Matt Martin 14:58 (BST)
08/10/2008

Consumers unlikely to risk buying unproven titles this Christmas

Analyst Signal Hill is warning that the current economic climate will force consumers to make safe purchases of guaranteed blockbusters this Christmas, rather than try new IP or less innovative annual franchises.

With less cash to go around, Todd Greenwald believes parents and gamers are likely to be more selective and take fewer risks with their spending.

"We don't subscribe to the notion that the videogame industry is completely recession-proof," said Greenwald in the company's latest note to investors.

"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.

He added: "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. 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."

Greenwald points to Activision's line-up as strong for the holiday season, but he backed away from the portfolio of titles on offer from EA, which includes new IP Dead Space and Mirrors Edge, and THQ, with its regular wrestling update WWE vs Smackdown and the return of the Red Faction series.

"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. On the other hand, this may be a risk for titles from EA and from THQ."

THQ was also singled out for releasing multiple licensed Nickelodeon titles in the flooded DS and Wii market, and doubts that Saints Row 2 – the publisher's answer to Grand Theft Auto IV – will not sell well enough despite positive press.

"We also believe that THQ's plethora of licensed Nickelodeon games could get crowded out at retail by the surge of new titles addressing the Wii and DS demographic.

"We have heard good things on Saints Row 2, but are not confident it will be enough for THQ to hit its numbers for FY09," he concluded.