sonycowboy
Member
July 2005 NPD Video Game Sales Preview
We expect July U.S. retail video game console software sales data to be released after the market close on Thursday, August 11. We forecast sales of $335 million, down 4% over last year.
We believe that most investors expect low industry sales growth this year, and we think that expectations will change as the industry grows at a faster rate.
We recommend that investors accumulate Activision, Atari, Majesco, THQ, and Take-Two shares.
Activisions sales should be $30 million, down 41% over last year.
Atari is expected to deliver $5 million in sales, down 74% over last year.
We expect Electronic Arts sales to be $80 million, up 3% over last year.
We expect Majesco sales to be $4 million, down 38% compared to last year.
Midway sales are expected to come in at $5 million, down 32% from last year.
We expect Take-Two to deliver $20 million in sales, down 24% over last year.
THQs sales should be $26 million, up 56% over last year.
We expect July sales of $335 million (down 4% vs. July 2004s $350 million). We note that last years comp benefited from the strong second month sales from Spider-Man 2 of approximately $40 million, and there is no comparable release this year. In July, we expect continued strong sales of Take-Twos Grand Theft Auto: San Andreas (PC, Xbox), which was pulled from the shelves on July 21, Electronic Arts Medal of Honor: European Assault (PS2, Xbox, GC), THQs Destroy All Humans! (PS2, Xbox), LucasArts Star Wars Episode III: Revenge of the Sith (PS2, Xbox, GBA, DS) and Nintendos Pokemon Emerald (GBA) along with the new release of Electronic Arts NCAA Football 2006 (PS2, Xbox). We note that there were 12 games that sold over 100,000 units in June, and we expect 10 in July (compared to 10 last year).
In 2004, ASPs held relatively steady, ending the full year down 1% ($30.76, compared to 2003s $31.12), while full year unit sales were up 9% (from 186 million to 203 million). For 2005, we anticipate that console and handheld ASPs
will decline by 3.4% (to $29.73), reflecting a decline in current generation console game pricing partially offset by significantly higher prices for new handheld software, and an increase in pricing for NFL games. We also expect unit sales to end the year up 13%. We forecast US console and PC software sales growth of 10% for 2005. ASPs year-todate through June are up 2% and unit sales are up 12%, tracking our estimates. For July, we expect unit sales to be flat compared to last year, and we expect ASPs to decrease slightly.
The U.S. hardware installed base currently stands at 83 million current generation consoles (including handhelds) as of the end of June 2005 (up from 75 million at year end 2004). Console prices have held steady since May 2004 (current U.S. prices are Nintendo GameCube $99, Microsoft Xbox $149, and Sony PS2 $149), with a round of cuts for the PS2 and GameCube likely some time late this year. We expect Microsoft to maintain pricing for the current generation Xbox following the launch of the next generation Xbox 360 console (expected in mid-November), in order to reduce demand for the current Xbox and spark demand for the Xbox 360. Should Microsoft choose to maintain pricing for the Xbox, we believe that Sony will cut price on the PS2 in order to capture incremental market share in front of the launch of the Xbox 360. We note that the redesigned PlayStation 2 has a manufacturing cost that is purportedly below $100, so Sony may choose to maintain pricing for current generation PS2s until supply and demand are in balance, and will have a tremendous cost advantage over competitor Microsoft in pricing going forward. We believe that Sonys PS2 shipment forecast of 13 million units worldwide does not incorporate a price cut this year, although we expect one no later than this fall. Should Sony cut the PS2 price, we believe that it will revise its PS2 shipment forecast upward by 2 3 million units.
Some of the notable publisher numbers.
Activision
Releases during July: None.
We estimate that Activision generated $30 million in sales for the month (compared with $30 million last month and $51 million last July). We note that Activision has tough comparisons with last July when Spider-Man 2 sold 867,000
units in its second month of release. We believe that sales were led by Fantastic Four, which we estimate sold 200,000 units in its second month of release (on top of the 77,000 units sold last month). We expect that catalog titles Madagascar, Tony Hawk's Underground 2, Call of Duty, Spider-Man 2, and Shrek 2 also sold well.
Electronic Arts
Electronic Arts
Releases during July: 7/12 Electronic Arts NCAA Football 2006 (PS2, Xbox).
We estimate that EA generated $80 million in sales for the month (compared with $65 million last month and $78 million last July). We expect sales to be led by NCAA Football 2006, which we estimate sold 900,000 units. We estimate that Medal of Honor: European Assault sold 150,000 units (on top of the 283,000 units sold last month). We also expect continued strong sales of PSP titles along with Need For Speed Underground, Lord of the Rings and Medal of Honor, and its catalog of sports games.
Take-Two
Releases during July: 7/11 Charlie and the Chocolate Factory (PS2, GC, GBA, PC, Xbox), 7/11 Sid Meier's Pirates! (Xbox).
We estimate that Take-Two generated $20 million in sales for the month (compared with $39 million last month and $26 million last July). We believe that sales were once again led by GTA San Andreas (Xbox), with an estimated 150,000 units sold before its recall (on top of the 387,000 units sold last month). We expect continued strong sales of ESPN sports games along with catalog sales of Grand Theft Auto and Midnight Club.
