Wedbush Morgan analyst Michael Pachter has told GamesIndustry.biz that the games industry is likely to experience more modest growth than has been predicted in the coming months.
"I think 2007 will be sloppy. It will start out quite strong, due to the PS3 and Wii supply situation being fixed in the US and the PS3 launch in Europe," he stated.
"Software sales in the summer should trend down to mid-single digits, due to impossible comparisons to 2006 and extraordinarily expensive console prices. I think that the PS3 and the Xbox 360 will continue to sell very slowly during the summer, because at the price, they are no longer an impulse purchase."
However, Pachter went on, software sales should pick up in the autumn - with an increase of around 15 per cent likely during November and December. He also believes that hardware sales are likely to be higher at Christmas than during past years, and will continue to rise in 2008 as the household penetration of high definition monitors grows.
"We expect to see only 30 per cent penetration in the US as of now and probably under 15 per cent in Europe; that should grow to 50 per cent and 25 per cent by year-end 2007, and to 70 per cent and 50 per cent by year-end 2008," Pachter stated.
"Once that many households have HD, PS3 and 360 sales should pick up dramatically, and software sales will grow as well."
Overall, Pachter said, the industry is likely to see "slightly more modest growth than many expect early in the cycle".
"We'll get a false signal in the first part of 2007 due to the next generation console supply situation," he added.
In a separate report, Wedbush Morgan predicted that publishing giant Electronic Arts is "likely to meet or modestly beat" its targets for Q3, with revenue estimates standing at US$ 1.3 billion.
WM has also issued reports noting that US rental service Netflix has launched more aggressive promotions after Blockbuster announced it secured 2.2 million subscribers - exceeding its year-end target by 200,000. According to the reports, Netflix is still likely to face difficulties in competing as many subscribers are signed up through Blockbuster's high street stores.