Wedbush: PS3 To Outsell Xbox 360 In July U.S. NPD?

Author: by Staff

Analyst Michael Pachter of Wedbush Morgan has released his preview of NPD's July U.S. game hardware/software sales, predicting game sales up 12.5% to $425 million, and suggesting that the post-price drop PlayStation 3 will outsell Microsoft's Xbox 360 for the month. Specifically, Pachter's forecast for the NPD results, which will become available this Thursday 23rd, are as follows: "We forecast [game] sales of $425 million, up 12.5% compared to last year’s $378 million... Our estimate reflects $295 million in sales contribution from new platforms (PS3, Wii, 360, PSP and DS) and current generation software sales of $130 million." Pachter continues: "We estimate sell-through of 330,000 Wii, 115,000 Xbox 360, and 160,000 PS3 hardware systems." The other estimates from the Wedbush Morgan analyst are for the PS2 at 205,000 units, the PSP at 225,000 units, the Nintendo DS again leading the way with 450,000 units, and the Game Boy Advance at 85,000 units. But why predict the PlayStation 3 outselling the Xbox 360 for this month in particular? The analyst explains: "We expect a bump in PS3 hardware and software sales due to the PS3 price cuts. Sony stated that sales of PS3 approximately doubled after the price cut, with sales before the price cut averaging 20,000 units per week." Explaining the other side of the equation, it's noted: "We have forecast a month-over-month decline for Xbox 360 hardware sales, due to the warranty issue announced in early July. We believe that the announcement may have disrupted sales for a week or so, as consumers struggled with the meaning of the “three red rings of death” issue. Now that the warranty has been communicated to consumers, the price has been cut, and (it appears) the design flaw that caused the high failure rate has been corrected, we believe sales will rebound." Delving into more detail on the predicted top game titles for the month, it's explained: "We expect July sales to be driven by new releases Activision’s Guitar Hero Encore: Rocks the 80's (PS2) and Electronic Arts’ NCAA Football 08 (PS2, PS3, Xbox, 360) along with catalog sales of Activision’s Guitar Hero 2 and Nintendo’s Wii Play and Mario Party 8." Finally, some more general trends are addressed by Pachter: "Notwithstanding the lowered price points for the consoles, we continue to believe that hardware unit sales will be more modest than they were in the analogous period of 2002, when console prices averaged under $200. We continue to expect higher average console prices to be an impediment to rapid sell-through of hardware, and we expect cycle-to-cycle declines of 10% or more for hardware sales to persist through the end of summer 2007. Although we do not expect another PS3 price cut this year, we think a cut for the PS2 is possible. Any hardware price reduction could serve as a catalyst for sales growth later in the year."