After a disappointing February video game sales report, many analyst insiders are predicting a strong month in March for top video game stocks Electronic Arts (ERTS), Nintendo (NTDOY), Sony (SNE) and Take Two Interactive (TTWO).
The biggest reason is simply because the bar is set pretty low. March 2009 video game sales were down 17% when up against 2008 numbers, and unless the data gets seriously skewed we should see an organic rebound in numbers just from that low. If you'll recall, March 2009 was pretty bad on all fronts -- the economy shed 650,000 jobs, stocks hit a 12-year low, and there was a -6% contraction in GDP for the first quarter of 2009.
With lower expectations, the video game industry may win a reprieve when the March numbers roll out. But on top of those low expectations, a new Nintendo console and a few blockbuster titles should result in decent sales for the industry.
First up is the Nintendo DSi XL release, which features an enlarged screen, WiFi access and even electronic reader capabilities. It's not quite an iPad, but as far as gamers are concerned, this is a fine piece of hardware. Sales officially kicked off Sunday, March 28, so there should be a good push at the end of the month for NTDOY. This is the latest version of the wildly successful handheld gaming device, which has moved 125 million units since 2002. The DSi XL is sure to boost that even more – and when Nintendo 3D hardware hits the market, you can expect it to become the best selling console ever to unseat the PlayStation 2.
Sony's vice president of marketing claimed that the highly anticipated sequel God of War III had sold 1 million units in "just a couple days" after its release. Though Sony's video game operations have been on the decline, this title is capitalizing on old successes with a popular sequel.
Speaking of sequels, Japanese studio Square Enix made a huge splash with yet another incarnation its RPG powerhouse, Final Fantasy XIII. It's been three and a half years since the latest Final Fantasy video game hit the , so demand should be strong. The company estimated it topped 1 million unit sales in the first week after of the video game's March 9 launch. Also on the list of profitable sequels was Ubisoft's Assassin's Creed II, which sold 1.6 million copies in its first week when released for video game consoles last fall. Now that a PC computer version is out, a resurgence in sales could be in the works.
It's tough to blame video game studios for playing it safe with sequels like these. Spending is down among casual gamers, and core audiences are really powering video game sales right now. Playing to built-in audiences with sequels not only makes sense, but can save on development costs since you can reuse existing characters, music, and game architecture.
So while March may pick up, the overall trend for the video game industry should still be weak sales. With Sony pushing back the launch of its PlayStation Move motion controller to this fall and Microsoft hoping for a Christmas launch of its own motion-sensitive hardware (nicknamed "Project Natal"), it's going to be nothing but software pulling the industry for a few months now that Nintendo's DSi XL is out of the box.
And judging by March's rash of sequels and the scheduled releases for April, that software should include a lot of familiar video game titles. Already on the block for April are Take Two with Grand Theft Auto IV: The Lost and Damned for PlayStation and PC, and Electronic Arts with its regular yearly offering of a FIFA soccer video game for all systems.