The following is an excerpt from a report compiled by Michael Pachter of Wedbush Securities.
We expect April U.S. retail video game software sales data to be released by the NPD Group after the market close on Thursday, May 16.
We expect console/handheld software sales of $300 million, down 2 percent compared to last year’s $307 million, as a strong new release schedule, solid catalog sales from a slew of high-profile releases last month [most notably late March release of Take-Two’s (NASDAQ:TTWO) BioShock Infinite] and an easy comparison (down 39 percent) mitigate continuing declines in a transition year. We expect these factors to almost offset the deterioration of catalog sales at this late stage of the console cycle. The industry hasn’t seen a month of true growth (based on the same number of weeks in the month and its comparison period) since November 2011, and we expect sustained positive growth to remain elusive until 2014.
Exhibit 1: Estimated Console/Handheld Software Sales (by Publisher)
|April-13E ($ millions)||YoY||MoM|
|Take Two Interactive||$45||89%||-53%|
Publishers as percentage of Market: 62 percent
Source: The NPD Group/Retail Track and Wedbush Securities estimates
We expect April console/handheld software sales to be led by new releases Deep Silver’s Dead Island: Riptide (360, PS3, PC) and Warner Bros.’ (NYSE:TWX) Injustice: Gods Among Us (360, PS3, Wii U), as well as multiple March releases, including Microsoft’s (NASDAQ:MSFT) Gears of War: Judgment, Nintendo’s Luigi’s Mansion: Dark Moon, Sony’s (NYSE:SNE) God of War: Ascension, Square Enix’s Tomb Raider, and Take-Two’s BioShock Infinite. We expect Activision Blizzard’s (NASDAQ:ATVI) StarCraft II: Heart of the Swarm and EA’s (NASDAQ:EA) SimCity to again lead PC sales.
We expect hardware sales of 55,000 Wii U units in its sixth month (down 19 percent month-over-month), 75,000 Wii units (down 16 percent year-over-year), 205,000 Xbox 360 units (down 13 percent y-o-y), 165,000 PS3 units (down 5 percent y-o-y), 60,000 DS units (down 20 percent y-o-y), 185,000 3DS units (up 46 percent y-o-y), and 30,000 PS Vita units (down 57 percent y-o-y).
In March, combined current-generation home console (PS3, 360, Wii, Wii U) hardware unit sales were down 28 percent y-o-y, while handheld hardware unit sales were down 37 percent, resulting in overall hardware unit sales being down 32 percent for the month. We expect negative momentum to continue for the most part until the release of the new consoles from Microsoft and Sony.
We expect packaged goods weakness to persist for much of 2013, albeit with intermittent reversals. We next expect positive growth in September (the launch month of Take-Two’s Grand Theft Auto V), and do not expect sustained growth until 2014, as new consoles from Sony and Microsoft are expected to launch late this year.
Michael Pachter is an analyst at Wedbush Securities.
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