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Analyst: February Video Game Sales Fell 18%

12 Mar, 2013 By: Erik Gruenwedel

Sales of console video games in February are expected to reach $395 million, down 18% from $484 million in sales during the previous-year period, according to Wedbush Securities’ Michael Pachter.

The Los Angeles analyst, who made his projections based on internal data and The NPD Group Retail Track, said February console software sales were led by EA new releases Crysis 3 and Dead Space 3, Konami’s Metal Gear Rising: Revengeance, as well as Activision Blizzard’s Call of Duty: Black Ops II. Other top performers included Nintendo’s Fire Emblem: Awakening, as well as Take-Two’s NBA 2K13, and Ubisoft’s Far Cry 3 and Just Dance 4.

“We expect 10 [titles] that sold at least 100,000 units in February compared to 19 [titles] last year,” Pachter wrote in a March 12 note.

Going forward, the analyst said monthly game sales will become irrelevant as consumers await launches of new consoles from Sony and Microsoft. He does expect sales growth in March, when two big titles (Microsoft’s Gears of War: Judgment and Take-Two’s BioShock Infinite) are expected to sell well.

“While [game] sales may be weak for the next several months, Take-Two’s Grand Theft Auto V should be such a huge seller in September, so much so that overall sales may actually tick back into positive territory for the year,” Pachter wrote. “If next-generation consoles from Sony and Microsoft launch in October or November, we expect investors to look past potential holiday sales weakness, and we believe publisher shares will continue to appreciate.”

Indeed, the analyst contends the long-term appeal of current game consoles is undermined by the perception that the next generation units from Microsoft (Xbox 720) and Sony PlayStation 4 will be more powerful with greater online integration and multimedia functionality.

At last month’s unveiling of PlayStation 4, Sony said the new console would be capable of cloud-based gaming, in addition to streaming games and movies to the handheld PlayStation Vita, among other features. The PS4 hits retailers in the fourth quarter.

Pachter said he expects the new consoles will include an IPTV tuner that allows authenticated users subscribers to access their cable provider’s content without a dedicated cable TV box. He also believes the Xbox 720 will incorporate Skype with a monthly subscription for unlimited calling.

“It is likely that Microsoft will bundle Kinect with every next Xbox console shipped, making competition from Sony more difficult unless the latter decides to include its Move bundle with every PS4,” Pachter wrote. “For those reasons, we expect Microsoft to ‘win’ the next console generation.”

As a result, Pachter said he expects that February hardware sales were led by Nintendo’s four-month-old Wii U, which sold 80,000 units — up 41% from January; the Wii, which sold units (down 65% year-over-year); 225,000 Xbox 360 units (down 47% year-over-year); 165,000 PS3 units (down 53% year-over-year); 55,000 DS units (down 59% year-over-year); 115,000 3DS units (down 56% year-over-year); and 30,000 PS Vita units (down 87% year-over-year from its debut month).

“Overall, we expect hardware unit sales to be down 55% [year-over-year], with current-generation console hardware unit sales down 45% and handheld hardware unit sales down 68%,” Pachter wrote.

The NPD Group is expected to release February video games sales March 14.

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