Even Grand Theft Auto IV Couldn't Save April for Videogames

Video game software stocks are under some selling pressure today after industry tracker NPD reported April sales that came up short of some estimates.

NPD said video game software sales grew 68% year over year in the quarter. Pacific Crest’s Evan Wilson this morning writes that he had had expected 120% growth. “Results for April are much lower than we had expected across the board, and other forecasts we have seen are not far from our expectations,” he wrote. “Although the data has been incorrect in the past, we checked with NPD and they said they have no reason to believe the current data is incorrect.”

• Activision’s (ATVI) sell through was down 11.5% in the month, to $54.7 million; Wilson had expected 25% growth. He notes that sales of both Guitar Hero III and Call of Duty 4 were lower than he had expected.
• Electronic Arts (ERTS) had a 74.4% increase in sell through to $65.8 million, below the 160% gain Wilson had forecast. He noted that sales of Army of Two were much lower than he had forecast; the biggest driver of the company’s growth continued to be Rock Band.
• THQ (THQI) sell through was up 10.6% to $14.7 million; Wilson had expected a gain of 65%. He notes much lower than expected sell-through in the month from Battle of the Bands for the Wii.
• Take-Two (TTWO) had a 919.4% increase in sell through to $199.6 million, thanks to the debut late in the month of Grand Theft Auto IV, although Wilson had expected 1,280% growth.

In today’s trading:

• Electronic Arts is down $1.97, or 3.8%, to $49.55.
• Activision is down 72 cents, or 2.1%, to $32.77.
• THQ is down 5 cents, or 0.3%, to $18.65.
• Take-Two is down 31 cents, or 1.1%, to $27.02.

Comments

[User 117413]

Hmmm.... it seems to me that this Mr.Wilson didn't get one right, maybe he doesn't know how to do estimates?

[Grampy]

The article would have been a lot more complete, interesting and useful if it had included the fact that the dismal month was far from across the boards. In consoles, Nintendo sold almost twice as many as the PS3 and 360 combined while setting new all time records in sales. I realize the article was aimed at software, but in video games the two are tightly linked.
In software, I think it should be pointed out that Grand Theft Auto 4 broke sales records by selling about 3.6 million units on its first day of release and grossing more than $500 million in its first week surprising everyone in the industry. If Mr. Wilson was really expecting more than that, I would seriously question his estimate, not the sales. The surprising thing is that these phenomenal sales did not translate into console sales for Microsoft and Sony and didn’t cause any slowdown of the Nintendo Wii juggernaut.