A Very Dangerous Game

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Written by BuckGB on October 8th, 2008

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Exactly how the gaming industry will hold up during the holiday season won't be clear for several weeks. Data on the the industry's September sales are due out from market research firm NPD Group on Oct. 15. Those numbers are expected to look dismal in a year-over-year comparison--but not, oddly enough, because of the downturn. Last September's release of "Halo 3" by Microsoft (nasdaq: MSFT - news - people ) caused such a significant spike in software (and hardware) sales that this year can't help but look shabby (even with the long-awaited release of "Spore").

Investors trying to assess damage to the industry from the downturn, therefore, should ignore the September data and instead keep an eye on sales figures for October.

Of course, investors are so skittish now they may not factor such nuances into their selling plans.

"We believe that September NPD data scheduled for release in mid-October could add to near-term concerns over industry sales trends and that shares in the sector are likely to remain choppy until there is better visibility for the key holiday period," wrote Lazard Capital Markets analyst Colin Sebastian in a note last week.

No one expects the industry to collapse this holiday season. And, every analyst I spoke with said they continue to believe sales will remain relatively strong, compared to other industries, as the year marches on. Few are counting on stocks to rebound anytime soon, however.

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