Price Cuts Coming On EA And Activision Games? (ERTS, ATVI)

So far, despite a grim outlook for sales of Nintendo’s (NTDOY) Wii and Sony (SNE) PS3, we’ve seen no signs of price cuts on game hardware. But will price cuts come soon to game software?

Lazard’s Colin Sebastian thinks so, noting that’s a tack game publishers have taken in the past. Look to industry leaders like EA (ERTS) and Activision (ATVI) to set the pace.

Gamedaily: In his latest update on the video game industry, Lazard Capital Markets analyst Colin Sebastian said that he thinks leading publishers like EA and Activision (among others) may be forced into dropping prices on several titles as sales have slowed in the post-holiday period. “Following earlier post-holiday price promotions by Activision and Electronic Arts, we believe several software publishers are likely to consider additional markdowns moving into the seasonally slower selling period,” he stated.

Sebastian focused particularly on EA, noting that the company “may reduce wholesale pricing by $10 on its annual EA Sports franchises (e.g., Madden, NBA Live, NCAA Football, FIFA) as well as other recent releases such as Dead Space, Mirror’s Edge, Monopoly and Command and Conquer.”

He also singled out “excess inventory” of other industry titles like Activision’s Guitar Hero, which “may also require price concessions.”

Consumers shouldn’t expect pricing to come down across the board, however. Publishers will definitely maintain the “next-gen” pricing for software at $59.99. “Overall industry sales trends [remain] fairly steady − no widespread price war yet. Despite the post-holiday price promotions and markdowns on a number of key video game titles (e.g., Guitar Hero, Madden), we believe most publishers still plan on launching new software titles at top-tier pricing in 2009,” said Sebastian.

Makes sense to us. EA Sports in particular has seen shrinking market share for years, and this generation of game consoles have been around long enough that publishers have two fights: The recession, and a glut of used video games at outlets like Gamestop (GME).

See Also:
No, Not Just America: Global PS3 Holiday Sales Down From Year Earlier
Nintendo Slashes Guidance, Expects Wii Sales To Slow
Amazon Charging $400 For The PS3 Again

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