NPD reports console game sales, revenues are off for May

This week, retail sales tracking company NPD Funworld released figures for the month of May. Compared to May of last year, this year's stats show considerable weakness.

Year-on-year unit sales of console games were down 15.9 percent. However, most analysts commenting on the figures cited 2003's top-heavy list of blockbuster games--including Enter the Matrix and NBA Street Vol. 2--as setting up a no-win situation. "This drop was expected as the industry was up against a tough competition," said TNI Securities analyst Boris Markovich.

Dollar sales of console games were down 17.1 percent during May to $245 million, according to NPD. That figure compares to $295 million in revenues tallied for May 2003. As Piper Jaffray's Tony Gikas said: "The industry faced a challenging comparison to May 2003 as the top four titles [for May 2003], Atari's Enter the Matrix, Electronic Arts' NBA Street Vol. 2, Activision's Return to Castle Wolfenstein, and Microsoft's Brute Force tallied over $77 million in sales alone." Gikas also points out that May 2003's top title, Enter the Matrix, sold 560,000 units while May 2004's top-selling title, Red Dead Revolver, could only muster combined sales of 220,000 units.

"June-July NPD data should be more favorable," Gikas concluded.

Year to date, NPD reported that sales of console software through May generated $1.69 billion in revenue, compared with 2003 year-to-date sales of $1.71 billion--a decrease of just 1 percent.

Of the largest publicly traded game publishers, Midway and Take-Two were the only companies to post positive results in the area of unit sales. Midway sold almost 100 percent more units this past May than the previous May, and Take-Two sold just north of 30 percent more units.

Software sales by platform were also off, save for GameCube titles. Sales of PS2 titles were off 18.5 percent, Xbox software sales decreased 7.7 percent, GBA game sales were down 23.1 percent while GameCube game sales were up by 21.8 percent. Console hardware sales across all platforms were up 17 percent for the month.

Several industry analysts chimed in with their own reports, noting other trends and giving forecasts for the coming year. Michael Pachter and Edward Woo of Wedbush Morgan Securities said, "We were disappointed with relatively weak year-over-year unit sales, which we believe is attributable to the relatively low number of SKUs released to date, down 20 percent year-over-year." However, the duo sees better days ahead. "We expect sales growth to resume in June, and anticipate that overall industry growth will rebound to 10 percent for the full year as the console-installed base continues to expand."

It should be noted that NPD tracks approximately 60 percent of total US console game sales, and it does not receive data from retail giant Wal-Mart.