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Holiday video game sales could be well off target

06:37 - Monday 16 January 2006 by Scott M. Fulton - source: Tom's Hardware

Port Washington (NY) - This week, it seems the upcoming report on North American video game shipments from research group NPD Funworld may be as highly anticipated as housing starts or factory orders numbers. As the US economy appears to have been straddling the fence between recovery and recession in the latter half of 2005, analysts are increasingly looking to NPD Funworld’s numbers as an indicator of whether Americans are making use of disposable income.

Last Friday afternoon, NPD whetted the appetite of financial reporters everywhere by letting one of its juiciest numbers slip : Microsoft’s Xbox 360, claims parent company NPD Group, has shipped only 600,000 to the North American market since its launch on 4 November 2005. That’s well below the company’s initial targets of 2.5 million units in the first 90 days of sales, and about 5 million by the end of this June. Later that evening,

But like political pundits in the spin room after a debate in which their candidate just declared the Soviets had no presence in Poland, financial analysts are seeking to put their spin on NPD’s numbers even before they come out. As a result, two sources reporting on NPD’s preview of this week’s numbers came away with polar opposite conclusions : either console sales are up 6% for the year if you take portable units into account as well. Which is a more difficult conclusion than it might seem, given the apparent fact that So whether you care to plan a party or a wake for 2005 depends on your mood at the time. Sony is apparently taking the good and/or bad news pretty hard, declaring to PSXExtreme that NPD’s numbers may not be fair because they don’t appear to take Wal-Mart into account. Sony either had a goal, or a rumor of a goal, to sell 6 million PlayStation Portable units to North America in 2005, whereas an early peek at the NPD report appears to say Sony sold 2.5 million units instead. Not having met that goal, it may have just been a rumor, but Wal-Mart would account for 2 million unit sales of PSPs alone, the company told the publication.

Even assuming NPD was capable of omitting Wal-Mart from its sales evaluations, the thought of a single retailer accounting for as much as 80% more unit sales than all the other retailers combined, is scary enough.

If console sales actually are down - as we expect them to be - then some analysts will blame the slight downturn on the US economy. But a more credible source of blame this time could be Microsoft, whose entire holiday strategy has been called into question. How could the company have been expecting to sell as much as three times as many Xbox 360 consoles as it actually produced ? Did it really expect millions of customers to have been happy with a rain check, during a season where gifts generally come in boxes rather than envelopes ?

The complete NPD Funworld report is expected early this week.