After the big console sales splash of fiscal year 2007, analyst Colin Sebastian of Lazard Capital Markets predicts that 2008 will be the year of gaming software. He expects sales of game titles to hit US$ 10 billion in the U.S. for the first time ever.

"Our estimate excludes the incremental contribution from online, casual, mobile, and advertising revenues, which we believe are key long-term growth and margin drivers for the industry," he explains. Sebastian forecasts a 34 percent increase in sales of gaming software for the Nintendo Wii, Sony PlayStation 3, and Microsoft Xbox 360.

"In addition, we expect handheld and PC software sales to increase by 10%-15% and account for approximately $3.3 billion of software sales," explains Sebastian. "We note that strong 28% growth in 2007 has created a more difficult growth comparison; however, we believe there is increasing visibility for a solid new release lineup for all three major platforms."

This means that as the market penetration levels grow for gaming hardware, the way is paved for more software to end up in homes. We are currently seeing the continuation of publisher interest in the Xbox 360 platform, while more and more third-party game makers are getting into development for the Nintendo Wii. The Sony PlayStation 3 is also picking up steam and is sure to see a spike in software sales as it releases grade-A content.