Sure, games are selling quite nicely right now. Sure, the last couple of months were ahead of expectations by large margins. But nothing lasts forever, says an analyst for investment bank Goldman Sachs. Once GTA4 and Wii Fit are out, we’re told, that’s going to be it for the year.
Goldman Sachs analyst Robert Higginbotham has changed his rating for GameStop to a “sell” as part of his prediction, saying its stock is “poised for a pullback as industry growth remains on a path toward deceleration from its current peak.” Many Higginbothams died to bring us this analysis, which says the year’s biggest releases will be done with in May, and investors would do well not to expect a repeat of 2007, which will be tough to match — 2008 will be hard-pressed to stand out of the shadow cast by last year’s releases of Halo 3, Guitar Hero III, and Super Mario Galaxy. The massive sales we’re seeing right now for games like Brawl and GTA4 are a peak, says Higginbotham, and we should start seeing the numbers decline for the next couple of years. Even in the case of a stronger-than-expected 2008 season, “2009 growth will still decelerate and the multiple will still compress.”
Other investors disagreed with the forecast, praising GameStop as a strong stock which would continue to excel as the game industry thrived. An analyst for Sterne Agee wrote, “It increasingly appears the current video-game cycle could be longer and stronger than the most recent one.”
As for us at GameCyte, we’re cautiously optimistic about the year’s releases following Wii Fit. We heard there’s some new game coming out involving metal-based gears, and something or other to do with spores. Could be big stuff.
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