February 2008 Video Game Sales Preview: Expect 27% Sales Growth
We expect February U.S. retail video game console software sales data to be released after market close on Thursday, March 13. We forecast sales of $575 million, +27% compared to last years $454 million. For purposes of comparison, The simExchange prediction market forecasts overall software sales of $592 million.
Our estimate reflects $485 million in sales contribution from new platforms (PS3, Wii, 360, PSP and DS) and current generation software sales of $90 million. We estimate sell-through of 300,000 Wii, 250,000 Xbox 360 and 260,000 PS3 consoles. For purposes of comparison, The simExchange prediction market forecasts 450,000 Wii, 285,000 Xbox 360
and 270,000 PS3 consoles sold in February. Our console sell-through forecasts reflect our belief that Wii, DS and Xbox 360 hardware continued to be supply constrained during the month. With the launch of several high-profile games in March, we expect supplies for the consoles to increase.
Console software sales growth in 2007 was a robust 34%. In January, software sales were again strong and up 11% over January 2007, with the reporting period this year consisting of only four weeks compared to last years five week period. We expect robust sales in February, with the sector appearing highly recession resilient.
We expect solid software sales growth for all of 2008, as the holiday lineup included high priced (and sold out) games like Guitar Hero III and Rock Band, and the line-up over the next several months is also quite strong. We recommend that investors accumulate Activision, Electronic Arts, Nintendo, THQ, and Ubisoft shares at current levels.
...
We expect February sales of $575 million (+27% compared to February 2007s $454 million). We expect next generation software sales of $485 million and current-generation software sales of $90 million. We believe that PS2 software sales declined 28% year-over-year, as continued adoption of next generation consoles has reduced demand for current generation software. PS2 software sales decreased 24% in 2007 and were down 26% in January. The degree of PS2 software sales decline over the next several months will likely be highly correlated to next generation console sales, with year-over-year increases in next generation consoles purchases likely to accelerate declining demand for current generation software.
We expect February sales to be driven by Capcoms Devil May Cry 4 (PS3, 360, PC), and to a lesser extent Microsofts Lost Odyssey (360) and THQs Frontlines: Fuel of War (360, PC), along with recent top selling releases Nintendos Super Mario Galaxy and Wii Play, Activisions Call of Duty 4 and Guitar Hero III, and Electronic Arts Rock Band. We note that there were 14 games that sold over 100,000 units in January, and we expect 14 in February (compared to 10 last year).
