We expect NPD Funworld TRSTS U.S. retail video game console software sales data for the month of October (fourweek period ending October 30, 2004) to be released on Thursday, November 11, after the market close. This date is earlier than in the past due to NPDs decision to move the release date up from the third Monday of the month to the second Thursday (we are hopefully optimistic that there will be no surprises this month unlike last months restatement)...
..Sales typically begin to build in October heading into the holiday season, with a significant amount of games typically released for the holiday selling period this month and in November. We expect this trend to continue in 2004, and forecast sales of $500 million (up 41% vs. October 2003s $355 million). Our forecast is highly leveraged to sellthrough of the blockbuster Grand Theft Auto : San Andreas, which we believe was responsible for over $100 million in sales.
Comparable sales for the last four months were up following three consecutive months of year-over-year declines. We continue to be optimistic that strong holiday sales will allow the U.S. console software market to deliver 10% yearover- year growth (up from 5% in 2003). We note that year-to-date through September unit sales are up 10%, while ASPs have declined by only 1% (compared to our full-year forecast of a 6% decline). We expect ASPs to stay relatively flat over the remainder of the year, given the likelihood for strong sales of several full-priced blockbuster titles for the remainder of the year.
The U.S. hardware installed base is currently at 65 million current generation consoles (including the GBA) as of the end of September 2004 (up from 56 million at year end 2003) and we forecast growth to 77 million total consoles by the end of 2004. We expect console prices to remain stable for the balance of the year (current U.S. prices are Nintendo GameCube $99, Microsoft Xbox $149, and Sony PS2 $149), with the next round of cuts likely early next year. However, we note that there is an increase in promotional activities (bundling of free games) with the Xbox and GC and the PS2 may follow. We expect momentum in handhelds to continue with the price cut of the Nintendo GBA SP from $99 to $79 and the imminent launch of the Nintendos DS at $149 on November 21.
In October, we expect sales to be dominated by Take-Twos GTA San Andreas (PS2) as well as other top releases during the month including Activisions Tony Hawk Underground 2 (PS2, Xbox, GC, GBA, PC), and Midways Mortal Kombat: Deception (PS2, Xbox). We also expect last months top releases Nintendos Pokemon Fire Red and Leaf Green (GBA) and Electronic Arts NBA Live 2005 (PS2, Xbox, GC) to be top sellers. We note that there were 20 games that sold over 100,000 units in September, and we expect 15 in October (compared to 10 last year).
