NPD predictions cast gloom over February
Despite several high-profile releases, Wedbush Morgan analysts believe software sales slumped 11 percent last month to $350 million.
Though it's barely two months old, 2006 is already shaping up to be a rough year for the game industry. At least, that's what investment house Wedbush Morgan Securities believes will be the case when industry-research group NPD Funworld releases its software sales numbers this Friday.
"We forecast sales of $350 million, down 11 percent compared to last year," read a report coauthored by analysts Michael Pachter and Edward Woo. "Our estimate reflects $95 million in sales contribution from new platforms (Xbox 360, PSP and DS) offsetting a likely steep decline in sales of current-generation software (-33 percent)."
The two analysts agreed that the chaotic transition from current- to next-generation consoles is behind the falling numbers, which they believe will continue even after the Xbox 360 shortage ends. "We expect the sales weakness to persist for the first half of 2006," read the Wedbush report. "We expect supply and demand for Xbox 360 hardware to balance in April, but expect monthly contribution from next-generation software sales to remain fairly stable, with declines of current generation software sales expected to accelerate."
The pair also reiterated their belief that Sony and Nintendo's next-gen machines won't be available until Q4 2006--and that their looming launch will hobble interest in the PlayStation 2 and the GameCube. "Though we expect the PS3 and Revolution to launch in the fall, we think that declines in current-generation software sales will be greater than contribution from next generation software sales, and expect 2006 sales to be lower than 2005 levels," they wrote.
The Wedbush Morgan report, which is almost always in line with the final NPD numbers, also forecast the fortunes of each major third-party publisher. By percentage, Activision's 58 percent year-on-year revenue rise to $35 million will make it February's fastest climber. By income, though, Electronic Arts remains top dog; its monthly income is expected to rise one percent year on year to $85 million.
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