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[UbiSoftologist]

While we are waiting for the detailed NPD data from bunkum / datawhore / rhindle, let's peruse the Oct NPD review by Michael Pachter of Wedbush Morgan Securities:

1) Overview of video game sales in Oct 2004

On Thursday afternoon, NPD Funworld released the October 2004 (four-week period ending October 30, 2004) TRSTS data for U.S. console video game software retail sales. Total sales were $479 million, up 5% sequentially from September’s $458 million, and up 35% compared to October 2003’s $355 million. Year-to-date sales are $3.70 billion compared with 2003 year-to-date sales of $3.33 billion (a year-over-year increase of 11%).

The overall sales figures were slightly lower than our expectations of $500 million (up 41%), but still very strong due to the combination of strong sales of older catalog games as well as Take-Two’s new release, GTA San Andreas (PS2). October sales were dominated by Take-Two’s GTA San Andreas (PS2) with over $100 million in sales, with strong contributions from other top releases during the month, including Midway’s Mortal Kombat: Deception (PS2, Xbox) and Activision’s Tony Hawk Underground 2 (PS2, Xbox, GC, GBA, PC). Sales of Electronic Arts’ Madden NFL 2005 (PS2, Xbox, GC, PSX, GBA, PC) and NBA Live 2005 (PS2, Xbox, GC), and Nintendo’s Pokemon Fire Red and Leaf Green (GBA) led catalog for the month.

Given the large percentage gains over the last two months, we are optimistic that we will see a strong finish for 2004, with double-digit sales growth for the year. We expect that these strong holiday sales will allow U.S. console software sales to grow 12% year-over year (up from 5% in 2003 and up from our prior estimate of 10%). We anticipate that PC software sales (expected to decline approximately 8%) will contribute sufficiently to enable overall U.S. interactive software sales growth of 10% for the year.

So far in 2004, ASPs have held relatively steady, with ASPs through October down only 1% ($30.57, compared to last year’s $30.73). Unit sales through October are up 12% (from 108 million to 121 million). Our prior 10% growth forecast presumes an increase of 17% in unit sales, offset by a 6% decline in ASPs. We believe that it is likely that ASPs for 2004 will decline by less than our forecast, and may end up being close to flat for the year, although we acknowledge that our unit forecast is very likely optimistic. Should ASPs hold relatively steady for the remainder of the year, it is possible that overall console software dollar sales will exceed our forecast, due to the large contribution expected from games released during this holiday such as Grand Theft Auto: San Andreas, Halo 2, and Gran Turismo 4.

There were 18 games selling more than 100,000 units apiece in October vs. our estimate of 15 and compared to 10 last year. The top 10 games captured 38% of dollar sales and 28% in unit sales in October versus 31% and 23% last month. These figures reflect the relative sales strength of new releases this month (particularly GTA), and we expect high contributions from the top sellers for the balance of 2004. The average selling price of all games (console and handheld, legacy and current generation) was $33.13, up 3% from last year’s $32.09 ASP. We expect ASPs to increase again in November with the launch of Halo 2 and continued contribution from GTA San Andreas, and now expect the full year ASP to come in flat to up 1% over last year. This year’s blockbuster lineup presents a difficult comparison for next year, and we anticipate that ASPs will decline by 5 – 10% in 2005.

2) Top-selling games by platform

Top Selling Games By Platform For October 2004 (Retail Sales $)

PS2 Title Publisher Projected $'s Projected Units
1 GRAND THEFT: ANDREAS Take-Two Interactive 100,879,300 $ 2,053,983
2 NBA LIVE 2005 Electronic Arts 13,397,740 $ 347,594
3 MORTAL KOMBAT: DECEPTION Midway Games 13,371,300 $ 261,022
4 TONY HAWK UNDERGRND 2 Activision 11,558,910 $ 245,461
5 MADDEN NFL 2005 Electronic Arts 7,773,246 $ 178,187

Xbox Title Publisher Projected $'s Projected Units
1 MORTAL KOMBAT: DECEPTION Midway Games 11,338,380 $ 218,023
2 FABLE Microsoft 5,550,907 $ 116,001
3 SW: BATTLEFRONT LucasArts 5,460,644 $ 112,352
4 NBA LIVE 2005 Electronic Arts 5,371,416 $ 138,237
5 X-MEN: LEGENDS Activision 5,186,361 $ 107,761

GC Title Publisher Projected $'s Projected Units
1 PAPER MARIO: THOUSAND Nintendo 8,959,945 $ 189,703
2 DONKEY KONGA W/BONGOS Nintendo 3,329,404 $ 72,051
3 TONY HAWK UNDERGRND 2 Activision 2,381,384 $ 50,491
4 X-MEN: LEGENDS Activision 2,041,272 $ 43,703
5 NBA LIVE 2005 Electronic Arts 1,394,158 $ 36,629

