Analyst: May game sales could jump 12 percent

Anticipating May 2005 sales figures, due this week from sales trackers at The NPD Group, Michael Pachter of Wedbush Morgan is forecasting that revenues from video game sales could top out at $275 million, a healthy 12 percent spike over sales the previous May.

Much of the success, according to Pachter, can be attributed to continued solid sales from high-profile releases in April, including Doom 3 on the Xbox and Pokémon Emerald for the GameCube.

"In May," Pachter wrote, "we expect continued strong sales of Sony's Gran Turismo 4 (PS2), Ubi Soft's Splinter Cell 3: Chaos Theory (Xbox, PC), Activision's Doom 3 (Xbox), Take-Two's Midnight Club 3: DUB Edition (PS2, Xbox), Eidos's LEGO Star Wars (PS2, Xbox, GBA), and THQ's WWE Wrestlemania 21 (Xbox)... The top new releases in May were LucasArts' Star Wars Episode III: Revenge of the Sith (PS2, Xbox, GBA, DS) and Activision's Madagascar (PS2, Xbox, GC, GBA, DS, PC). We note that there were 10 games that sold over 100,000 units in April, and we expect five in May (compared to three last year)."

According to Pachter, Doom 3 publisher Activision could see sales of 150,000 units for Madagascar (based on the DreamWorks animated film); Take-Two sales will live off the fragrant fumes of Midnight Club 3: DUB Edition, which will tally an estimated 200,000 units in May; and THQ, with no "high-profile releases in May," still cleans up with its April release of WrestleMania 21, which Pachter projects will sell 75,000 units in May, in addition to the 109,000 units sold in April.

Briefly, Pachter projects the industry coffers for the month of May looking like this:

Activision: on sales of $27 million, up 54 percent over last year.
Atari: on sales of $9 million, down 20 percent over last year.
Electronic Arts: on sales of $36 million, down 12 percent over last year.
Majesco: on sales of $3 million, up 15 percent compared to last year.
Midway: on sales of $8 million, down 11 percent from last year.
Take-Two: on sales of $21 million, up 7 percent over last year.
THQ: on sales of $22 million, up 63 percent over last year.

Overall, Pachter sees sales of console and PC software growing 10 percent over the full course of the year in the US.

And from the perspective of the investor, Pachter continues to see an upside for those with patience--seven of the eight game-industry companies he covers are forecast to have significant gains in the coming months. "Following a generally positive and well-attended E3 in mid-May, it appears that investor sentiment has recovered, notwithstanding that expectations are still quite low for the quarter and for the year," Pachter said in his memo to investors this week. "Should data come in more robust than our forecast, we expect valuations to hold, as many may perceive sales strength early in the year as signaling a positive trend for 2005."

NPD is expected to release official results after the markets close tomorrow.