Analysts respond to November sales

Last month was a record-breaking one for US retail gaming revenue, but what lessons are being pulled from the numbers?

97 Comments

Last month was widely expected to show significant growth in the US gaming industry, but when the retail-tracking NPD Group yesterday released sales data for the month, the figures far outstripped already-rosy analyst projections. According to the NPD, the month saw US retailers sell more than $2.63 billion in gaming hardware, software, and accessories, a 52 percent spike over the previous November. Even without December, typically the biggest month of the year for game sales by far, 2007's US industry sales are already up 5 percent over the total 2006 haul.

In an investors note heralding the news with exclamation points, Wedbush Morgan Securities' Michael Pachter acknowledged that the industry was outstripping not only its previous performance, but also his own projections.

"Year-to-date, industry sales are up 27 percent (including PC), tracking well ahead of our 19 percent [growth] estimate," Pachter said. "In order for our forecast to be right, December software sales would have to be down year-over-year (this is highly unlikely), so there should be significant upside to our growth estimates. Should December sales be up a modest 10 percent, overall industry growth will approach 23 percent for the full year."

Activision scored big, thanks to strong sales of Call of Duty 4 (more than 2 million units sold on the Xbox 360 and PlayStation 3), the continued success of Guitar Hero III: Legends of Rock (1.9 million sold across platforms in its second month), and the publisher's recently announced merger with Vivendi Games.

"Activision ascended to become by far the largest publisher of console and handheld video games with over 67 percent greater sales than its top competitor," Wilson said, factoring Vivendi game sales in with the Activision total. "It is set up to have by far the best holiday season sales."

The simExchange prediction market analyst Jesse Divnich released his own assessment of the figures, saying that a slowing US economy and reduced holiday shopping activity were to blame for the conservative November sales forecasts. Among the titles that surpassed the prediction market's expectations, Divnich was most impressed with Rock Band.

"Rock Band, up against an improperly executed marketing campaign, supply constraints, and hardware bugs, still managed to beat market expectations by ringing in 311,909 units sold in November, well above the market's expectation of 152,000 units," Divnich said. "We consider this a significant achievement for Harmonix, which despite large barriers managed to break into the music peripheral genre under a new intellectual property, which clearly could have been marketed better to consumers."

As for titles that didn't sport great performances, Divnich noted Manhunt 2 for the Wii, saying its sales of under 19,000 copies "should not be considered a victory for those groups who protested its release, but rather a victory for industry and gamers who did not fall for the market hype of what can only be described as a poorly executed title."

He also pointed to Crysis, which actually beat the simExchange's expectations with sales of nearly 87,000. However, Divnich said it had a long way to go before it could be called a success, and its performance "suggests that the best PC titles are those that can be readily available to a wider market by having lower hardware requirements."

Got a news tip or want to contact us directly? Email news@gamespot.com

Join the conversation
There are 97 comments about this story