The releases of key software titles in 2010 will lead to a rebound in sales, according to Wedbush Securities analyst Michael Pachter, however Wii sales will stagnate and hardware sales are also expected to decline.
In an investor note on US retailer GameStop, Pachter said he expected the company to report solid holiday sales in a weak environment.
"We believe that industry sales will rebound in 2010 and that GameStop is well-positioned to reap the rewards," he predicted.
The company, he added, benefits from high exposure to the software market, of which it has an estimated market share of 30 per cent for January. It also has a comparatively low exposure to hardware - a 12 per cent share - which will be beneficial since that market is expected to decline.
"In addition to this favourable product mix," he said, "the company's appeal to hardware gamers will become increasingly important as Wii sales stagnate and Q1's long-awaited slate of games (Army of Two: The 40th Day, BioShock 2, Gran Turismo 5 and Splinter Cell Conviction etc) comes to market."
While US software and hardware sales combined were down nine per cent in November, Pachter predicts GameStop will post a four per cent year-on-year sales increase for that month and a four-five per cent decline in December - which still outperforms the industry's predicted 13 per cent year-on-year decline.