A report issued by Wedbush Morgan Securities analyst Michael Pachter, ahead of the official NPD results out later this week, has predicted a decrease of 18 percent in total game software sales for March 2006, in comparison to 2005, with total predicted sales of $445 million.
The decline reflects $122 million in sales contribution from new platforms, including the Xbox 360, PSP and DS, representing growth of only $58 million, more than offset by a decline in sales of current generation software, which dropped 33 percent or $157 million.
“It appears that 2006 is following a similar pattern to 2000, when the last console transition began," said Pachter in the report, "Consumers have slowed purchases of current generation console software while waiting for the opportunity to purchase an incredible next-generation console, the Xbox 360, and its associated software. While Microsoft indeed delivered an incredible machine, few consumers have thus far been able to actually purchase one.”
He continued: “Through February, NPD data shows that Xbox 360 hardware sales in the U.S. were just over one million units, and we expect sales of between 200,000 – 250,000 in March. We believe that Microsoft has remedied the supply-demand imbalance in the U.S. this month, with recent manufacturing capacity additions resulting in greater unit availability in early April.”
Pachter indicated that although he expects a modest rebound in April, due in part to a renewed supply of Xbox 360 hardware, the overall industry sales are expected to stay down approximately 10 percent for the first half of 2006.
On the bright side, however, Pachter's report indicated that after April next-generation software sales will remain fairly stable at around $100 - 150 million through October, thus representing growth of $80 - 130 million, with declines of current generation software sales expected to remain at around $130 – 150 million monthly.
“We expect relatively flat sales through the summer months, with potentially robust sales in November and December, once next-generation consoles from Sony and Nintendo are launched,” continued the report.
For all of 2006, however, the report indicated that with current generation software sales expected to decline, they will continue to eat into the the contribution from next generation software sales, resulting in overall 2006 sales being 3 percent lower than those in 2005.