Analyst: Game sales up 7 percent in August

[UPDATE] Wedbush Morgan's Michael Pachter predicts the forthcoming monthly NPD report will bring more good news; lowers PS3, raises Wii hardware-sales estimates for 2006.


Though many predicted it would be a year of doom and gloom, 2006 has turned out to be not too bad for the game industry. Summer, in particular, saw robust game sales. In June, $444 million in US console software was sold, an increase of 15 percent versus the same period in 2005. In July, $386 million in console games was sold, an increase of 22 percent versus the year before. From April, console software sales have increased an average of 11 percent per month.

As for August, Wall Street analysts are predicting that it, too, will best the same period in 2005, albeit by a smaller amount that the previous two months. Today, Michael Pachter of Wedbush Morgan Securities forecast that $360 million of console games were sold last month, 7 percent more than in 2005.

"Our estimate reflects $140 million in sales contribution from new platforms (Xbox 360, PSP, and DS) representing year-over-year growth of $108 million," said Pachter in a note issued today. "We expect current-generation software sales of $220 million, reflecting a decline of 28 percent (or $86 million) compared to last year."

And, with the launch of both the Wii and PlayStation 3 due by year's end, Pachter thinks the situation will only get rosier. "We now believe that declines in current-generation software sales will be more than offset by contributions from next-generation software sales," he said. "Much depends upon the launch timing and quantities for the PS3 and Wii, but should both consoles launch as represented by Sony and Nintendo, we expect overall 2006 US sales to be higher than 2005 levels."

As for third-party publishers, Pachter predicts that, percentage-wise, the month's big winners would be Midway ($4 million in monthly revenue, up 59 percent year-on-year), Take-Two ($20 million, up 31 percent), and THQ ($22 million, up 30 percent). By percentage, losers are pegged as being Majesco ($2 million, down 4 percent), Activision ($14 million, down 6 percent), Electronic Arts ($130 million, down 11 percent), and Atari ($4 million, down 33 percent).

But while widely respected, Pachter's predictions of the NPD August numbers are just that--predictions. The actual numbers are expected to be released later this week.

[UPDATE] Pachter also issued his revised estimates for game software sales for all of 2006. Citing "better-than-expected positive trends," he now predicts that combined US and European game sales will enjoy a 3 percent increase over 2005, versus the 3 percent decline he predicted in February. In addition, Pachter tweaked his 2007 US/EU software sales estimate to a 15 percent year increase (down from 16 percent), and 2008 estimate for both territories to 15 (down from 17 percent).

Furthermore, Pachter adjusted his combined US/EU sales forecasts for the PSP and DS. "We are lowering ... our forecast for PSP sales from 8.5 million to 7.4 million, and increasing our expectation for DS sales from 6.5 million to 8 million," he said. The analyst fueled further console fanboy flame wars by slashing his worldwide 2006 PS3 hardware sales estimate by a 1 million units to 3 million and raising his 2006 worldwide Wii hardware sales by 500,000 to 4 million.

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