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Pachter: NPD October Results To Be Up 10%
Pachter: NPD October Results To Be Up 10%
November 6, 2006 | By Simon Carless

November 6, 2006 | By Simon Carless
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As part of his preview for October's U.S. NPD video game sales, which debut next Thursday, Wedbush Morgan's Michael Pachter has forecast overall revenues to be up 10% to $401 million, as the console transition continues to run smooth.

Specifically, Wedbush detailed: "We expect October sales of $401 million (up 10% compared to October 2005’s $365 million). Our estimate reflects a decline of $94 million in current generation software sales (PS2, Xbox, GameCube, GBA), more than offset by an increase of $130 million in next generation software sales (Xbox 360, PSP and DS). Overall, we expect next generation software sales of $173 million and current-generation software sales of $228 million."

Pachter revealed that he expects October sales to be driven by new releases Vivendi’s Scarface: The World is Yours (PS2, Xbox, PSP, PC), Midway’s Mortal Kombat: Armageddon (PS2, Xbox), and Ubisoft’s Splinter Cell Double Agent (360, PS2, Xbox, GC, PC) along with continued strong sales of LucasArts’ Lego Star Wars II: The Original Trilogy and Nintendo’s Pokemon Mystery Dungeon.

The analyst noted that, due to the timing of the NPD retail calendar, three major October releases (Take-Two’s GTA: Vice City Stories (PSP), Square Enix’s Final Fantasy XII (PS2), and Electronic Arts’ Need for Speed Carbon (360, PS2, Xbox, PC, PSP, GBA, DS, GC), will fall outside the NPD October reporting month (October 1 – October 28). Thus, it was commented: "We believe that this will limit growth this month, but should drive significant growth next month."

Also mentioned and predicted: 15 games sold over 100,000 units in September, and "we expect 11 in October (compared to eight last year)." The report continues: "We believe that the recent sales strength on current generation platforms is sustainable, given strong sell-through performance for four consecutive months and negative comparisons for the next six months. Consumers appear willing to purchase compelling content for current generation consoles in spite of the imminent launches of the PS3 and Wii, driving monthly sales higher."

Through September, NPD data shows that Xbox 360 hardware sales in the U.S. were 2.7 million units. Wedbush expects monthly sales of 250,000 units in October, 750,000 million units in November, and between 1.5 – 2 million units in December. Wedbush comments: "Sell through of Xbox 360 hardware could be higher if the supply situation for the PS3 falls well short of demand, with many holiday gift givers likely substituting purchases of the 360 in place of the PS3."

It's also explained that the U.S. hardware installed base currently stands at 14 million next generation consoles (including handhelds) as of the end of September 2006 (up from 8 million at year end 2005).

Wedbush notes: "The console transition got off to a rocky start, with negative year-over-year sales for seven months (September 2005 through March 2006), as consumers delayed purchases of current generation software pending further clarity into the launch timing and pricing for the next generation consoles. Sales rebounded strongly over the next six months (up an average of 13%), as consumers appear content with current generation games due to anticipated shortages of the PS3 and Wii this holiday. We expect the transition to be quite mild over the balance of the year, with positive sales trends through March 2007."

The report concludes: "We continue to expect the publishers to deliver solid results through March, and think that the publisher stocks will stay at current prices once Sony and Nintendo launch their respective next generation consoles. Investor euphoria has returned as we approach the launch of the Wii and PS3, and we believe that hardware sell-outs and robust software sales in November and December will reinforce that the industry is on solid footing."


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