Beatles win battle of the video-game bands amid holiday price cuts

While my Guitar Hero gently weeps, the Beatles are number one again -- only this time in a category John, Paul, George and Ringo had never dreamed of: music video games. In this battle of the bands, the Fab Four's new title Beatles Rock Band has been selling eight days a week, but rival music simulator Guitar Hero has been a real nowhere man.

The Beatles' numbers come amid generally lackluster video-game sales, with the exception of Sony (SNE)'s PS3, which aced the competition for the first time in many levels. "Overall, the data shows the market weaker than expected," Broadpoint AMTech analyst Ben Schachter tells DailyFinance.
In September, PS3 outsold Microsoft (MSFT)'s Xbox 360 and Nintendo (NTDOY)'s Wii, according to industry research firm NPD, which reported that the video-game industry sold $1.28 billion worth of consoles and games in September, up 1 percent from a year ago. Schachter said he expects the sluggishness to continue through October, then pick up for the holidays.

With 491,800 PS3 units sold in September, Sony jumped ahead of Nintendo's Wii, which shipped 462,800 units, and Microsoft's Xbox 360, which sold 352,600. A Sony price cut boosted September PS3 sales by more than 100 percent over a year earlier.

"Although hardware unit sales were solid for the PS3 in particular, 5 percent software growth in September means that the possibility of any upside to this year for the overall software industry is likely gone," Schachter wrote in a research note Tuesday morning. "While we have a positive view on the industry for November and December on the momentum from recent price cuts and a strong pipeline of software, we are more cautious on the industry's ability to grow in October given tough comparables last year, when the Guitar Hero World Tour drove October sales."

UBS video-game analyst Brian Pitz agreed that price cuts should help spur sales heading into the holiday season. "We expect significant promotional activity from the Xbox in order to reinvigorate growth in the holiday season," Pitz wrote in a note to clients Tuesday morning.

In the closely watched war between music-simulation video games, "Rock Band Beatles won the battle of the bands," Schachter says, "selling through 595,000 units in 25 days' worth of data, versus 499,000 units for Guitar Hero 5 in 33 days' worth of data. In terms of dollars, Rock Band Beatles outsold Guitar Hero 5 by about 1.8 to 1 in September, though Guitar Hero 5 did not have a full band kit available."

This Christmas, look for a lot of consumers gesticulating wildly in front of screens pretending they're Navy SEALs, bounty hunters, tennis champions -- and four lads from Liverpool.
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