Cable, Satellite & Interactive Media Industry Update (TTWO, ATVI, ERTS, THQI)

Analyst Todd Mitchell at Kaufman Bros. has an update on the Cable, Satellite & Media Industry, in a report released on Friday.

According to the report, on Thursday night NPD reported that retail sales of video game software, hardware, and accessories were $1.26 billion in February, down 15% from $1.47 billion reported a year ago. Software sales were down by 15% to $624 million, higher than Kaufman’s forecast of an 8% decline. Hardware sales were down 20% to $426 million, lower than Kaufman’s forecast of a 31% decline. Accessories sales remained flat at $206 million. February only saw one strong third-party release, which was Hold rated Take-Two Interactive Software, Inc.’s (NASDAQ: TTWO) “BioShock 2”.

The down side to expectations was mainly due to a stronger-than-expected pullback in Wii sales, according to Kaufman. Kaufman believes that a stronger pullback in Wii sales bodes well for third-party publishers. Wii sales dropped 47% to 398,000 after a promotional holiday season. The drop in Wii sales was offset by stronger-than-expected sales of X360, and PS3, which were up 8%, and 30%, respectively.

The top seller for February was DS, with 613,000 units, followed by X360, with 422,000 units, Wii, with 398,000 units, and PS3, with 360,000 units.

Kaufman expects monthly comparisons to get easier in March. According to Kaufman, NDP has become a less meaningful number for the industry due to opening up of alternative channels, and direct distribution becoming greater part of the mix.

Among the companies in its coverage, Kaufman has Buy rating for Activision Blizzard, Inc. (NASDAQ: ATVI), Electronic Arts Inc. (NASDAQ: ERTS), and THQ Inc. (NASDAQ: THQI).