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Friday, January 16, 2009

NPD December video game results

NPD released December video game sales information. Software grew 15% y/y, better than analyst expectations of roughly 5-10%. Activision (ATVI) remained the number one publisher despite Guitar Hero band kits costing more than consoles in some cases – they were up 7% y/y overall with Guitar Hero up 14% y/y on a higher ASP. Electronic Arts (ERTS) was up 11% y/y. THQ Interactive (THQI) was down 23%. Wii titles dominated the top selling list, though Nintendo software sales +37% y/y may be a bit below street estimates of +50%, according to Deutsche Bank. Nintendo (NTDOY) Wii dominated platform sales with 2.1 mil units, up 59% y/y but up only 5% m/m – Nintendo essentially doubled shipment rates in the last couple of months of 2008 – market share grew substantially to 46%. Xbox sold 1.4 mil units, up 14% y/y and Sony (SNE) PS3 sold 700k units, down 10% y/y.

The Skew: I'm surprised Guitar Hero's ASP held up as well as it did. I've been thinking tough year to year comps would make keeping the franchise going difficult. Layering new functionality and drums and microphones into the product allowed them to keep pricing strong. Despite the franchise's age, 42% of Guitar Hero sales were band kits. Nintendo may be showing some signs of slowing – industry hardware units sales accelerated in December yet Nintendo grew only 5% m/m. Activision should work toward ~$10.30 near-term.


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