Wii to Dominate Holiday Sales, says Analyst

October 15, 2007 | By: James Brightman

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Despite an expected $399 PS3 and new Xbox 360 bundles, simExchange analyst Jesse Divnich anticipates the Wii to outsell the competition this holiday. Divnich says that consumers have likely already made up their minds. Also, in the battle of the bands, Divnich expects Guitar Hero III to fare better than Rock Band.

While the Wii has been red hot, can Nintendo carry its momentum into the holiday season? According to simExchange analyst Jesse Divnich, the answer is clearly yes. Microsoft and the Xbox 360 have been gaining steam thanks to the Halo 3 behemoth � and sales for the console will likely be further boosted thanks to bundles that include two free games � and at the same time it's expected that Sony will introduce a cheaper ($399) 40GB PlayStation 3. Nevertheless, Divnich asserts that Nintendo's already won this round.

"Given all the recent news and trading in the market, it is apparent that consumers have already made up their choice as to which system(s) they plan on purchasing this season. There is no cost effective strategy that either Sony or Microsoft could implement this late in the season to change the minds of the consumers. The prediction market expects the current home console trend to continue through the holiday season with the Wii leading the pack followed by the Xbox 360 and then the PS3," Divnich said.

Unlike Wedbush Morgan Securities' Michael Pachter, Divnich and the simExchange have forecast the Wii to be September's top selling console with 485K units. However, according to the prediction market it's the DS that has reclaimed the number one spot in hardware with 501K units.

Speaking of the DS, simExchange expects The Legend of Zelda: Phantom Hourglass to quickly approach one million unit sales. "The prediction market is expecting 385,000 units in September with a follow up of 519,000 units in October. Nearly a million units in two months on a handheld system dominated by users in the 'casual' market is a pretty impressive achievement," said Divnich. "We believe the prediction market is expecting high sales for this Zelda title due to its originality as previous handheld Zelda titles have been remakes or ports of previous released version from other systems (NES/SNES). The prediction market is expecting Phantom Hourglass to be one of the top 10 selling individual SKU's this holiday."

As for Sony's portable, the PSP, the simExchange ultimately believes it's a positive for the industry. Rather than take away sales from the Nintendo DS, Divnich thinks the expected uptick in sales for the PSP Slim (or 'Lite' as Divnich calls it) is growing the portable sector. "Although the Nintendo DS has dominated the handheld market for some time, the prediction market forecasted an increase in October sales for the PSP when the PSP Lite was announced. The forecast of the Nintendo DS was unaffected. This implies that consumers purchasing the PSP Lite either already own a PSP and are upgrading or have been holding off their PSP purchase until the release of the PSP Lite. We concluded that the introduction on the PSP Lite is growing the handheld market and not steering consumers away from the Nintendo DS," Divnich said.

Beyond the console battle, another very interesting fight this holiday is the one between Rock Band and Guitar Hero III. It's Guitar Hero III, however, that may rock just a bit harder, according to simExchange.

"Currently, the market expects a higher Metacritic score for Activision's Guitar Hero III over EA's Rock Band, 91% to 89% respectively (Xbox360). For the other platforms, Guitar Hero III is expected to achieve Metacritic scores no lower than 88%. Typically, it takes a critically acclaimed newcomer to overcome the incumbent in niche markets, or even achieve a survivable piece of the market. The prediction market presently anticipates Guitar Hero III to sell 358,000 units in October compared to Rock Band's 239,000 units in November (Xbox 360). Given the month lead Guitar Hero III has and the projected higher review scores; it would take a strong marketing campaign by EA to convince consumers to hold their purchases until Rock Band's release," Divnich stated.