Analysts predict tough competition in Xmas '05 market

A new report from Banc of America Securities has predicted that Christmas competition in the games market will be much more intense than last year - with even industry leader EA expected to lose 2 to 4 per cent market share.

The report, authored by analysts Gary L Cooper, Eric K Brown and John P Newell, details key clashes between major titles in almost every genre - and presents a convincing argument for the claim that "apart from The Sims 2.0, we do not consider any game this holiday out of harm's way of the competition."

It also highlights the fact that more games will be released in the October-December period this year than in any previous year (according to current release schedules), and while it states a belief that the headline titles should all perform well, there's concern that competition between them may result in underperformance to some extent - and a much more pressing concern about the impact on smaller publishers.

In a Christmas quarter when even Electronic Arts is expected to lose between two and four per cent of its market share due to strong competition and the difficulty of establishing its new more hardcore titles such as GoldenEye and Battlefield against rivals like Halo 2 and GTA San Andreas, publishers with less well-known brands are liable to be squeezed out of the market, the authors of the report argue.

"We have very low expectations for games of other developers with less-known brands," it states, "including Acclaim, Midway (except Mortal Kombat), Atari, Eidos, Vivendi (apart from Half-Life 2, if it is releasd) and even Microsoft (apart from Halo 2)...With the competition out there and large number of titles, some games will just not receive any shelf space from retailers, and initial shipments of titles will be very low, even by historical standards. Expect many disasters this holiday."