. We expect Sony (NYSE:SNE) and Microsoft’s (NASDAQ:MSFT) new consoles to thrive over the next three years. We do not expect Nintendo’s (NTDOY.PK) Wii U to fare as well.

Software sales for the next-generation consoles are expected to grow to $12.2 billion by 2016; in contrast to the last cycle, we expect software sales for PS4 ($5.9 billion) and Xbox One ($4.9 billion) to dominate, with Wii U software capturing only 11 percent share. We expect overall software sales growth (including PC) in the U.S. and Europe combined (the addressable market for covered publishers) of 10 percent in 2014, 7 percent in 2015, and 6 percent in 2016. We expect combined Xbox 360/Xbox One/PS3/PS4 software sales growth of over 50 percent over the next three years.

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