CREDIT SUISSE FIRST BOSTON CORPORATION
Equity Research
Americas
Internet Software & Services
Heath P. Terry
Andrew Thomas
Interactive Entertainment
Weekly Sales Update
Summary
US sales of video games declined by an estimated 26% in the week following
Thanksgiving. The projected Xbox hardware units sold in the third week was
182,000, for a total of 738,000 total units in the first 16 days. Approximately
1.74 million Xbox software units were sold during that time period, for a tie-
ratio of 2.4. On Sunday, Microsoft announced they had shipped 1.1 million units
to retailers and would ship at least another 300,000 by year-end. This puts
them near the top end of the 1.0-1.5 million range the company had guided to and
above the 1.3 million we had forecast.
Gamecube sales dropped dramatically from over 469,000 units during its first
week in the US to 65,000 units this past week. PS2 sold 241,000 units in the
week, bringing the install base in the U.S. to 5.2 million units. Game Boy
Advance sold 260,000 units last week, bringing the install base to 3.1 million
units. Sales to date put each system on or ahead of pace to meet our year-end
expectations.
Take-Two\'s (TTWO, $14.62, Buy) Grand Theft Auto 3 for the PS 2 topped the
charts, selling approximately 137,000 units in its sixth full week on the
shelves. Take-Two\'s sales for the months of October and November are up nearly
300% over the same period last year on the strength of GTA3.
Electronic Arts\' (ERTS, $62.94, Strong Buy) Harry Potter titles maintained their
#1 spots on the Game Boy Advance, Game Boy Color, and the PlayStation One
charts. To date U.S. sales of EA video game and PC products in the quarter have
risen 42% over the same period last year. EA also debuted three titles in the
top 25 in Japan during this period, likely a first for any U.S. company.
THQ\'s (THQI, $57.70, Buy) WWF title for the PS2 has sold over 256,000 units in
the U.S. since release last week, an increase of 81% over sales of its
PlayStation product last year. Quarter to date THQ\'s U.S. sales are up 27% over
last year, well above the 2.5% revenue growth expected in the quarter.
Activision\'s (ATVI, $25.50, Buy) Tony Hawk products have performed very well in
the quarter to date filling the top seven slots in the company\'s videogame
portfolio and generating nearly $60 million in U.S. sales in the quarter to
date. In that period Activision\'s U.S. sales are up 34% year over year.
Clearly, video game hardware and software sales in the first two months of the
quarter have been very strong, even above our high expectations. While the
stocks have been reflecting this strength in recent days, we expect shares will
continue to trade well through year-end. We continue to believe that investors
should focus on owning core positions in the industry leaders through the first
years of this powerful product cycle.
Executive Summary
We are now able to use NPD\'s TRST data for video game sales in the U.S. and PC
Data for PC game sales in the U.S. to estimate year over year growth rates for
the companies we cover. The PC Data report lags, the NPD video game report by a
week, so we are using like year over year periods to make our comparisons.
There are several adjustments and estimations that have to be made to this raw
data to develop these numbers, so they should not be seen as exact
representations of a company\'s reported sales.
The Week After Thanksgiving
US sell through data for video games decreased an estimated 26% in weekly sales
during the week ending December 1st, the first full week after Thanksgiving.
The projected Xbox hardware units sold in the third week was 182,000 units, for
a total of 738,000 total units in the first 16 days. Approximately 1.74 million
Xbox software units were sold during that time period, for a tie-ratio of 2.4.
Microsoft\'s Halo remained in the top spot on the Xbox with over 81,000 units
sold in the week.
The Gamecube sold over 469,000 units during its first week in the US, but
followed with only 65,000 units this past week. Just over 1 million software
units have sold since launch, for a tie-ratio of 1.9, the result of the narrow
software offering available on launch. The top selling Gamecube title was
Nintendo\'s Luigi Mansion, with nearly 44,000 units sold.
Take-Two\'s (TTWO, $14.62, Buy) Grand Theft Auto 3 for the PlayStation 2 topped
the charts, selling approximately 137,000 units in its sixth full week on the
shelves. Electronic Arts\' (ERTS, $62.94, Strong Buy) Harry Potter series
maintained the #1 spot on the Game Boy Advance, Game Boy Color, and the
PlayStation One, spots held since the games launched three weeks ago.
Sell through to date for the quarter is encouraging. Versus the same period
last year, each of the companies we cover are experiencing impressive gains.
The data in the chart above combine October monthly retail data for PC software
sales and VG sales, and weekly totals for the month of November. Since there is
a timing difference between the PC software sales release and the VG sell
through release, the data above compares total November data on video games, and
three-fourths of PC sales for the month of November.
The fourth quarter typically accounts for 50% or more of sales in the industry
and December is expected to account for nearly 70% of sales in the quarter this
year. So while the quarter to date is trending very well relative to
expectations, the remaining weeks will be critical.
Hardware sales were down slightly week-to-week after the big Thanksgiving
shopping weekend. PlayStation 2 US hardware sales were down 9%, with Game Boy
Advance and Game Boy Color down nearly 32% and 70% respectively versus week ago
levels. When comparing the first four weeks of the quarter versus the last four
weeks, PS2 hardware sales are up 196%, GBC up 229%, and GBA up 244%. This
places both PS2 and GBA on track to reach the install bases expected by year
end.
Sell through data for the quarter to date follows in Exhibits 6 through 13. The
numbers in the exhibits are projected totals for each software title. The
totals include data through the week of December 1st.
Activision\'s (ATVI, $25.50, Buy) Top 10 list is dominated by Tony Hawk\'s Pro
Skater franchise, which holds the top 7 games. The Spiderman brand holds spots
8 through 10. Sales of Shaun Palmer Snowboarder, rose from over 8000 units in
the first two weeks of sales to nearly 10,000 units sold in its third week on
the shelves.
Electronic Arts\' Top 10 list is similarly dominated by their most popular
franchise, Madden 2002. Harry Potter for the Game Boy Advance and the Game Boy
Color solidified their Top 10 positions after the third straight week of
impressive sales. If these were worldwide numbers, one of the top 10 spots may
have gone to EA\'s FIFA Soccer product.
THQ\'s ($57.70, Buy) Monsters, Inc. games continue to sell well, with nearly
298,000 GBC and GBA units sold. WWF: Just Bring It for the PS2, which sold a
projected 194,000 units in its first week, sold over 62,000 units in its second
week. THQ has one major release remaining in the quarter, WWF: Raw is War, its
most significant Xbox title.
After selling over 205,000 units in its launch week, GTA3 continues to post
impressive sell through totals. In its sixth week, it has sold over 730,000
units. However, there is still a pretty big drop off between Take-Two\'s #1 and
#2. If the company can replicate its success with GTA3 when it releases the
console versions (Xbox and PS2) of Max Payne on Dec. 14th, the company should be
in very good shape.
Hmmmmmmmm.......gba 260,000.....ps2 240,000, xbox 182,000.....and but last but not least gamecube 65,000!?!? Is it me or gamecube sells were kinda low for that week compared to the other systems?:nerd: :nerd:
Topic: Sells of systems last week...interesting.... (Read 679 times)