Halo 2, San Andreas key drivers of Nov. revenue, say NPD stats

Halo 2 and Grand Theft Auto: San Andreas rescued the industry from a disastrous November. Industry revenues for the month, as reported by sales-tracking firm NPD and commented on by most analysts in morning memos to investors, were publicized this morning: Total US console software sales for November reached $849 million, up 11 percent over last November's take of $764 million.

Commenting on the role both Halo 2 and GTA: San Andreas played, Wedbush Morgan analyst Michael Pachter said, "Without contribution from Halo 2 and Grand Theft Auto: San Andreas, [revenues] would have been down 21 percent over last year."

Halo 2 sold 3.3 million units during the month, while GTA: San Andreas moved 1.5 million units. According to one analyst, the total sales of San Andreas now stand at 3.6 million units.

A quick look at analyst comments sees most eyeing Electronic Arts and Activision with some concern:

Boris Malkovich of TerraNova Institutional wrote this morning that he is reducing his company's estimates for EA: "For the first two months of the quarter, Electronic Arts has totaled $205.8 million in US console sales, down 18 percent versus the same period last year. This is running below our expectations of a 4 percent decrease. While we believe that international product strength, a weak US dollar, and strong performance of PC titles will offset some of this decline, we are reducing our estimates for the company."

In his morning memo, Tony Gikas of PiperJaffray said, "On balance, ERTS and ATVI clearly fell short of our Nov sales expectations."

Mike Wallace of UBS provided context, saying, "EA's sales declined 23 percent due to competition from Take-Two's ESPN games (sports price cuts) and the launch of Medal of Honor last year." Suggesting that Activision was hard put to beat last year's solid sales of True Crime during November, 2003, he added, "ATVI's sales were down 11 percent from a tough comp with last year (True Crime)."

Pachter summed up his assessment of the month with the following outlook: "We would be aggressive buyers of Activision and Take-Two shares on any weakness, and would opportunistically add to positions in Atari and Electronic Arts. We continue to recommend that investors hold shares of Midway and THQ, although we see no compelling reason to add to positions at current levels."

NPD stats indicate that year-to-date game sales are up 10.9 percent. One highlight in the stats surrounding hardware sales is the positive performance of Xbox--unit sales rose more than 50 percent when compared with sales during the same month a year ago.

Analyst consensus is that, overall, the console industry is on track to see revenue growth of at least 8-10 percent for the full year.