GBA Title Publisher Projected $'s Projected Units
1 POKEMON FIRERED W/ADP Nintendo 4,738,851 $ 142,514
2 POKEMON LEAFGRN W/ADP Nintendo 4,138,924 $ 129,665
3 SHARK TALE Activision 2,170,846 $ 85,720
4 MARIO PINBALL LAND Nintendo 2,043,483 $ 69,149
5 KIRBY AMAZING MIRROR Nintendo 1,662,038 $ 55,979

3) Reviews of publishers' performance

Activision:

Activision (ATVI—Buy and Focus List)
Releases during October: 10/4 Tony Hawk's Underground 2 (PS2, Xbox, GC, GBA, PC), 10/26 Shrek 2 Beg For Mercy (GBA).
October Retail Sales--$51 million
WMS Estimate--$32 million
Activision’s market share increased sequentially from 5.9% last month to 10.6%, as its retail sales increased from $27 million to $51 million (compared with $19 million last October). Sales were led by Tony Hawk's Underground 2 which sold 423,000 units combined compared with our estimate of 500,000 units in its first month. X-Men Legends sold much better than we expected, with 310,000 units combined sold in its second month. We expect Activision’s catalog games (Spider-Man 2, Shark Tales, Shrek 2, etc.) to continue to sell well through the balance of the year. Activision’s ASP for all units sold was $37.86, up 18% from last year’s $32.22 reflecting the large contribution of full priced games to the mix.

Electronic Arts

Electronic Arts (ERTS—Buy)
Releases during October: 10/12 FIFA Soccer 2005 (PS2, Xbox, GC, PC, PSX, GBA).
October Retail Sales--$83 million
WMS Estimate--$90 million
Electronic Arts’ market share decreased sequentially from 23.5% last month to 17.3%, and its retail sales decreased from $108 million last month to $83 million (compared to $86 million last October). Sales were led by NBA Live 2005 which sold 522,000 units compared with our 500,000 units estimate in its second month of release (on top of the 296,000 sold last month). Madden NFL 2005 sold 293,000 units, slightly lower than the 306,000 units sold through last October. The company’s ASP for all units sold was $35.76, down 15% compared with last year’s $42.11, reflecting a shift in Electronic Arts’ mix of sales toward lower-priced catalog games and the high contribution from NBA Live, which launched at a $39.99 retail price this year.

Take-Two Interactive

Take-Two Interactive (TTWO—Buy and Focus List)
Releases during October: 10/4 Conflict: Vietnam (PS2, Xbox, PC), 10/5 Robotech Invasion (PS2, Xbox), 10/25 Grand Theft Auto Advance (GBA), 10/26 Grand Theft Auto San Andreas (PS2).
October Retail Sales--$126 million
WMS Estimate--$130 million
Take-Two’s market share increased sequentially from 5.4% last month to 26.3%, as its retail sales increased from $25 million to $126 million (compared with $16 million last October). Sales were led by GTA San Andreas, which sold 2.1 units compared with our estimate of 2.2 million units in its first month of release (this compares with 1.4 million units sold by GTA Vice City in its first month of release). The game generated over $100 million in sales, the highest monthly figure since August, when Madden NFL generated $107 million in sales. ESPN NFL 2K5 had another strong month, selling 158,000 units combined (on top of the 1.9 million units sold since its launch in July). ESPN NBA 2K5 sold very well with 452,000 units (on top of the 140,000 units sold last month), comparable to sales from competitor NBA Live. Although we believe that Take-Two has taken market share from Electronic Arts for team sports games, we expect to see some stabilization of market share now that Electronic Arts has lowered pricing on its front line sports titles. Take-Two’s ASP for all units sold was $38.86, up 38% from last year’s $28.18, reflecting the large contribution from sales of GTA offset by its $20 ESPN games this year.

THQ

THQ (THQI—Hold)
Releases during October: 10/4 LEGO Knights Kingdom (GBA), 10/11 Tak 2 Staff of Dreams (PS2, Xbox, GC, GBA), 10/12 WWE Survivor Series (GBA), 10/27 The SpongeBob SquarePants Movie (PS2, Xbox, GC, GBA, PC), 10/28 The Incredibles (PS2, Xbox, GC, GBA, PC).
October Retail Sales--$17 million
WMS Estimate--$30 million
THQ’s market share decreased sequentially from 4.3% last month to 3.5%, as its retail sales decreased from $20 million to $17 million (compared with $27 million last October). Sales were led by Tak 2 which sold 76,000 units combined. The SpongeBob SquarePants Movie sold only 14,000 units combined compared with our estimate of 200,000 units and The Incredibles showed no sales. We assume that both games were released very late (or even in November) and since both these games are tied with movie releases in November, we expect a significantly up tick in sales next month. Our $30 million estimate for the month included $12 million in contribution from these two games, so we believe that THQ’s overall results are in line with our adjusted forecast. THQ’s ASP for all units sold was $22.92, down 26% from last year’s $31.10, reflecting a greater contribution from low priced GBA and catalog games. The company had 24 titles sell 10,000 units or more, compared with our estimate of 25 and 25 last October.