Outlook: Gaming Industry Faces Declining Software Sales

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Source: http://assassinscreed.ubi.com/

After the market close on Thursday, January 16, NPD is expected to release the December 2013 (five-week period ending January 4) U.S. retail video game software sales data. We expect console/handheld software sales of $1.53 billion, down 1 percent compared to last year’s $1.54 billion.

The comparison in December is quite easy (down 26 percent), and software sales for next-gen consoles likely largely offset declines in software sales for current-generation consoles in December. We believe the sizable software sales decline we saw in November was due to a difficult comparison from the debuts of Microsoft’s (NASDAQ:MSFT) Halo 4 and Ubisoft’s Assassin’s Creed III in November 2012 (with a shift of the newest Assassin’s Creed this year into October 2013), a sales decrease for the newest iteration in Activision Blizzard’s (NASDAQ:ATVI) Call of Duty franchise and Nintendo software sales well below our expectations.

Wallets were drained by spending on the two new consoles with supply constraints through November having a negative impact on software sales. The impact of next-gen hardware spending and supply constraints was more muted in December, and some current-gen software sales may have been deferred as consumers chose to wait to buy games available on both current- and next-gen consoles until they purchased their new consoles, contributing to a more positive trend for overall software sales.

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