March 2007 Video Game Sales Preview: Expect 3% Sales Growth
We expect March U.S. retail video game console software sales data to be released after market close on Thursday, April 19. We forecast sales of $515 million, up 3% compared to last year’s $501 million. Our estimate reflects $305 million in sales contribution from new platforms (PS3, Wii, 360, PSP and DS) and current generation software sales of $210 million. Our forecast presumes sell-through of 165,000 PS3 and 400,000 Wii hardware systems.
Our forecast also assumes PS2 software sales of $155 million, although we expect relatively modest declines in PS2 sales for the middle part of 2007, when a strong slate of mass-market titles will be released. Sales growth over the last nine months has averaged a robust 16%. We continue to expect contribution from next generation software sales to grow on a year-over-year basis throughout 2007, more than offsetting modest declines in current generation software sales. We expect March sales of $515 million (up 3% compared to March 2006’s $501 million). We note that March poses tough comparisons, with three titles (Kingdom Hearts II, GRAW, and Elder Scrolls IV) selling very well last year, partially offset by GRAW 2 and God of War II this year. We expect next generation software sales of $305 million and current-generation software sales of $210 million. Our estimates include $90 million in software sales for the PS3 and Wii, which is based on our expectation of a tie ratio of around 3.0 units for each hardware unit sold (400,000 Wii plus 165,000 PS3).We expect March sales to be driven by new releases Ubisoft’s Ghost Recon Advanced Warfighter 2 (360), Sony’s God of War II (PS2), and Electronic Arts’ Command & Conquer 3 Tiberium Wars (PC). We also expect modest contribution from Activision’s Guitar Hero II (360), which launched on April 3.
Our views for console hardware sales are as follows:
Wii 400,000
PS3 165,000
PS2 250,000
Xbox 360 250,000
PSP 210,000
DS 250,000
GBA 165,000
We expect the recent sales strength on the PS2 to continue beyond March, given strong sell-through performance over the past nine months and a phenomenal lineup of mass-market games expected in April-July. We note that positive comparisons for PS2 software sales begin in April, making continued sales strength more difficult. However, we expect a high level of software support for the PS2 platform for the foreseeable future, and expect only modest year-over-year declines (approximately 20%) for the first half of 2007. Over the next four months, we expect the PS2 versions of Spider-Man 3, Shrek the Third, Ratatouille, Transformers, The Simpsons and Harry Potter and the Order of the Phoenix to sell more units than on any other platforms. The degree of decline in the second half of the year will depend upon next generation console sales, as most next generation consoles are likely replacements for current generation consoles.
[GAF]
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