Heading in to the release of NPD Funworld's September sales projections Thursday, analysts braced themselves for bad news. They had no delusions that September 2005's lineup of games (spearheaded by Activision's X-Men Legends II and the annual onslaught of EA Sports games) could measure up to September 2004, where hits like Pokémon Fire Red and Leaf Green, Fable, and Star Wars: Battlefront combined for approximately $95 million in sales alone. Sales that month were up a whopping 44 percent over September of 2003, and without a stacked lineup of surefire hits on the month's release list this year, a pessimistic view of the short term prevailed. Even so, the actual Funworld numbers were worse than analysts had predicted (worse than the predictions of analysts who dared to put a number on the slide, at any rate).
Total US console sales for the month amounted to $347 million, down 24 percent from last year's roughly $458 million in sales. Thomas Weisel Partners analysts Colin Sebastian and Joshua Matthew had predicted software sales "could be down in the 20 percent range," while Wedbush Morgan Securities' Michael Pachter and Edward Woo also predicted a 20 percent drop to $365 million. UBS Analysts Michael Wallace and Stephen Tam couched their predictions by merely saying that sales would be weak.
Now the big question is how long it will take for the industry to rebound. Pachter and Woo today issued their response to the NPD numbers, and the pair is expecting a rough October, somewhat along the lines of September, with a 15 percent drop in sales from October 2004 (which were sales that represented a 35 percent increase from the year before). This month's releases of big games like Soul Calibur III, SOCOM 3, Tony Hawk's American Wasteland, and SpongeBob SquarePants: Lights, Camera, PANTS! should help offset the problem, but the pair still expects an overall slide.
Bad news aside, Pachter and Woo expect a strong finish to the year, with US software sales up in the high single digits for both November and December. On the other hand, Wallace and Tam aren't convinced of that and don't expect the industry to post positive growth numbers until December. Measuring up to 2004's numbers becomes a little easier in November and December, as those months in 2004 posted a growth of 11 percent and a loss of 1 percent, respectively.
A number of other interesting points came out of the NPD Funworld data. Gaming hardware sales are now split 50-50 between handhelds and consoles, but the overall sales have been sliding for months. A primary reason for this is the slowing of Xbox hardware in anticipation of the Xbox 360. Sales of Microsoft's original console were down 53 percent from last September and are down 26 percent year-to-date. Those numbers aren't likely to get better anytime soon, as many expect Microsoft to stop manufacturing its older system altogether once the 360 gets a foothold in the market.
Looking at the football market to assess the end impact of Electronic Arts' exclusivity deal with the NFL, it has predictably resulted in an increase of sales, but the overall football market appears to be shrinking. EA moved 2.85 million copies of Madden from August through September, a 10 percent increase over last year's 2.59 million copies for the same time period. However, that growth doesn't make up for the 1.09 million copies of 2K Sports' NFL 2K5 sold, and as a result, the overall football market (including college, pro, street, and backyard games) so far has shrunk almost 19 percent in unit sales for August through September.
Regardless, EA Sports dominated retail during September, claiming four of the top five highest-grossing game spots (X-Men Legends II prevented the sweep by placing third in sales). Buoyed by the start of the NFL regular season, Madden NFL 06 landed the top spot again, with NBA Live 06, Tiger Woods PGA Tour 06, and NASCAR 06 landing in second, fourth, and fifth places, respectively.