Wedbush Morgan's Michael Pachter is anticipating that Sony will cut the price of the PlayStation 3 to USD 299 in April this year, a move which will reignite sales of the console.
He's also expecting Microsoft to announce a drop in price for the Xbox 360 Pro SKU to USD 249, probably at or before E3 in June - although no price change is expected for the Nintendo Wii.
But while a price cut is a more difficult decision to make in a tricky economic climate, he was quick to dismiss any notion that the market is set to contract in the coming year.
"We think that concerns about weakening consumer demand for videogames are overblown," he said in a note to investors. "In our view, the best indicator of future demand is hardware unit sell-through, and we expect a robust 9.15 million hardware units sold in December, up 13 per cent year-over-year. For the year, we expect total U.S. console and handheld hardware sales of 35.15 million units, up 17.4 per cent year-over-year.
"This bodes well for continued software sales growth, as a large installed base of hardware households is likely to continue purchasing some software, while new console households are likely to buy software to accompany their hardware purchases."
However, he did concede that the economy will change the way that some people make their purchasing decisions around videogames.
"While we acknowledge that the recession will impact software sales somewhat, we note that the majority of software sales between January and October are user-driven, and we think that the hardcore gamer population is still on the upswing, with high price points for the PS3 and Xbox 360 causing many to defer purchases late into the cycle," he said.
"Once the PS3 is at a more affordable price point (we expect a cut to USD 299 in April), we think that sales of that device will once again begin to grow. We expect another cut in price for the Xbox 360, with the feature-laden Pro model likely to come down in price to USD 249 at or before this year's E3 show in June.
"We expect Nintendo to maintain Wii pricing at USD 249 until the company sees signs that demand is slowing, which means a price cut may not happen until late in the year, if at all," he added.