October sales not up to expectations

The industry-tracking NPD Group released its sales figures for October's US console hardware and software sales yesterday, and the industry continued its run of year-over-year improvement, but just barely.

Where analysts like Pacific Crest Securities' Evan Wilson and Lazard Capital Markets' Colin Sebastian had expected game sales to be up sharply for the month, the numbers were actually more or less flat. Last month, US software sales accounted for $369 million, an increase of less than 1 percent over October 2005's $366 million take.

NPD industry analyst Anita Frazier noted that the number of games sold actually jumped by 4 percent, but the average retail price of games dropped about $1 from last year. Part of that is due to the success of generally cheaper handheld titles and the reduced cost of many PlayStation 2 new releases, which generally go for $40 instead of $50 now. Frazier said both of those factors are offsetting the $60 price tags of most new Xbox 360 games.

Domestic hardware sales were more robust, as NPD reports an October tally of $207 million, a jump of 56 percent over last year's $133 million for the month prior to the Xbox 360 launch. Combined with sales of accessories, the industry's total take for the month was $642 million, up more than 15 percent from last October's $556 million.

"A lot of people thought that consumers would be holding their dollars in anticipation of a pricey hardware purchase, and I think that the results show that this is anything but true," Frazier said. "Entertainment is consumable by nature, and I never thought consumers would put off being entertained in the present for the promise of future gratification. It's just not a common trait of entertainment consumers...I think we've learned a lot with this transition--that if you build the right content, consumers will continue to buy it and transitions don't necessarily have to be as painful as previously thought."