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Publishers expected to have slow 2007

Justin Murray

A number of gaming companies have had decent 2006 performances. Ubisoft (EPA:UBI) is beginning to reverse their losing trend as is Infogrames (EPA:IFG); companies like THQ (THQI) are doing well and even GameStop (GME) is enjoying the success the publishing houses are. However, some analysts believe that this is going to be a temporary boost and publishers are going to have a weaker 2007.

DFC Intelligence has stated that 2007 will be a weaker year for game publishers (which contrasts other expectations). This decline is mainly because of the reduction of PS2 desirability as the system will be replaced by the next three consoles as well as a additive effect of third party publishers having had historically poor sales on Nintendo platforms. The hardest to be hit are expected to be Electronic Arts (ERTS) and Take Two (TTWO) as they are too heavily invested in Sony systems (one being in poor supply and the other expected to have declining software sales).

The trend is, however, just part of the console cycle. The year after the new batch of consoles launches has shown to be bad for the game creators. Current gen levels are still low and developers are cutting back on last-gen software development, giving the existing install base little to play. However, with major releases at the end of 2007 like Halo 3 and Final Fantasy XIII (which, ironically, are sequels of the titles that launched in 2001, the end of the second year after the PS2 launched), the slump will likely end there ... that is if poor third party success on a Nintendo console since the N64 doesn't persist.

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