Console Sales Jump, Game Sales Fall In December As Holiday Shoppers Step In
In a report published Thursday, Wedbush analyst Michael Pachter analyzed the Software entertainment sector noting the disappointing software sales. Pachter noted that December U.S. console/handheld software sales were down 17 percent compared with last year at $1.28 billion. This was also below Wedbush's estimate of $1.53 billion.
Ian Sherr from the Wall Street Journal commented on the drop in U.S. video game sales in December despite the launch of PS4 and Xbox One. In the article, Sherr referenced the NPD Group who reported that new game sales at retail shops fell to $1.31 billion, down 17 percent.
Despite this decline, video game hardware sales were up 28 percent in December to $1.37 billion. In addition, SuperData Research noted that not all software sales were hit, as traditional video game software delivered over the internet in December increased to $378.9 million, up 71 percent.
According to NPD and Superdata, the top game was Activision Blizzard's Call of Duty: Ghosts. NPD placed Battlefield 4 from Electronic Arts (NASDAQ: EA) as second and Ubisoft's Just Dance 2014 party game at third. Superdata reported that Take-Two Interactive Software's Grand Theft Auto V was the second-most purchased game over the Internet, followed by Electronic Arts's Battlefield 4.
NPD reported that Microsoft's Xbox One outsold Sony's PlayStation 4 in December, but Nintendo's 3DS handheld was the top selling device. Pachter commented, “The Xbox 360 surprise was due in large part to Activision's Call of Duty: Ghosts, which sold 2.79 million units, well below our estimate of 5.0 million units. The PS4 surprise, on the other hand, was due primarily to lower-than-expected hardware sales. In our view, Sony opted to starve the channel domestically in order to create sell-outs and additional hardware demand, while shipping more units internationally than we had anticipated.”
Wii U had its best sales month, according to NPD. Despite this success, Nintendo forecasts a FY operating loss of 35 billion yen, compared with the previous estimate of 100 billion yen. The company also severely cut FY Wii U sales forecast from 9 million units to 2.8 million units.
In a statement to the Tokyo Stock Exchange, Nintendo cut FY net forecast from 55 billion yen profit to a 25 billion yen loss. In addition, the company cut FY sales forecast from 920 billion yen to 590 billion yen. Year-end software sales were “significantly” below the company's forecasts.
Piper Jaffray analyst Michael Olson analyzed Sony's situation in a note on January 14. Olson noted that Sony is attempting to make the PS4 stand out by offering a wider selection of franchise and eclectic titles. One exciting title includes Octodad: Dadliest Catch by the independent studio Young Horses.
Pachter continued to comment on Electronic Art's success in gaming with Battlefield 4 and anticipated titles. The analyst noted that sales of next-generation releases for Electronic Arts should accelerate after February, when the company begins selling Titanfall, a science-fiction shooter game for the Xbox One.
In Friday's trading, shares of Electronic Arts are up as high as 12.35 percent as Nintendo trails down as much as 23.86 percent. Sony fell 1.2 percent to 1,783 yen after 2:00 PM in Tokyo.
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