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Guitar Hero "Reaching its Peak" - Analyst

Ahead of NPD data, Jesse Divnich names likely hits and misses for November.

Lagging Guitar Hero: World Tour sales are an indication that Activision's explosively popular series is finally "reaching its peak," claimed Electronic Entertainment Design and Research analyst Jesse Divnich in a Monday research note.

Ahead of U.S. NPD Group November sales data, Divich said, "Currently, we expect unit sales to decline by more than 50 percent series-over-series for November. This is coming off the October month where series-over-series units declined by more than 60 percent."

Guitar Hero: World Tour sales had been initially hampered by tight supply, but now Ebay reseller prices are beginning to register below the bundle's $189 retail tag, "a strong indication that demand and supply are currently in equilibrium," said Divnich.

Reduced-price Guitar Hero III sales during Black Friday cannibalized sales of World Tour, he added.

Although sales appear to be down for the series, Divnich assured that games like Guitar Hero and Rock Band will not be disappearing "anytime soon."

He explained, "In fact, we expect Guitar Hero and Rock Band releases for the next 10 years as they will always have a large and loyal market base, just as [Dance Dance Revolution] is still today a very profitable franchise for Konami, even though that series reached its peak a long time ago."

Other "Misses"

Guitar Hero: World Tour wasn't the only game that Divnich categorized as a November sales "miss." He also said EA titles Need for Speed: Undercover and Mirror's Edge, along with THQ's WWE Smackdown vs. Raw, will post "disappointing sales."

"We believe that low quality scores and low replay value are to blame for Mirror’s Edge’s poor sales," he said. "However, If EA can improve quality and release a sequel during a less congested time-period (off-holiday), we believe that Mirror’s Edge 2 could achieve some market success."

EA has yet to formally announce a sequel to the game, although it's expected.

Divnich fingered "brand fatigue" and lower review scores for Need for Speed: Undercover and WWE. He expects the titles to decline in November unit sales year-over-year by 10 percent and 20 percent, respectively.

Likely "Hits" and Overall Sales Predictions

Divnich expects November U.S. software sales to be $1.34 billion, a 3 percent year-on-year increase. He noted that last year, November had nine post-Thanksgiving shopping days versus only two this year, so a small climb would actually be an accomplishment.

Driving these software sales during the month were Call of Duty: World at War, Gears of War 2, Left 4 Dead, Resistance 2 and Animal Crossing: City Folk.

Divnich estimates Call of Duty: World at War sales were up series-over-series by 2.1 million units during November, taking into account the PS2 and Wii versions, which Call of Duty 4 did not have. However, he expects holiday sales of World at War to be flat for the entire holiday when compared to last year's entry. "This title is performing well above our expectations and that of the markets," he stated.

Divnich also said that Gears of War 2 is expected to sell over 2 million for the month, while Left 4 Dead and Animal Crossing: City Folk were projected to have sold around 300K and 200K, respectively.

Charts below courtesy of EEDAR

*Last Year Hardware Data According to The NPD Group