Signal Hill analyst Todd Greenwald says the rough economic situation is going to drive consumers toward established, proven franchises rather than the unknown quantities of new IPs this Christmas.
Greenwald said the tight cash situation facing parents and gamers will discourage them from taking risks on games they’re not familiar with, suggesting that while Activision’s holiday lineup looks strong, Electronic Arts is rolling the dice a bit with its focus on all-new titles Dead Space and Mirror’s Edge, as well as its reliance on yearly sports game releases that offer little over previous versions. THQ may also be facing a bumpy ride over the Christmas season because of its heavy reliance on licensed Nickelodeon games in the crowded DS and Wii market and questions about the sales potential of Saints Row 2.
“We don’t subscribe to the notion that the videogame industry is completely recession-proof,” Greenwald said in his latest investor note. “Rather, we believe that both gamers and parents alike will have a tougher time this holiday buying every game they want. As a result, we believe that overall industry sales may be negatively impacted but that strong, triple-A titles should still sell well and drive growth for those publishers that have the right line-ups.”
“We believe this bodes well for games like Guitar Hero 4, Call of Duty 5, Wrath of the Lich King, Spiderman: Web of Shadows and James Bond: Quantum of Solace,” he continued. “On the other hand, this may be a risk for titles from EA and from THQ.”
“If gamers are forced to be more selective, we believe they will take fewer risks with their cash and will only be drawn to highly-rated, proven IP with strong buzz and compelling new features,” he continued. “At the same time, we believe they will be prone to passing on new, unknown titles, as well as annual iterations of sports or licensed games that have few new features or innovation.”
