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.

31 Comments

  • acutech

    Posted Mar 11, 2006 9:22 am PT

    I haven't bought a new game since november. Because there are no good games since then. Starting the 20th all the next gen titles will be coming. Watch the sales climb then.

  • SavoyPrime

    Posted Mar 8, 2006 12:50 pm PT

    Did any blockbuster titles release in February? If not, then it's not surprising that there will be bad numbers for that month.

  • Tranceplant

    Posted Mar 8, 2006 8:20 am PT

    January slow month? I dunno... remember last year? RE 4 was out on the Gamecube. It sold very good!!
    But it's alright. There wasn't any stellar hit these months... well.. I dunno. Ask the PS2 owners for Grandia 3 and Tales of Legendia.

  • thefjk

    Posted Mar 8, 2006 6:20 am PT

    Good news, Bad news!

  • ROCKINGFOOL

    Posted Mar 8, 2006 4:10 am PT

    why do you guys think ps3 will be great we havent seen his sales or games no reviews we only got rumors :/

  • jakeboudville

    Posted Mar 8, 2006 12:18 am PT

    i agree with buildar

  • buildar

    Posted Mar 7, 2006 9:58 pm PT

    January and February are always slow months

  • NeoJedi

    Posted Mar 7, 2006 8:02 pm PT

    All the King's horses and all the King's men...

  • jimbo102671

    Posted Mar 7, 2006 7:20 pm PT

    I'm not suprised, as most of the past month's releases are forgettable. Plus, this is the transition. Gamers and developers alike are awaiting the next-gen systems.

  • eourgh

    Posted Mar 7, 2006 5:08 pm PT

    Well this are just reports. and the fact that january and february are not a big hit month for DS why don't they wait until march and see the difference. Anything can happen.

  • jonnyjd

    Posted Mar 7, 2006 2:10 pm PT

    It makes sense...unfortunately.

  • mariokart64fan

    Posted Mar 7, 2006 1:40 pm PT

    i seen it coming with gc ps2 and xbox having not many goodtitles coming theres a few though ps2 has gtalcs coiming xbox has driver parallel lines this month and of course gc has zelda twilight princess but i dont think thatll be enough to drive sales until revolution and ps3 comes i dont think records will be set

  • tremo01

    Posted Mar 7, 2006 1:25 pm PT

    A gaming crash just like 83 is inevitable...

  • REVOLUTIONfreak

    Posted Mar 7, 2006 12:28 pm PT

    This is to be expected for the current time. I mean, look, the PS3 and Revolution are both being unveiled at E3 this year, 360 is out, but there is nothing truly next generation out yet, and the current generation consoles have hardly anything left (poor poor xbox fans, at least the gamecube has Twilight Princess left). Until the PS3, Revolution, and Xbox 360 have been out more than a year, dont expect any big jumps in the industry. At this point, it looks like handhelds are literally running the market.

  • pedjan

    Posted Mar 7, 2006 12:23 pm PT

    Yeah, but only xbox360 games will be next gen in 2007. Revo i ps3 games in 07 will be just ports or nex-gen-wanna-be games and maybe in Q4 2007 next gen titles will appear... and maybe not.

  • rbarahona

    Posted Mar 7, 2006 12:11 pm PT

    I agree that the market is in a transition phase. Nintendo is holding back a lot of projects for the Revolution and the GCN is practically dead (I'm very sad to write this). Anyway, there's still time and there are a lot of great games announced so maybe those games can help the situation.

  • HuhJustaBox

    Posted Mar 7, 2006 11:47 am PT

    This is a no-brainer!!!! HELLO!!!! We are currently in a transition phase! There are not that many 360 games out and everyone looking for the PS3 and Revo are saving there money. Besides, there are not really any current gen games coming out worth buying. Expect this year to not be as profitable, but in 07 the profits will be coming in hand over fist--that is after all next-gen systems are out and many games to sell on those systems.

  • zhuojloh

    Posted Mar 7, 2006 10:56 am PT

    do u think xbox 360 games will make it to the top this month?

  • Zephyr_3

    Posted Mar 7, 2006 10:50 am PT

    This month should see a dramatic increase in sales considering the release of Elder Scrolls IV: Oblivion, Driver Parallel Lines, Kingdom Hearts 2, Burnout: Revenge for the X360, among many others . . . I think this month will be a good month for the industry

  • NextGenAdam

    Posted Mar 7, 2006 10:42 am PT

    I reckon they're talking rubbish, and they say PS3 is to launch Q4 06???
    Interesting. Not that I'll get it anyway...

  • Donkeljohn Site moderator

    Posted Mar 7, 2006 10:41 am PT

    [This message was deleted at the request of the original poster]

  • Donkeljohn Site moderator

    Posted Mar 7, 2006 10:40 am PT

    No surprises. But when Halo 3 emerges (Whenever that will be) we may see new sales records. . . or we my see shock on many faces

  • automaticsnake

    Posted Mar 7, 2006 10:37 am PT

    until PS3 comes out sales going to be low

  • M4NI4K

    Posted Mar 7, 2006 10:34 am PT

    sigh

  • choas_era

    Posted Mar 7, 2006 10:32 am PT

    Thats the stockmarket for yah..... But like coffee beans, it will go back up in time....

  • Ace_The_Ace

    Posted Mar 7, 2006 10:32 am PT

    Please let this be a transition! It will get better if the PS3 is going to be cheaper than they say it is.

  • gamecockbarista

    Posted Mar 7, 2006 10:30 am PT

    sounds like a good excuse to charge 69.99 for games

  • Revobean

    Posted Mar 7, 2006 10:18 am PT

    This is good really....just a transition phase.

  • dchan01

    Posted Mar 7, 2006 10:17 am PT

    Well seeing as how there were zero important games released this year until the very end of February this is shocking!

  • billigloo

    Posted Mar 7, 2006 10:11 am PT

    and walker texas ranger too

  • billigloo

    Posted Mar 7, 2006 10:10 am PT

    go go power rangers

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